Two provisions of recently passed federal legislation could reduce the tax bill for home builders, according to global accounting and tax advisory firm Grant Thornton.
In the company;s BuildingBusiness newsletter, Thornton tax partner Todd Taggart says the Job Creation and Worker Assistance Act of 2002 has features on bonus depreciation and extension of the net operating loss carryback period that offer potential savings for many construction contractors.
"Eligible contractors can take the 30% bonus depreciation in year one and depreciate the remaining 70% using the normal depreciation schedule," Taggart says. He adds that contractors considering whether to lease or buy equipment should explore how this provision applies to each option.
Of the net operating loss carryback extension, Taggart observes, "Extending the carryback to a five-year period has opened up a lot of these previously closed years, and people are recovering taxes they had paid and thought they would never get back."
You can see BuildingBusiness on the firm's Web site, www.grantthornton.com.