By Kelly Sayre, President, Texas Association Of Rental Dealers (TARA)

The recently enacted "American Jobs Creation Act of 2004" has some potential positive tax provisions for some rental dealers. Dealers should consult their tax advisers for specifics.

Of particular interest to rental dealers:

Leasehold Improvements The Act provides a 15 year recovery period for qualified leasehold improvement property placed in service before January 1, 2006. The current law definition of qualified leasehold improvement property is modified to provide that if a lessor makes an improvement that qualifies for the reduced recovery period, a subsequent owner of the improvement will not qualify for the reduced recovery. Effective Date-The provision is effective for property placed in service after the date of enactment and before 2006.

Extends section 179
The Act extends the section 79 expensing limit established by the Jobs and Growth Tax Relief Reconciliation Act of 2003 for two additional years, through taxable years beginning before 2008. The maximum dollar amount a qualified taxpayer may deduct for property placed in service ins $100,000; the phase-out threshold is $400,000. The provision adjusts both of these limits for inflation. (current law expires at the end of 2005, when the expensing limit would drop to $25,000, and the phase-out threshold would be reduced to $200,000.)

Off-the-shelf computer software placed in service in taxable years beginning before 2008 is included as qualifying property.

Contact TARA with questions