June 18, 2014

The Emergency Economic Stabilization Act of 2008: Tax Incentives and Other Provisions That Benefit the Nursery and Greenhouse Industry


By Steve Shropshire

Winter 2008

When Congress passed the Emergency Economic Stabilization Act of 2008 (the "Act"), it not only provided $700 billion in relief to the troubled financial industry, it also included many provisions that could benefit the nursery and greenhouse industry directly through tax incentives and other tax deductions. Some key provisions include the following:

1. New Five-Year Depreciation for Farm Equipment.

The Act allows farm machinery and equipment to be depreciated faster. New (not used) farm machinery and equipment put in use in an agricultural business during 2009 can be written off over five years instead of seven years. The accelerated depreciation is not available for grain bins, cotton ginning assets, or fencing and other land improvements.

2. Extended Solar Tax Credits.

The Act extends for eight years the thirty percent tax credit to residential homeowners and commercial businesses that purchase rooftop solar energy systems and eliminates the $2,000 cap on the tax credit benefit. With the cost of a rooftop system running as much as $30,000, a $9,000 tax credit would provide significant incentive to install these systems in new and existing buildings.

3. Wind and Geothermal Tax Credits.

The Act provides a thirty percent tax credit for small wind installations up to $4,000 and for geothermal heat pumps up to $2,000.

4. New Fifteen-Year Depreciation for Retail Space Improvements.

The Act provides for fifteen-year straight-line depreciation for qualified retail improvement property placed in service in 2009. This break covers real property improvements to the interior portion of a nonresidential building if certain qualifications are met. The fifteen-year depreciation break is not available for improvements related to enlarging a building, elevators or escalators, structural components that benefit common areas, or the internal structural framework of the building. Retail space improvements generally must be depreciated over 39 years, so this benefit is a good deal if your business qualifies.

5. Energy Efficiency Improvements.

The Act extends an existing tax deduction through December 31, 2013 for commercial building owners that invest in energy efficiency improvements meeting certain standards. Building owners may claim as much as $1.80 per square foot and both new and existing buildings may apply for the deduction. Acceptable investments in energy efficiency include interior lighting systems, HVAC, ventilation and hot water systems, building envelope improvements such as high efficiency doors and windows, and green roofs that effectively reduce the building's total energy power cost by five percent or greater when compared to EPA building standards.

As with all tax-based incentives, certain conditions, limitations, and restrictions apply. However, with some planning and timely improvements, members of the nursery and greenhouse industry could benefit significantly from these provisions.

For more detailed information, or to see if you qualify, you should contact a knowledgeable accountant or tax attorney.

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