Obama's 100% Expensing - My Christmas Wish!

I sincerely hope the tax deal between President Obama and the Republicans becomes law and includes the 100% expensing provision for business assets purchased in 2011. This is my Christmas wish! Earlier this week, the President announced confidently that he had reached a deal with the Republican leadership to extended the Bush tax cuts. The deal included a provision to allow businesses to deduct 100% the cost of certain capital goods in full in 2011. This will dramatically help my fractional yacht share business - let me tell you why.

First, an explanation of capital goods, depreciation, and expensing. Capital goods are typically large expensive items that last a long time - such as Cat tractor, or a new assembly plant. Normally, a business expenses or writes-off these purchases over time using a depreciation schedule. So, even though you write a check today, it normally takes years to expensive these items. A write off is simply an expense that offsets income. These assets are depreciated over 5, 10, 20 or 30 years depending on the type of asset. A yacht purchased for charter service is considered "10 year" property and expensed over a 10 year period.

So, here is the good news for the American economy; if businesses are allowed to deduct expenses in full in 2011, they are far more likely to buy stuff in 2011. It takes people to build stuff and that means more employment and, I predict. the beginning of the end of this "great recession".

For Signature Yacht Shares, the ability to write off a business asset would be huge! Instead of waiting around for the "all clear, everything is going to be OK with the economy signal", our yacht owners will likely buy new yachts in 2011 to take advantage of the expensing provision. To be clear, not all yacht purchases will qualify. Only those purchases used in a legitimate business enterprises such as Signature Yacht Shares.

The President described the deal as a "frame work" and says it will be up to the partisan rascals in Congress to create the law that outlines the details of the provision. But, if my Christmas wish comes true, I will wake up earlier Christmas morning, turn on CSPAN, and discover that 100% expensing has become law! Alleluia - there is a Santa!