New tax bill has a few more gifts for dealers

Dealers scored a few wins when President Obama signed the new tax bill into law Friday. In addition to a lower estate tax and higher exemption to that tax than had once been expected, two other parts of the new law are expected to help the auto industry.

First, businesses will now be allowed to immediately depreciate 100 percent of new equipment purchased between Sept. 8, 2010, and the end of 2011. That covers company vehicles, subject to certain IRS rules pertaining to business use. It doubles a previous bonus depreciation provision of 50 percent and should encourage businesses to replace aging fleet units, says Bailey Wood of the National Automobile Dealers Association.

Businesses have been hanging on to their cash. Now expect many of them to be out shopping for new pickups for their work crews, Wood told me.

Wood also touted the extension of higher thresholds for investment deductions. For 2010 and 2011, companies can deduct up to $500,000 of capital investments, including machinery. For 2012, they can deduct up to $125,000. That not only bodes well for auto sales, he said, but it also will help dealerships make needed improvements to their own facilities.

Said Wood: "If you need to go out and buy a new car wash, this is the year to do it."