[Daus]

Instead of retaining the profits for equipment he may purchase in the future, Joe needs to actually purchase that equipment. Then he can first year expense the entire amount spent on equipment.

I agree the changes GWB has made in this area have been great. As a tech company I understand there is a great deal of incentive to make those purchases in the current tax year. Apparently this one is getting even better, my accountant keeps reminding me that it's getting even more lenient to include purchases you 'commit' to make but are not actually executed (or something to that effect).

Though it does help, this tax break was put in to spur the economy not to neccessarily push business owners into making wise purchase decisions. As an owner myself you can feel the pull to make purchases before they are actually justified or needed just to get the tax benefit. It can be dangerous when all of sudden you find out you need that cash for payroll and the money is sitting over in the corner in the form of an idle machine you bought early for the tax benefit. :)

On balance, this one is a net benefit to business owners, it's once again the politicians manipulating the tax code to achieve an end goal.

[justa-hairyape]

You are correct, one must make their purchases wisely. Never throw good money after bad. In our example, we have made purchases of equipment we normally needed to lease ourselves every now and then or equipment we are now actually leasing out to others. So in the long run these purchases have increased our assets, lowered our operating costs and are now generating cash income via leasing. True our cash assets have taken a hit and if payroll is an issue you need to be more conservative with the purchases. We are however very solvent and should be generating decent amounts of cash next year. Could have been doing some of that this year if talking the economy into a recession had not become the best way for someone to win a campaign.