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If your company has unused research and development (R&D) or alternative minimum tax (AMT) credits from pre-2006 tax years, you may have a decision to make while preparing your 2009 corporate tax return: Either take advantage of the 50% first-year "bonus depreciation" or cash in on your unexpired R&D or AMT credits in lieu of bonus depreciation.
Corporations eligible for the 50% additional bonus depreciation may elect to accelerate the R&D or AMT credits and receive cash instead of claiming bonus depreciation. This election can be particularly valuable to corporations with net operating losses, for whom bonus depreciation would not generate any immediate tax savings, or corporations that are subject to AMT.
This election can benefit certain companies by generating much-needed cash. And, if you choose to swap the first-year bonus depreciation for use of the credits, you do not lose the deduction but merely defer the depreciation to later years.
Your R&D and AMT credits are eligible for monetization in the following circumstances:
You are a corporation;
You have unutilized pre-2006 R&D and/or AMT credits;
You purchased eligible bonus depreciation during 2009;
Your credits may otherwise expire due to carryforward limitations;
You have net operating losses; and
You are generating additional R&D and AMT credits, which you may not use.
If your company meets these criteria, the ability to cash in your unused credits may help your company make it through these tough economic times.
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