The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (H.R. 4853) was signed into law by President Obama on Dec. 17, 2010. Included in this legislation is a benefit regarding the purchase of certain assets used in a business. The legislation allows taxpayers to take a deduction for 100% of the cost of equipment acquired from Sept. 8, 2010 through Dec. 31, 2011.

Under the new law businesses may immediately write-off 100% of the cost of equipment acquired between Sept 8, 2010 and December 31, 2011, provided the equipment is used in the United States. Additionally, the equipment must be new and the original use of the equipment must commence with the taxpayer claiming the bonus depreciation on its timely filed tax return.

To be eligible for the 100% bonus depreciation, the equipment must have a recovery period of 20 years or less. Generally, ADTRAN equipment will meet these requirements and qualify for the 100% bonus depreciation as most networking equipment. has a recovery period of five or seven years.

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Example: With the 100% write-off, a $10,000 investment in ADTRAN equipment would provide an immediate $3,500 in tax savings, assuming a 35% tax rate ($10,000 X 35% = $3,500). Without the 100% write-off and assuming the equipment is depreciated over seven years, the tax savings would be $500 a year for seven years. ($10,000 X 35% = $3,500 / 7 = $500 a year for seven years)

The above example does not include the impact of state taxes as many states have different depreciation rules, but it is possible that the taxpayer would receive an additional benefit from its home state as a result of this law.

Please check with your tax advisor to make sure that you will be able to take advantage of this opportunity.