The following information is not intended to be tax advice, it is provided for guidance purposes only. You should consult your tax preparer and/or tax attorney for advice appropriate to your individual situation.
RISE allows taxpayers to claim accelerated deprecation for the purchase of machinery or equipment used to collect, distribute or recycle a variety of commodities such as scrap plastic, scrap glass, textiles, scrap rubber, scrap ferrous and nonferrous metals, or electronic scrap.
Accelerated depreciation is a very common incentive often used by federal and state governments to spur manufacturing, production or certain purchasing behaviors, or to achieve certain policies:
- RISE provides a purchaser of "qualified reuse and recycling property," (which is just a fancy term for eligible recycling machinery or equipment) with the option to depreciate 50% of the cost of that machinery or equipment in the first year.
- Only qualified reuse and recycling property that is used exclusively to process materials (including sorting) and that has a useful life of at least five (5) years is eligible for the 50% accelerated depreciation allowance under RISE. Rolling stock, real estate, and buildings are not eligible for the depreciation allowance under RISE.
- In order to use the bonus depreciation under RISE, eligible machinery or equipment must be placed into service after August 31st, 2008. However, that same equipment must not have been ordered prior to August 31st.
- However, the economic stimulus package passed earlier this year also contains a 50% accelerated depreciation, but requires that in order to be eligible, that equipment must have been purchased in 2008 and placed into service by December 31st, 2008.
- RISE is purely voluntary. Some recycling equipment purchasers, based on their own tax situation, may elect not to use the accelerated depreciation schedule. Instead, they may elect to straight-line depreciate machinery or equipment equally over five years or more.