Until December 31, 2011, EHR investments are eligible for 100% Bonus depreciation. 100 % Bonus Depreciation allows a practice to completely write off their hardware and software EHR expense without limit in 2011. (Bonus Depreciation drops to 50% in 2012 and reverts to regular depreciation in 2013.) Another interesting aspect to Bonus Depreciation is that Bonus Depreciation is not limited to an offsetting profit. Without getting into too much number crunching, that means that you may be able to generate positive cash flow depending on financing etc.
For many practices, a 2011 EHR investment may present a significant tax benefit. However, that means that you need to move forward quickly since the EHR must be placed in service by the end of 2011 to qualify for 100% Bonus Depreciation, and by December 31, 2012 to qualify for 50% Bonus Depreciation.
Note that an EHR placed in service is not the same as attaining Meaningful Use and qualifying for the Stimulus Incentives.
© Sterling Solutions, 2011