"Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”"
It would be interesting to know how much of equipment was expensed versus depreciated before this change.
Every bit possible up to a company's limit for losses. I.e. if you're still losing money there are provisions I'm not familiar with for carrying losses forward to when you ideally are earning a profit but I gather these have limits and in that case you might want to e.g. use the 3 year depreciation schedule for computers.
But if you're profitable (even if most of that profit is flowing through to the founders so that they can purchase their ramen :-) then you want to expense what you can immediately instead of paying taxes. Cash is king, especially in a startup.
I expect that this will be a boost to AWS, Rackspace, etc. and a general hit to the nation's capital investment. In relation to this I've read one small tour operator talk about how they were going to have to change their purchasing pattern for vehicles and among other things lay one person off. Multiply that by a few million small businesses that have to regularly buy equipment....
If they use equipment up faster than the official IRS depreciation schedules they're going to take a hit, period (this includes obsolesce, like replacing network gear with faster varieties). If their usage matches the schedules this is going to move earnings into the future, which will hurt, especially if they don't have the cash to spare right now.