42.20 Bonus Depreciation

Bonus depreciation is an additional first-year depreciation allowance equal to a set percentage of the adjusted basis of eligible property. It is allowed for eligible property placed in service after 2007 and before 2013 (2014 for property with a longer production period). The percentage for bonus depreciation in 2011 was 100%. For 2012, the percentage is 50% unless Congress increases it to the 100% bonus allowed for 2011; see the e-Supplement at jklasser.com.

Bonus depreciation (also called a Section 168(k) allowance and a special depreciation allowance) can be claimed in addition to any first-year expensing. In figuring “adjusted basis” for purposes of bonus depreciation, any first-year expensing deduction is taken into account first. Then, you figure bonus depreciation on the cost of the property minus the first-year expensing allowance. Bonus depreciation is fully deductible for alternative minimum tax purposes (23.2); no adjustment is required.

Bonus depreciation allows the first-year dollar limit on write-offs for vehicles weighing less than 6,000 pounds to be increased by a fixed dollar amount reflecting bonus depreciation, provided business use exceeds 50%. The bonus allowance increases the total dollar limit for such vehicles placed in service during 2012 by $8,000, to $11,160 for a car or $11,360 for a light truck or van (43.4).

Eligible property.

Bonus depreciation can be claimed for any property with a recovery period of 20 years or less, computer ...

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