Bonus Depreciation 2010 and 2011

There seems to be some confusion when it comes to the bonus depreciation effective dates for fixed assets.  When do I use the 50% bonus?  When is the new 100% expensing rule apply? Is it only for 2011 or retroactive?  Allow me to shed some light on the subject for you.

Placed-in-service Date

Bonus Depreciation Level
January 1, 2008 – September 8, 2010

50%

September 9, 2010 – December 31, 2011

100%

January 1, 2012 – December 31, 2012

50%

 Bonus Depreciation and AMT Depreciation Relief

50% bonus depreciation is for qualifying personal property fixed assets placed in service after January 1, 2010 and before September 8th, 2010.

100% bonus depreciation is for qualifying property that is:

  1. Placed in service and acquired after September 8, 2010 and before January 1, 2012
  2. Purchased after September 8, 2010 and before January 1, 2012
  3. Qualified AIRCRAFT or Long-Production-Period placed in service before January 1, 2013

In addition to extending the eligibility period for bonus depreciation on fixed assets, the extension of the placed-in-service deadline also extends the eligibility period for obtaining exemption from the AMT depreciation adjustment.

For 2012, bonus depreciation reverts back to 50 percent and it is the last year bonus depreciation is available.

15-Year MACRS Depreciation

The 15-year recovery period has been extended and retroactive  for both 2010 and 2011.  Assets that qualify:

  • Qualified leasehold improvements,
  • Qualified retail improvements, and
  • Qualified restaurant improvement property has been extended retroactively for 2010 through 2011.

UPDATED 04/01/2011:  Guidance Issued on 100% Bonus Depreciation Rules Tax Advisor Article

Need a better fixed asset solution than your spreadsheet, home-grown database or ERP systememail me today.

IRS Reference for 50% bonus and new Section 179 deductions: http://www.irs.gov/formspubs/article/0,,id=177054,00.html

The information contained in this article does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.

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