Bonus depreciation overview

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JCWA / JGTRRA / ESA / Recovery Act/ SBJA / TRA 2010 / TRA 2012

The Job Creation and Worker Assistance Act of 2002 (JCWA) provided an additional depreciation deduction in the placed-in-service year that is equal to 30% of the adjusted basis of the qualified property placed in service after 9/10/01. This law is reflected (for the most part) in IRS Code section 168(k).

The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) amended the bonus depreciation provisions of the Job Creation and Worker Assistance Act of 2002. For qualified property placed in service between 5/6/03 and 12/31/04, the bonus depreciation increased from 30% to 50%.

The Economic Stimulus Act of 2008 allows 50% bonus depreciation for qualified property placed in service between 1/1/08 and 12/31/08.

The American Recovery and Reinvestment Act of 2009 allows 50% bonus depreciation for qualified property placed in service between 1/1/09 and 12/31/09.

The Small Business Jobs Act of 2010 allows 50% bonus depreciation for qualified property placed in service between 1/1/10 and 12/31/10.

The Tax Relief Act of 2010 allows 100% bonus depreciation for qualified property placed in service between 9/9/10 and 12/31/11 and 50% bonus depreciation for qualified property placed in service between 1/1/12 and 12/31/12.

The Tax Relief Act of 2012 allows 50% bonus depreciation for qualified property placed in service between 1/1/13 and 12/31/13.

The Tax Relief Act of 2014 allows 50% bonus depreciation for qualified property placed in service between 1/1/14 and 12/31/14.

The Protecting Americans from Tax Hikes Act of 2015 allows 50% bonus depreciation for qualified property placed in service between 1/1/15 and 12/31/17, 40% bonus depreciation for qualified property placed in service between 1/1/18 and 12/31/18, and 30% bonus depreciation for qualified property placed in service between 1/1/19 and 12/31/19.

More information on JCWA / JGTRRA / ESA / Recovery Act / SBJA / TRA bonus depreciation qualified assets


GO Zone

The Gulf Opportunity Zone Tax Relief Act of 2005 (GO Zone) allows 50% bonus depreciation for qualified Gulf Opportunity Zone property placed in service between 8/28/05 and 12/31/07. This law is reflected (for the most part) in IRS Code section 1400N.

More information on GO Zone bonus depreciation qualified assets


Disaster Area Relief

The Tax Extenders and Alternative Minimum Tax Relief Act of 2008 allows 50% bonus depreciation for qualified Disaster Area property generally placed in service after 12/31/07 for disasters declared after 12/31/07 and occurring before 1/1/10. This law is reflected (for the most part) in IRS Code section 168(n).

Steps for managing assets

The following steps will help you manage assets for bonus depreciation.

  1. To learn how the application calculates the bonus depreciation, see the following information.

  2. Complete additional data entry for clients with possible bonus assets.
    1. The application automatically calculates the bonus depreciation deduction for most qualified assets. For the following types of assets, you must force the bonus property type.
      • GO Zone leasehold improvement
      • GO Zone nonresidential real and residential property
      • GO Zone extension property
      • Cellulosic biofuel plant property (QCBPP)
      • Leasehold improvements
      • Improvement property
      • Computer software Code section 167 where an Amortization section has not been entered in the Other tab
      • Water utility property
      • New York Liberty Zone nonresidential and residential realty
      • New York Liberty Zone leasehold improvement
      • Disaster Area leasehold improvement
      • Disaster Area nonresidential real and residential property
    2. Modify clients who will elect out asset classes for bonus depreciation.
    3. By default, all treatments - except Book and some state treatments - comply with bonus depreciation.
  3. Print reports and forms for clients whose states do not comply with bonus depreciation.

    • For states in which the add back is the difference between the Tax treatment that complies with bonus depreciation and the state treatment that does not comply, choose File > Print and print the Comparative - Tax & State report.
    • For states that require an add back of the bonus depreciation allowance claimed on federal Form 4562 and/or 2106, print the Tax State Depreciation Adjustment report.

    If you have not yet set up the state treatment and need to do so now, see Copying asset data from the Tax treatment to a state treatment.

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