additional first-year depreciation

Additional First-Year Depreciation

A provision in U.S. tax law that permits some assets purchased in a given year to be expensed, rather than depreciated, the first year of ownership. That is, one may write off the total value of the asset rather than the amount by which is depreciates. This reduces one's taxable income. There are limits on the value of property on which one may use additional first-year depreciation; this amount changes in different years.

additional first-year depreciation

Also called bonus depreciation. An IRS provision that allows taxpayers to take more than the ordinary depreciation in the first year a property is placed in use. (After the 9/11 attacks, taxpayers could deduct up to one-half of the basis of their property in the first year.Ordinarily,only 1/39 or 1/28 of the basis could be deducted in the first year.Similarly,in the wake of the devastating 2005 hurricane year, some taxpayers could take additional first-year depreciation equal to one-half of the basis.) In addition, taxpayers may take larger than normal depreciation for some property,called Section 179 property,even it if results in effectively expensing the entire purchase price in the current year.(For more information, visit the IRS Web site www.irs.gov.)

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Assets not eligible for additional first-year depreciation (including assets for which an election to forgo additional first-year depreciation has been made) must be grouped into a separate GAA;
Bonus depreciation allows for an additional first-year depreciation deduction of 50% of the basis of certain qualified property acquired after Dec.
Under current law, these first-year depreciation caps include an $8,000 additional first-year depreciation allowance that expires at the end of 2012.
Extension of Additional First-Year Depreciation (also called bonus depreciation) through 2012 (through 2013 for certain long-production-period and transportation property).
This additional first-year depreciation deduction allows businesses to write off more than a standard depreciation schedule would allow," Loebenberg explained.
Old Law: An additional first-year depreciation deduction was allowed equal to 50 percent of (he adjusted basis of qualified property placed in service during 2008 and 2009 (2009 and 2010 for certain longer-lived and transportation property).
Extend the provision allowing additional first-year depreciation on qualified investments.
It now allows an additional first-year depreciation equal to 50% of the adjusted basis of qualified property.
Through this incentive businesses can claim an additional first-year depreciation deduction equal to 50 percent of the cost of new property investments made in the Zone.
The House Committee Report for the JGTRRA clarifies that the adjusted basis of qualified property acquired by a taxpayer in a [section] 1031 like-kind exchange or in a [section] 1033 involuntary conversion is eligible for the additional first-year depreciation deduction.
Fortunately, publishers are now entitled to an additional first-year depreciation deduction equal to 30 percent of the adjusted basis of qualified property, such as some computer software costs and qualified leasehold improvements.
Allows a taxpayer to claim an additional first-year depreciation deduction equal to 30% of the adjusted basis of qualifying property.

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