additional first-year depreciation

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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.
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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

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
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Because of "the policies underlying the enactment of an unprecedented 100-percent additional first year depreciation provision," (43) the revenue procedure provided a limited exception to the self-constructed property rules in Treasury regulations section 1.168(k)-1(b)(4)(iii) for certain components of a larger self-constructed property (hereinafter, the "component election"):
* Provided 30% additional first year depreciation on the adjusted basis of qualified "New York Liberty Zone" property.
May's California CPA, Page 33, discussed the new 30-percent additional first year depreciation deduction for qualified property generally acquired after Sept.
167(0(1) or 168, as applicable, is determined for the placed-in-service year and all subsequent years by taking into account the 30-percent additional first year depreciation deduction.
* The time described above and included in that return an affirmative statement that the taxpayer is not deducting the additional first year depreciation for the class of property.

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