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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Beyond expensing under Section 179, "bonus" depreciation has allowed additional first-year depreciation deductions for amounts spent on certain business equipment.
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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).
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The temporary tax cuts of 2003. (Business Tools)

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