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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(2) The proposed regulations would provide guidance regarding the additional first-year depreciation deduction under section 168(k) and reflect changes made by Public Law 115-97, informally known as the Tax Cuts and Jobs Act (the "Act").
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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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On the positive side, additional first-year depreciation will be allowed for qualified improvement property without regard to whether the improvements are property that's subject to a lease.
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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;
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Bonus depreciation allows for an additional first-year depreciation deduction of 50% of the basis of certain qualified property acquired after Dec.
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Investments above this amount are eligible for the 50% additional first-year depreciation, so nearly all capital investment by farmers can be written off in the current year.
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Under current law, these first-year depreciation caps include an $8,000 additional first-year depreciation allowance that expires at the end of 2012.
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"This additional first-year depreciation deduction allows businesses to write off more than a standard depreciation schedule would allow," Loebenberg explained.
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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).
More tax law: selected provisions of 2010 Small Business Jobs Act
It now allows an additional first-year depreciation equal to 50% of the adjusted basis of qualified property.
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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.
Go Zone tax credits and incentives: Hurricane Katrina, which wreaked an estimated $86 billion in damages across 90,000 square miles, ranks as the most expensive natural disaster in the history of the United States
The new bill provides an additional first-year depreciation deduction equal to 50 percent of the adjusted basis of qualified property.
The temporary tax cuts of 2003. (Business Tools)

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