(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").
Beyond expensing under Section 179, "bonus" depreciation has allowed
additional first-year depreciation deductions for amounts spent on certain business equipment.
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.
* 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.
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.
Under current law, these first-year depreciation caps include an $8,000
additional first-year depreciation allowance that expires at the end of 2012.
"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).
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 new bill provides an
additional first-year depreciation deduction equal to 50 percent of the adjusted basis of qualified property.