(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").
SUVs and trucks that weigh more than 6,000 pounds (gross vehicle weight) are not limited to the $18,000 first-year depreciation
The percentage for figuring the additional first-year depreciation
allowance, called bonus depreciation, for property placed in service after September 27, 2017, has been doubled to 100% (IRC section 168).
$8,000 increase in first-year depreciation
limit for passenger automobiles
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;
Along with the expensing provision, the ability to take an additional first-year depreciation
deduction also benefits farmers making capital purchases.
The additional 50 percent first-year depreciation
deduction for investments in qualified property is extended for property placed in service in 2013.
The $8,000 increase in the first-year depreciation
cap for passenger automobiles for which bon us depreciation is claimed remains unchanged and continues to apply to vehicles placed in service during 2013.
Code Sec 179 expensing should be taken first, followed by bonus depreciation, and then regular first-year depreciation
. Careful consideration should be taken when planning for depreciation; for example certain taxpayers may benefit from electing out of bonus depreciation, and certain property qualifies for Code sec.
The amount of first-year depreciation
has been 30 percent, 50 percent or 100 percent and has most recently been reduced to 50 percent for 2012.