Friday, January 28, 2011

Bonus Depreciation

The AED folks had a Bonus Depreciation Seminar.
Here are some facts as I recall, consult with your tax professional to be sure I'm correct.

Bonus Depreciation, New Equipment

  • For 2011, Bonus Depreciation is 100% with qualifying new equipment purchase. 2012 deduction drops to 50%
  • This bonus can be used for current year, carry back( if you had to pay taxes in the past 3 years) or for carryover into 2012
  • Vehicle purchases- Vehicles over 6,000 lbs(like heavy duty work pickup trucks) qualify for 100% deduction. For vehicles below 6,000 lbs, luxury vehicle rules still apply but there is an additional $8,000 this year.
  • Some States are not allowing this deduction for State Taxes
Sec 179 Deduction, New or Used Equipment
  • For 2011, Bonus Depreciation is a max of $500,000 with qualifying new or used equipment purchase. 2012 deduction drops to $125,000. It starts to phase out at $2 million.
  • This bonus can be used for current year but CANNOT be used for carry back. For carryover, deduction is limited to $25,000 a year
  • Some States are not allowing this deduction for State Taxes
Some other points that came up from discussion:
Trades- Deduction is equivalent to value of trade plus your cash out of pocket
Internal Moves- Moving from inventory to rental fleet qualifies
New?- If equipment is on first rental and less than 3 months, it qualifies for new in the year it was put into service, otherwise use sec 179
Again, consult your tax professional for confirmation.

More information and a bonus depreciation calculator is available here from AED- http://www.depreciationbonus.org/


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