Friday, April 8, 2011

What is Bonus Depreciation?

Q.  Someone told me you could take 100% of the cost of a depreciable item this year. Knowing this, I included all my equipment purchases (small items like computers, printers, etc.) under supplies. My tax preparer now has asked me to send a detailed list of dates, items and cost for each item. I don't understand why I need to look all this up. It it's 100% deductible, what's the point? SS, Idaho

A.  Like most things, our tax laws don't take the easy way out. In order to take accelerated write offs either under Code Section 179 or as Bonus Depreciation, you must make an election to do so. This election is made on the schedule for depreciation (Form 4562) and for Bonus Depreciation, pertains only to purchases made between September 8th and December 31, on the 2010 tax return. Hence, your preparer needs all the detail information.

Tax Tip:  The 100% Bonus Depreciation extends through this year - until December 32, 2011. This may be a real tax saver for those of you who are business owners and may be able to take advantage of this. Unlike Section 179 depreciation, there are no limitations! RG, Idaho

P.S. Depreciation is no longer available for RVs. See Jackson, T.C. Memo 2014-160, August 7, 2014.

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