Previous Events
Reduce Your Small Business’
IRS Audit Risk: Bond Beebe’s Guidance for Keeping Uncle Sam from Knocking
View the Presentation
Taxes and Estates:
Preparing for Today,
Planning for tomorrow
View the Video
Sizzling Hot News
| State Tax |
| Federal Tax |
| Estate |
| Accounting |
| Financial |
| Other |
BB Bloggers
| Click here for bios |
Bond Beebe Links
| Bond Beebe, Accountants & Advisors |
| Bond Beebe Forensic |
| Greater Washington DC Family Business Alliance |
| Payroll Auditing Portal |
Receive Updates
Join Our Mailing List
Bonus Depreciation Clarification Issued by the IRS |
| Written by Donna Buck on Wednesday, 20 April 2011 | |
|
The Congress was very generous when it granted 100% bonus depreciation for qualifying property placed in service after September 8, 2010 and before January 1, 2012. However, if you did not want to take the 100% bonus depreciation, your only other option (according to the IRS) was to elect out of bonus depreciation and take the regular depreciation on the asset. This was reinforced in the Form 4562 (Depreciation and Amortization) instructions when they cautioned taxpayers that “if you elect out of the 100% special depreciation allowance . . . the property does not qualify for the 50% special depreciation allowance”.
Now the IRS has clarified their position in Revenue Ruling 2011-26 by allowing taxpayers to step down the election to 50% bonus depreciation on assets placed in service after September 8, 2010 and before January 1, 2012. The Joint Committee on Taxation says that it was Congress’s intent that “a taxpayer may elect 50 percent (rather than 100 percent) bonus depreciation with respect to all property in any class of property placed in service during a taxable year” and the IRS has agreed to follow suit.
So what happens now if you claimed 100% bonus depreciation or elected out of bonus depreciation but now want to elect to claim a stepped-down 50% bonus depreciation allowance?
Well, the IRS has elaborate procedures for you to follow! If you timely filed your 2010 federal tax return, the IRS is granting an automatic 6-month extension to make the stepped-down 50% bonus depreciation election. This means that you have 6 months from the original due date of your return to file an amended return and attach the required statements to elect the stepped-down 50% bonus depreciation allowance. |