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No reduction of bonus depreciation

by on
in Small Business Tax,Small Business Tax Deduction Strategies

Q.  Are bonus depreciation deductions reduced for business property placed in service in the last quarter of 2011? J.M., Lansing, Mich.

A. No. The restriction on last-quarter deductions doesn’t apply to property that qualifies for the 100% bonus depreciation deduction in 2011. But regular deductions for other property (e.g., used property) may be reduced if the cost of property placed in service in the last quarter of the year exceeds 40% of the cost of all property placed in service during the year (not counting real estate).

Tip: This tax trap may be avoided by electing Section 179 treatment for qualified property. The cost is removed from the last-quarter calculation. 

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{ 2 comments… read them below or add one }

Real Estate Tax Attorney April 21, 2012 at 4:09 am

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Property Tax Deduction February 23, 2012 at 9:03 am

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