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Bonus Depreciation

In: Business and Management

Submitted By serenityao
Words 2277
Pages 10
The Discussion of Bonus Depreciation Deduction in the United States
May 6, 2015


The term paper researches the history of bonus depreciation allowance provision, the usefulness to the decision making of corporate taxpayers, and how the temporary changes in recent years affect cash flow of businesses. Under Section 168(k) of IRC, bonus depreciation is a special depreciation allowance to deduct income tax of corporate taxpayers. Though this ranges from 30% to 100% as determined by annual election of congress, bonus depreciation actually results in substantial present value tax savings for businesses when they purchase new qualified property. The introduction section is an overview of bonus depreciation, how it is relevant to businesses, and why taxpayers care about it. The legislation history is a brief description of temporary changes and the timeline of bonus depreciation. The fictional example section presents the possible effects of bonus depreciation transitioning from 50% in 2014 to 0% in 2015, and the conclusion section summarizes this research.

Keywords: Depreciation Deduction, Bonus Depreciation, Cash Savings

Outline the topic. Bonus depreciation is special depreciation allowance that allows businesses an additional first-year depreciation deduction when the qualifying asset is first purchased. It helps business recover the costs of qualified new property made in a particular year faster than the ordinary depreciation schedule allow. Bonus depreciation is eligible to new qualified property, but it is not eligible for property used outside of the US, tax-exempt use property, or tax-exempt financed property. Besides, all businesses are qualified for bonus depreciation. Bonus depreciation has no thresholds based on net income or purchase limits; it is not limited to smaller businesses.
Why this topic was chosen. Bonus...

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