What will the future impact be if I take 50% of a special depreciation allowance vs. 100% this year?

[CathiM · Accepted solution]

If it is likely you might resell the asset you have purchased, you might want to take only 50% special depreciation allowance.  When sold, the excess depreciation taken on the asset has to be "recaptured" and is taxed as ordinary business income, not capital gains rate.  You will have to decide if the 100% deduction is needed this year knowing that you may pay taxes on the recapture if you sell it later.

If you sell an asset that you have depreciated 100%, you will have to "recapture" the entire depreciation you have taken up to amount you sold it for. If you sell an asset for more than the original cost, the recaptured depreciation would be the entire cost and any addition amount you received is taxed as a capital gain. 

Click here to read more: Publication 544 (2016), Sales and Other Dispositions of Assets