Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
ahill020
New Member

What is bonus depreciation

 
1 Best answer

Accepted Solutions
PatriciaV
Expert Alumni

What is bonus depreciation

Basically, bonus depreciation allows you to write off an additional 50% of the cost of eligible property that you begin using during the current tax year. It's considered "special" or a "bonus" because when this IRS rule first went into effect, it was expected to be for a very limited time. The provision has been extended several times over the years.

From IRS Pub 946: Special (Bonus) Depreciation:

Bonus depreciation is "a special depreciation allowance under IRS rules that allows you to recover part of the cost of qualified property, placed in service during the tax year. The allowance applies only for the first year you place the property in service. For qualified property placed in service in 2015, you can take an additional 50% special allowance. The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service."

TurboTax will offer this bonus depreciation during the asset interview sequence if your property qualifies for this special allowance. Because this type of depreciation can be "recaptured" as ordinary income when you sell the asset, taking this additional deduction is optional.

View solution in original post

11 Replies
PatriciaV
Expert Alumni

What is bonus depreciation

Basically, bonus depreciation allows you to write off an additional 50% of the cost of eligible property that you begin using during the current tax year. It's considered "special" or a "bonus" because when this IRS rule first went into effect, it was expected to be for a very limited time. The provision has been extended several times over the years.

From IRS Pub 946: Special (Bonus) Depreciation:

Bonus depreciation is "a special depreciation allowance under IRS rules that allows you to recover part of the cost of qualified property, placed in service during the tax year. The allowance applies only for the first year you place the property in service. For qualified property placed in service in 2015, you can take an additional 50% special allowance. The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service."

TurboTax will offer this bonus depreciation during the asset interview sequence if your property qualifies for this special allowance. Because this type of depreciation can be "recaptured" as ordinary income when you sell the asset, taking this additional deduction is optional.

info30
New Member

What is bonus depreciation

If my profit was only 25K but my fishing boat was 55k, can I use 179 for up to 25k plus the 50% depreciation or just the 25k?
PatriciaV
Expert Alumni

What is bonus depreciation

Please post your question to a new thread so you receive an answer that is specific for your situation.
mlynch2687-
New Member

What is bonus depreciation

how does bonus depreciation affect cost basis on rental asset
PatriciaV
Expert Alumni

What is bonus depreciation

Taking bonus depreciation does not affect the cost basis of the associated asset.
Like all depreciation, special (bonus) depreciation will reduce the adjusted basis in an asset. The cost basis remains the same, but the net value of the asset is cost less accumulated depreciation (including special depreciation).
fasteddie577
Level 5

What is bonus depreciation

If the Bonus Depreciation is not taken in the year eligible, is the option lost? Thanks
ttharker
New Member

What is bonus depreciation

Am I allowed to take 100% special depreciation on new carpet I installed in my rental property last year?

Is this deduction recaptured when I see the rental property?

donaldepate
New Member

What is bonus depreciation

I thought we could get 100% bonus depreciation for property with a useful lift of less than 20 years
BillM223
Expert Alumni

What is bonus depreciation

@donaldepate

 

Yes, this is true, unless you opt out of it. See IRS Newsroom.

 

What is your situation that causes you to ask this?

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
kpascard
Returning Member

What is bonus depreciation

I've taken this in a prior years return prepared by a tax accountant. The remaining depreciation schedule is 20 years.  I can't seem to figure out which code to use in Turbo Tax to get the 20 year life.  All I get is 15 years. Which code should be used? 

AnnetteB6
Expert Alumni

What is bonus depreciation

Here is a guide for how to go about entering depreciation into TurboTax in order to duplicate the entries that have been made on previous returns to continue the same depreciation.

  • Start from the Schedule C or Schedule E section of your return until you get to the Assets/Depreciation section.
  • Proceed to the point where you are adding an asset on the page titled Describe This Asset.
  • In order to enter the asset exactly as it has been reported in the past, choose the last option on the list, Intangibles, Other Property, then click Continue.
  • On the next page titled, Tell Us a Little More, select Other asset type, then click Continue.
  • Enter the detailed information about the asset:  description, cost, date purchased or acquired.  Click Continue.
  • Move forward with additional details on the next screen, then click Continue.
  • Select the appropriate Asset Class, then click Continue.
  • Choose the MACRS Convention, then click Continue.
  • Select the Depreciation Method, then click Continue.
  • Answer the question regarding Listed Property, then click Continue.  There may be some additional background questions as well, keep going.
  • You will eventually come to a screen to confirm the Prior Depreciation, enter the data and click Continue.
  • Finally, you will see an Asset Summary screen with the current year depreciation amount listed.  There is also a check-box here to Show Details.  This will open a full description for the asset so you can verify that it matches the previously reported information.  If it does not, you can choose to go Back and re-enter the data that needs to be changed.

@kpascard

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Dynamic AdsDynamic Ads
Privacy Settings
v