Last Call for Bonus Depreciation

Let the year-end tax planning begin. Whether a facility upgrade is being imposed by your manufacturer or you just want a fresh look for your dealership, start planning now instead of later. Let me give you an incentive to expedite the process… The bonus depreciation that we have all become accustomed to using is set to expire December 31, 2013, and currently there is no talk in Congress to extend it!

Bonus depreciation is an incentive to accelerate the expensing of your capital expenditures. It has been around since September 11, 2001 and is set to expire December 31, 2013. The current incentive allows you to expense 50% of the cost of your eligible capital expenditures.

To take maximum advantage of the bonus depreciation, the facility involved must meet certain criteria to be considered to be eligible. One way to take advantage of the current and former depreciation incentives is to undertake a cost segregation study (CSS) and identify the eligible portions of the facility.

Also, CSS performed on real estate acquired or constructed in previous years can identify those costs that might be eligible for shorter-class lives, and therefore result in the utilization of the former bonus depreciation incentives. This adjustment to correct depreciation allowed versus the depreciation taken on a prior-year tax return can be deducted on your current-year tax return.

Keep in mind the following incentives and dates:

  • 30% bonus depreciation from September 11, 2001 to May 5, 2003
  • 50% bonus depreciation from May 6, 2003 to December 31, 2004
  • 50% bonus depreciation from January 1, 2008 to September 8, 2010
  • 100% bonus depreciation from September 9, 2010 to December 31, 2011
  • 50% bonus depreciation from January 1, 2012 to December 31, 2013

It is never too early to start year-end tax planning. For more information, please contact Steven A. Barber.

© 2013 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

This advice is not intended or written to be used for, and it cannot be used for, the purpose of avoiding any federal tax penalties that may be imposed, or for promoting, marketing or recommending to another person, any tax related matter.

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