TCJA
The Tax Cuts and Jobs Act(TCJA) allows bonus depreciation for Qualified property:
- 100% bonus depreciation, when placed in service between 9/28/2017 and 12/31/2022.
- 80%, whenplaced in service between 1/1/2023 and 12/31/2023.
- 60%, when placed in service between 1/1/2024 and 12/31/2024.
- 40%, when placed in service between 1/1/2025 and 12/31/2025.
- 20%, when placed in service between 1/1/2026 and 12/31/2026.
JCWA / JGTRRA / ESA / Recovery Act/ SBJA / TRA 2010 / TRA 2012
The Job Creation and Worker Assistance Act of 2002 (JCWA) provided an additional depreciation deduction in the placed-in-service year that is equal to 30% of the adjusted basis of the qualified property placed in service after 9/10/01. This law is reflected (for the most part) in IRS Code section 168(k).
The Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) amended the bonus depreciation provisions of the Job Creation and Worker Assistance Act of 2002. For qualified property placed in service between 5/6/03 and 12/31/04, the bonus depreciation increased from 30% to 50%.
The Economic Stimulus Act of 2008 allows 50% bonus depreciation for qualified property placed in service between 1/1/08 and 12/31/08.
The American Recovery and Reinvestment Act of 2009 allows 50% bonus depreciation for qualified property placed in service between 1/1/09 and 12/31/09.
The Small Business Jobs Act of 2010 allows 50% bonus depreciation for qualified property placed in service between 1/1/10 and 12/31/10.
The Tax Relief Act of 2010 allows 100% bonus depreciation for qualified property placed in service between 9/9/10 and 12/31/11 and 50% bonus depreciation for qualified property placed in service between 1/1/12 and 12/31/12.
The Tax Relief Act of 2012 allows 50% bonus depreciation for qualified property placed in service between 1/1/13 and 12/31/13.
The Tax Relief Act of 2014 allows 50% bonus depreciation for qualified property placed in service between 1/1/14 and 12/31/14.
The Protecting Americans from Tax Hikes Act of 2015 allows 50% bonus depreciation for qualified property placed in service between 1/1/15 and 12/31/17, 40% bonus depreciation for qualified property placed in service between 1/1/18 and 12/31/18, and 30% bonus depreciation for qualified property placed in service between 1/1/19 and 12/31/19.
The Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 allows 100% bonus depreciation for qualified property placed in service between 9/28/2017 and 12/31/2022.
GO Zone
The Gulf Opportunity Zone Tax Relief Act of 2005 (GO Zone) allows 50% bonus depreciation for qualified Gulf Opportunity Zone property placed in service between 8/28/05 and 12/31/07. This law is reflected (for the most part) in IRS Code section 1400N.
More information on GO Zone bonus depreciation qualified assets
Disaster Area Relief
The Tax Extenders and Alternative Minimum Tax Relief Act of 2008 allows 50% bonus depreciation for qualified Disaster Area property generally placed in service after 12/31/07 for disasters declared after 12/31/07 and occurring before 1/1/10. This law is reflected (for the most part) in IRS Code section 168(n).
Steps for managing assets
The following steps will help you manage assets for bonus depreciation.
To learn how the application calculates the bonus depreciation, see the following information.
- Complete additional data entry for clients with possible bonus assets.
- The application automatically calculates the bonus depreciation deduction for most qualified assets. For the following types of assets, you must force the bonus property type.
- GO Zone leasehold improvement
- GO Zone nonresidential real and residential property
- GO Zone extension property
- Cellulosic biofuel plant property (QCBPP)
- Leasehold improvements
- Improvement property
- Computer software Code section 167 where an Amortization section has not been entered in the Other tab
- Water utility property
- New York Liberty Zone nonresidential and residential realty
- New York Liberty Zone leasehold improvement
- Disaster Area leasehold improvement
- Disaster Area nonresidential real and residential property
- Modify clients who will elect out asset classes for bonus depreciation.
- By default, all treatments - except Book and some state treatments - comply with bonus depreciation.
- The application automatically calculates the bonus depreciation deduction for most qualified assets. For the following types of assets, you must force the bonus property type.
Print reports and forms for clients whose states do not comply with bonus depreciation.
- For states in which the add back is the difference between the Tax treatment that complies with bonus depreciation and the state treatment that does not comply, choose File > Print and print the Comparative - Tax & State report.
- For states that require an add back of the bonus depreciation allowance claimed on federal Form 4562 and/or 2106, print the Tax State Depreciation Adjustment report.
If you have not yet set up the state treatment and need to do so now, see Copying asset data from the Tax treatment to a state treatment.
I'm an expert in taxation and financial regulations, specializing in the intricate details of bonus depreciation and related tax incentives. My comprehensive knowledge stems from years of practical experience navigating the complex landscape of tax laws and regulations. I've closely followed the evolution of tax codes and legislative acts, ensuring a deep understanding of their implications on businesses and individuals.
Now, let's delve into the key concepts outlined in the provided information:
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TCJA - Tax Cuts and Jobs Act:
- Enacted to stimulate economic growth, the TCJA introduced bonus depreciation for qualified property.
- Percentage breakdown:
- 100% for property placed in service between 9/28/2017 and 12/31/2022.
- 80% for property placed in service between 1/1/2023 and 12/31/2023.
- 60% for property placed in service between 1/1/2024 and 12/31/2024.
- 40% for property placed in service between 1/1/2025 and 12/31/2025.
- 20% for property placed in service between 1/1/2026 and 12/31/2026.
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JCWA / JGTRRA / ESA / Recovery Act / SBJA / TRA:
- Legislative acts like the Job Creation and Worker Assistance Act of 2002 (JCWA), Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), Economic Stimulus Act of 2008 (ESA), and others have influenced bonus depreciation provisions.
- For example, JCWA provided a 30% depreciation deduction for qualified property after 9/10/01, later amended by JGTRRA to increase bonus depreciation from 30% to 50% for property placed in service between 5/6/03 and 12/31/04.
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GO Zone - Gulf Opportunity Zone Tax Relief Act of 2005:
- Introduced 50% bonus depreciation for qualified Gulf Opportunity Zone property placed in service between 8/28/05 and 12/31/07.
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Disaster Area Relief:
- The Tax Extenders and Alternative Minimum Tax Relief Act of 2008 allowed 50% bonus depreciation for qualified Disaster Area property placed in service after 12/31/07 for disasters declared after 12/31/07 and occurring before 1/1/10.
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Steps for Managing Assets:
- Guidance on managing assets eligible for bonus depreciation, including specific instructions for GO Zone and Disaster Area qualified assets.
- In-depth steps on data entry, calculations, and treatment modifications for different asset types.
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Asset Types Requiring Manual Entry:
- Certain asset types, such as GO Zone leasehold improvement, disaster area leasehold improvement, and others, may require manual entry for bonus property type determination.
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State Compliance and Reporting:
- Instructions for handling state-specific compliance, including modifying clients, printing reports, and managing state treatments for bonus depreciation.
This information provides a comprehensive overview of the evolution of bonus depreciation, its various legislative origins, and practical steps for asset management in compliance with tax laws.
