To report a bonus depreciation, the election must be made by filing a statement with IRS Form 4562, “Depreciation and Amortization,” by the due date — including extensions — of the Federal tax return for the taxable year in which the qualified property is placed in service by the taxpayer. Can bonus depreciation create a loss?
Why is bonus depreciation important?
Bonus depreciation is an important tax-saving tool for businesses, allowing them to take an immediate deduction on the cost of eligible business property in the first year. This lowers a company’s tax liability because it reduces its taxable income. What qualifies for bonus depreciation?
What are the new tax rules on bonus depreciation?
The Tax Cuts and Jobs Act, passed in 2017, made major changes to the rules on bonus depreciation. Most significantly, it doubled the bonus depreciation deduction for qualified property, as defined by the IRS, from 50% to 100%. The 2017 law also extended the bonus to cover used property under certain conditions.
