Bonus Depreciation

Small Business Jobs Act of 2010 Extends and Increases the Allowance of Bonus Depreciation

The Small Business Jobs Act signed on September 27, 2010 gives companies a 50 percent bonus deduction on most shorter-life property placed in service from 2008 to 2012. The rate is increased to 100% for certain property placed into service between Sept. 8, 2010 and Dec. 31, 2011.

Bonus depreciation allows taxpayers to take a deduction of 50 percent of all property placed in service with a class life of 20 years or less. The remaining basis for the shorter-life property gets depreciated over the applicable MACRS recovery period. For every $1 million of 5-year property, the deduction will be approximately $600,000 in the first year.

Placed In Service Dates Bonus Depreciation Eligible Bonus Depreciation Percentage Notes
09/10/01 - 05/05/03
Yes
30%
05/06/03 - 12/31/04
Yes
50%
1
01/01/05 - 12/31/07
No
N/A
01/01/08 - 12/31/09
Yes
50%
2,3
01/01/10 - 09/08/10
Yes
50%
3
09/09/10 - 12/31/11
Yes
100%
3
01/01/12 - 12/31/12
Yes
50%

1- Qualified Leasehold Improvements and Qualified Restaurant Property eligible for bonus depreciation if placed in service 10/23/04 - 12/31/04
2 - Qualified Restaurant Property eligible for bonus depreciation if placed in service 1/1/08 - 12/31/08
3 - Qualified Leasehold Improvements eligible for bonus depreciation

Bonus Depreciation Qualifications:

To qualify for bonus depreciation in the first year, several criteria must be met:

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