In an effort to offer more corporate tax incentives, the Tax Cuts and Jobs Act expanded the bonus depreciation deduction to allow full expensing (100 percent bonus) for “qualified property” placed in service after Sept. 27, 2017, and before Jan. 1, 2023.
Beginning Jan. 1, 2018, the bonus depreciation deduction for qualified property placed in service is then phased out over four years:
Taxpayers may elect 50-percent expensing in lieu of 100 percent for qualified property placed in service during the first tax year ending after Sept. 27, 2017. The amendments apply to property that is both acquired and placed into service after Sept. 27, 2017.
In addition, under prior law, businesses could only use bonus depreciation for new property. The Act removes the requirement that the original use of the qualified property must commence with the taxpayer, thus allowing bonus depreciation on the purchase of used property.
Doeren Mayhew’s tax advisors encourage businesses to consider the following when applying this deduction:
To find out how this tax incentive can be applied appropriately for your business, please contact Doeren Mayhew’s tax advisors today.
Want to reach the author? Email Michael Weller or contact him at 248.244.3039. Michael Weller, JD is a Senior Tax Manager with Doeren Mayhew.
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