The conference version of the stimulus monstrosity extends the 50% bonus depreciation through 2009; it had expired at the end of 2008. It also gives corporations another chance to accelerate AMT and research credits in lieu of bonus depreciation (Sec. 1201 of the bill).
Under 50% bonus depreciation, a taxpayer gets to deduct half of the cost of an asset purchase in the year of purchase; the remaining 50% would be depreciated under the usual depreciation rules. For an asset with a five-year life, that means the taxpayer recovers 60% of the asset cost in the first year in computing taxable income (50% + 1/5 x 50%).
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Can bonus depreciation bring my net income to zero?
Creig, yes it can. There is no taxable income limit on bonus depreciation (unlike Sec. 179).
I thought there was a limit of $800,000 limit on the onus depreciation. No?
Charlie, the $800,000 limit is the amount of assets you can place in service before the Sec. 179 deduction starts to go away. There is no such bonus depreciation limit.
Joe: Please comment on the applicability of the bonus depreciation to assets such as heating/ventilation/air conditioning/lighting, and so forth as retrofitted to existing buildings. Thank you!