Here are the important rules to remember:
* Section 179 deduction is available on all new and used machinery (including single purpose ag structures such as a hog confinement facility),
* Bonus depreciation is only available on NEW purchases with a life of 20 years or less (includes almost all new ag buildings),
* Section 179 is taken first, bonus depreciation second, and then depreciation third,
* Section 179 is based upon when your taxable year starts and bonus depreciation is based upon when the asset is placed in service (if calendar year, then no difference).
Therefore, here are the general rules that you want to follow:
1. First, take Section 179 deduction on all of your used equipment.
2. Second, take full Section 179 deduction on all assets with the longest life. For example, if you have $100,000 of ten year property and $600,000 of 7 year property, take Section 179 on $100,000 of 10 year and $400,000 of 7 year property.
3. Third, take your bonus depreciation on all of your NEW assets that qualify.
4. Fourth, take normal depreciation on the remaining value.
This is complicated by the new tax bill, which will allow, in its current form, 100% bonus depreciation for qualifying assets placed in service starting September 9 of this year.
If you are hoping to generate a net operating loss to get a carryback refund, you will want to take the bonus depreciation rather than Section 179. You can generate a loss with bonus depreciation, but normally not with Section 179.