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Bonus Depreciation | News & Views - YouTube
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so belissa
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want to get you to answer some questions
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to inform our audience about bonus
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depreciation tax cuts and Jobs Act of
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late 2017 gave us bonus depreciation at
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a hundred percent so tell us where we
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are Melissa for 2019 for 2019 a taxpayer
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can deduct up to a hundred percent of
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qualifying purchases okay for how long
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is that 100 percent bonus depreciation
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and effect and what is scheduled to
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happen when one hundred percent no
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longer exists taxpayers actually have
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until 12 31 2022 to claim a hundred
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percent bonus depreciation for each year
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after that there's a phase down of 20%
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per year until it is completely
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eliminated in 2012 31 2026 is it
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possible the changes could be made to
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this schedule of course anything is
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possible it would take a change in the
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current tax law though for that to
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happen what property purchases qualify
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for bonus depreciation and what is new
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about qualification depreciable business
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assets with a cost recovery of twenty
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years or less qualify for bonus
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depreciation not only did the tax cuts
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and job act increase bonus depreciation
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deduction from 50 percent to 100 percent
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they actually expanded the qualifying
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property definition to include use
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property prior to that you could only
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deduct take the deduction on new
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property so this this is a greatly
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expanded the definition and the
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availability of the deduction to
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taxpayers another thing to know is
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vehicles would also qualify but vehicles
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they that are subject to the auto luxury
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limits those may not get the full
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benefit of the hundred percent but
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eventually will be depreciated over the
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course of their period under the auto
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luxury limit rules what are some
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purchases that would qualify but
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specific rules disqualify them
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some purchases that would qualify if
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you're purchasing equipment let's say
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from a related party related party
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purchases don't qualify for bonus
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depreciation also if you previously
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owned the property you can't take the
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bonus depreciation on previously owned
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property and any asset that you received
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from a gift or inheritance bonus
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depreciation isn't available and then
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just another note because we do see this
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in practice foreign assets are used
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predominantly outside of the US do not
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qualify for bonus depreciation for
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property acquired late in the year what
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do businesses need to know about what's
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required to qualify them for bonus
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depreciation whether or not an asset is
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acquired late in the year really doesn't
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matter it matters when you place the
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asset and service if you have that asset
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ready and available to use and place it
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in service in your trade or business you
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would be able to claim that depreciation
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on that even if you bought it on 1231
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what if property that otherwise would
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qualify that hasn't been paid for
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how does bonus depreciation work in that
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case asset acquisitions financed by a
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loan or vendor payable would be would be
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qualified for bonus depreciation as soon
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as the title transfers to the buyer and
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the property is placed in service by the
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buyer of that asset and that's the same
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for a cash basis or accrual-based basis
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taxpayer the tax cuts and Jobs Act
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eliminated like-kind exchange treatment
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so called 1031 exchanges for non real
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estate assets what are the implications
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of that in relation to bonus
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depreciation like an exchange has
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allowed the taxpayer to defer any gain
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on an asset that was traded in and now
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that that's illuminated a taxpayer may
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have a gain to recognize due to having
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to recognize a fair market value of that
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of that equipment that was traded in but
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on the flip side the acquisition cost of
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the property is going to include not
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only your cash that you pay but also
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the trade-in value that you're
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recognizing an income and if you can
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take bonus depreciation on the asset
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you're acquiring you'd be able to
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completely eliminate that game via bonus
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depreciation by deducting that by
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deducting that new asset that you just
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acquired what about property constructed
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by or for the taxpayer
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how is bonus depreciation handled in
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those situations really comes down to
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the same thing that we've discussed is
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the placing service when is it ret
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available and ready to be used in place
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and service in the business that's when
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you can claim bonus depreciation and
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what is Kentucky's treatment of bonus
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depreciation
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unfortunately Kentucky has decoupled
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from bonus depreciation so you can't
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claim bonus for Kentucky you would just
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appreciate any assets for Kentucky
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purposes over the makers cost recovery
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system
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you
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