First Year Bonus Depreciation
The bonus depreciation expense for property acquired and placed in service during 2016 has been extended through 2019. The amount of deprecation is 50 percent for cost of property placed in service during the year, in addition to regular deprecation.
Section 179 Depreciation
Under IRC Section 179, now permanent and indexed for inflation, taxpayers other than an estates, or trusts, or certain non-corporate lessors, may elect to deduct as an expense up to $500,000, rather than to depreciate over life expectancy of assets specified by the IRS, with $2,000,000 total assets limitation, and the maximum annual expense is reduced dollar-for-dollar in excess of $2,000,000. Therefore, taxpayers with assets purchase of $2,500,000 cannot use Section 179 anymore. After December 31, 2015, both the $500,000 and $2,000,000 are indexed for annual inflation; Code Sec. 179(b) (6).
Tax Tip: You may purchase any necessary business equipment before January 1, 2017 and deduct 50% of the cost as deprecation expenses, plus regular depreciation based on life expectancy of the qualifying equipment.
Tax Tip: You may purchase any necessary business equipment before January 1, 2017 and use up to $500,000 for the year 2016. The deduction is limited to $25,000 for California on real property.
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