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Bonus Depreciation

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Definition:

Bonus depreciation is a method of accelerated depreciation which allows a business to make an additional deduction of 50% of the cost of qualifying property in the year in which it is put into service. The IRS says:

This special "bonus depreciation" allowance is available to all businesses and applies to most types of tangible personal property and computer software acquired and placed in service in [a particular year]. It allows taxpayers to deduct 50 percent of the cost of qualifying property in addition to the regular depreciation allowance that is normally available.

Use IRS Form 4562 to record bonus depreciation and other types of depreciation and amortization.

Annual maximum bonus depreciation
The maximum bonus depreciation allowance for 2012 and 2013 is 50% of qualified assets purchased and put into service in the tax year. Bonus depreciation is not available for used equipment. It can be used to create a tax loss.

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