Bonus Depreciation: Making Informed Decisions About Upcoming Capital Investments

Outline

1. Background: Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
   1. Providing 100% bonus depreciation for qualifying property:
      1. That was placed in service between Sept. 8, 2010 and Dec. 31, 2011
      2. Whose original use commenced with the taxpayer after Sept. 8, 2010
      3. That was subject to a binding written contract commencing after Dec. 31, 2007
2. IRS Rev. Proc. 2011-26
   1. Amplified on legislation to say that qualifying costs must be paid or incurred after Sept. 8, 2010
   2. Important for self-constructed assets such as leasehold improvements
   3. Limited exception election for larger, self-constructed projects
   4. Step-down election for 50% bonus depreciation, in lieu of 100% bonus depreciation, for qualifying property placed in service in a tax year that includes Sept. 9, 2010
3. Related compliance and planning issues to keep in mind
   1. Certain types of property that aren’t presently subject to bonus depreciation will qualify, if they also meet the definition of “qualified leasehold improvement property”
   2. Remedies for fiscal-year taxpayers filing returns prior to retroactive extension of bonus depreciation
   3. Sect. 3.02(2)(b) safe harbor
   4. Safe harbor election for Sect. 280(F) property
   5. Other issues
4. State matches of or decouplings from federal 100% bonus depreciation
   1. States that completely track bonus depreciation
   2. States that don’t recognize it
   3. States that gradually allow subtractions to recover for addback

Benefits

The panel will analyze these and other key bonus depreciation topics:

• Qualifying rules: The most relevant guidance in Rev. Proc. 2011-26.
• Continuing challenges: What you need to know about the binding contract exceptions, possibilities for bonus depreciation on tenant leasehold improvements and other improvements to existing property, like-kind exchanges, Sect. 280 limitations, etc.
• State matches: Which states where your company files income tax returns match or part from this latest federal bonus depreciation?
• Take bonus depreciation or not: In which situations might a business taxpayer not welcome the 100% bonus depreciation?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.