
A government incentive scheme called bonus depreciation enables a higher depreciation deduction in the first year to help newly established enterprises. To be eligible for this incentive, a company must adhere to a number of conditions, though. Additional first-year depreciation is another name for it. https://www.expertcostseg.com/bonus-depreciation/.
Bonus Depreciation is a tool provided by law to accelerate depreciation of short-life assets (20 years life and shorter) and taking that available depreciation 100% in the first year of study use. What kind of study? A Cost Segregation study! Cost segregation is a conservative, IRS-defined approach for depreciating commercial properties thereby reducing your federal incomes taxes, and is the most accurate way to depreciate improved commercial property acquired or built after 1986.
This accelerated depreciation can significantly reduce your tax liability, leading to increased cash flow for your business.
Bonus Depreciation can be utilized at the time of construction or purchase of an asset, and for assets owned for several years. U.S. tax law allows an owner to recover previously under-reported depreciation using a “Look-Back” study, and deduct the “catch-up” depreciation on the current year’s return without filing amended returns for prior years.
This requires the filing of a Form 3115 (Change in Accounting Method) and a 481(a) adjustment.
How to get started with Bonus Depreciation
Interested in finding out how much you could be saving with bonus depreciation? First, plug a few simple numbers about your property into our savings calculator found on the sidebar of this page.