Why it matters
Bonus depreciation can make a large equipment purchase more affordable in the year of purchase. The percentage and the eligibility rules have changed several times, so the preparer should confirm the current rule before planning a purchase.
Example
A client buys qualifying equipment and places it in service before year end. The preparer applies the bonus percentage for that tax year to the eligible cost, then depreciates the remaining basis under the regular rules.
Related terms
Questions about Bonus depreciation
Is bonus depreciation the same as Section 179?
No. Section 179 has its own limit and business-income test. Bonus depreciation is an additional first-year deduction that can apply to a different set of property.
Does bonus depreciation apply to used property?
It can, when the property is new to the taxpayer and meets the other requirements. The preparer should check the current rules for the asset and the tax year.