Pre-ACRS Bonus Depreciation

For qualifying assets, you may be entitled to a 20% first-year depreciation bonus on up to $10,000 of eligible property placed in service during a taxable year prior to 1981.

You only use this option for assets using a depreciation method other than an ACRS or MACRS method. In addition, the asset must be personal property, it must have an estimated life of at least 6 years, and it must use a straight-line, declining-balance, sum-of-the-years' digits, own calculation, or custom calculation depreciation method.

The application calculates the bonus amount based on the preliminary depreciable basis of the asset without subtracting the salvage value. (The preliminary depreciable basis here is the acquired value times the business-use percentage.) If you take the bonus, the system subtracts it from the preliminary depreciable basis before making any further calculations. On reports, however, the system includes the bonus amount in accumulated depreciation, rather than showing it as subtracted from the depreciable basis.

The system does not let you enter more than $2,000 or 20% of the depreciable basis, whichever is less, as the bonus amount for any one asset. It does not keep track of your total bonus taken as you enter asset information. You must limit the first-year bonus depreciation taken according to IRS rules.