2009 Bonus Depreciation Deadlines

As the year of 2009 comes to an end, we would like to remind you that so too do many opportunities to take advantage of extended bonus depreciation allowances. Recall that under the 2008 Economic Stimulus Act, allowable bonus depreciation was increased to the amount of 50%. This allowance was again extended through the end of this year (2009) by the passage of the American Recovery and Reinvestment Act (ARRA). In case you have yet to take advantage of this but would still like to, below is the information you need to know from the ARRA of 2009.  Still, the ARRA of 2009 was not the only notable legislation related to bonus depreciation passed this year.  So, if you are asking what other amendments or new stipulations were passed, that you still have time to take advantage of, we have them listed right here below with a link to more information.

Bonus Depreciation: source-modernmachinerycompany.com

Bonus Depreciation: source-modernmachinerycompany.com

American Recovery and Reinvestment Act of 2009

1  Extends until 12/31/2009, the 50% Bonus Depreciation allowed under the 2008 Economic Stimulus Act

2. The Placed In Service data is extended to 12/31/2010 for property with a 10 year or longer recovery period, for transportation property (personal, used to transport people or goods) and for certain aircraft and,

  • Is subject to Uniform Capitalization Rules
  • Has a production period exceeding 1 year and a cost exceeding $1 million dollars

3. The Luxury Auto cap on new vehicles placed in service in 2009. The regular first year cap of $2,960 for automobiles is raised to $10,960, if bonus depreciation is elected. $11,160 for light trucks and vans.

4. For a Section 179 Expense Deduction there is a maximum deduction amount of $250,000 and a maximum Investment Limit of $800,000.

5. Refundable AMT and R&D credits in lieu of Bonus Depreciation


Emergency Stabilization Act of 2008

Qualified Disaster Assistance Property (Provision of the Emergency Economic Stabilization Act of 2008)

The Recovery Rebates and Economic Stimulus for the American People Act of 2008

Kansas Disaster  Area (Qualified Recovery Assistance Property) – Placed in service date of 12/31/2009 Only for Section 1250 Property

The time to take advantage of the increased allowable bonus depreciation is now.   So, if you have any questions, or would like more information on bonus depreciation, please feel free to ask us in the comments of questions section. Also, check out this post on bonus depreciation in Wichita to see how it is designed to help industries rebound. We certainly hope it does.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

Bonus Depreciation In Wichita, Kansas: Help for the Aviation Sector

Last Thursday, Congressman Tiahrt proposed a bill aimed at using bonus depreciation to help stimulate a suffering economy in Kansas.  The bill would further extend for two years, the increased allowable bonus depreciation amounts under the American Recovery and Reinvestment Act of 2009. This would be aimed at helping an ailing economy and aviation industry in the state.

Much of Wichita’s economic stability had been tied to job creation and sales in the growing aviation sector.  Less than two years ago, there were over 9,000 unfilled jobs in demand and sales were at an all-time high.   Recently however, sales have plummeted, and at least 13,000 jobs have been slashed in the last year alone.  Some people fear that the trend may be so negative, that Wichita may begin to resemble the situation Detroit is in.
wichita-aviation

Most however, argue that the circumstance of Wichita is not that of  Detroit’s and feel there is hope for a rebound.  Still, both Tiahrt and the General Aviation Manufacturers Association strongly urge proactive steps, and feel that extended bonus depreciation would help.  Also, under Tiahrt’s bill titled the General Aviation Jobs Act, the recovery period for new non-commercial aircraft purchased would be reduced to 3 years from 5, allowing for a more accelerated recovery of taxes.  This would in turn alleviate some of the financial burden of making such a purchase.  Hopes are that as a result, more planes will be ordered and purchased leading to job creation.

For more information regarding the general concepts of bonus depreciation, feel free to check out our other bonus depreciation posts here.  Also, we would like to hear your input on the subject.  Do you think that extended bonus depreciation would serve as a legitimate incentive?  Have prior increases in bonus depreciation helped you business in the past?  Are there any other forms of tax legislation that you feel would help the economy?  Let us know, in the comments.  Also, if there are any questions you have, feel free to ask below or on the questions page.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

photo credit:  kansassampler.org

IFRS & Fixed Asset Depreciation: An Overview of the Requirements

IAS 16:  Property, Plant & Equipment:

 

One of the hottest topics in the US accounting world is the transition to IFRS, which stands for International Financial Reporting Standards.  IFRS and IAS, International Accounting Standards, provide the detail behind the conceptual framework of the International Accounting Standards Board (IASB).  To clarify, the IASB is the international version of the U.S. FASB.  In a world where everything continues to grow into a globalized state, many feel that having uniformed accounting practices is needed for fair and reliable business reporting.  Moreover, having uniformity would make for easier comparisons among global competitors, and easier reporting for multinational corporations with global subsidiaries.  Still, despite being seen as inevitable, there is both much resistance to the change and a great deal of confusion as to what is entailed.

IFRSHere at DepreciationGuru, we will attempt to help clarify the issues and make the transitions easier.  Thus, we will address several issues through a number of posts.

This first post will dive into International Accounting Standards (IAS) 16, which details regulations for Property, Plant, and Equipment.  Listed below is a brief outline of IAS 16 as put together by DepreciationGuru.  Should you want to obtain full text copy of IAS 16, please click here.

IAS 16:  Property, Plant & Equipment

 

  • The IASB’s Framework contains five (5) elements, which need to be satisfied before IAS 16 applies. Once satisfied, the following IAS 16 elements must be met:
  • Basic required information
    • Cost of the asset or Basis
    • Estimated useful life of the asset to the business
    • Estimated residual selling value (salvage or scrap value)
    • What is the pattern of benefit or usefulness derived from the asset
  • Recognition of Property, Plant and Equipment
    • An asset can only be recognized if:
      1. It is probable that future economic benefits will flow to the entity
      2. The cost of the asset can be measured (Measurement) reliably
      3. Measurement stages:
      4. Initial Measurement
      5. Subsequent Expenditures
      6. Measurement subsequent to initial measurement
  • Componentization
    • When an asset is made up of multiple components and these components have different useful lives. The asset should be broken down into the separate components and each component should be depreciated as a separate asset
  • Depreciation
    • The depreciation or expensing of an asset should allocate the expense the cost of the asset over its useful life
    • The depreciation method used should reflect how the economic benefits of the asset are used by the entity
  • Derecognition
    • The carrying amount of an assets is derecognized upon:
      1. The disposal of the asset; or
      2. When no future economic benefits will be recognized from the assets use or disposal

There are other IAS Statements that may also apply to assets covered by IAS 16, Property, Plant and Equipment.  These will be discussed in future posts.  Still, if there is anything that you would like to know on this issue, or any related issues, please feel free to ask.  Also, considering the conflicting view points on this topic, we would love to know whether you’re for or against the conversion and transition to IFRS.

Questions? Comments? Let us know in the comments section below.

Depre123-Main w Try Free SF

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

(Photo Source:  Mediafine.com)

Gulf Opportunity (GO) Zone Depreciation

This next segment on bonus depreciation will address bonus depreciation in the Gulf Opportunity Zone, otherwise known as the GO Zone.  A few years ago in 2005, Hurricanes Katrina, Rita and Wilma ripped through the United States Gulf Coast causing a natural catastrophe.  Overall, the hurricane season of 2005 was one of the most severe and most financially damaging in nation’s history with estimated costs of well over $100 billion perhaps exceeding $200 billion.  As a result of this, the government took proactive measures to aid the area in its’ economic and physical recovery by creating favorable investment opportunities in what is known as the deemed the GO Zone.  Below is everything you need to know including helpful links and geographic information.

The IRS gives a detailed explanation of the GO Zone is Publication (the PDF is viewable here).  In it you can find a listing of all applicable counties that qualify as a GO Zone for their respective storm.  Overall, counties from the five states of Alabama, Florida, Louisiana, Mississippi, and Texas are included.  For a visual map, click here.

Eligibility and Essential Info on Bonus Depreciation for Property in the Go Zone:

go-zone

Gulf Opportunity Zone:

1.  Placed in service on 08/28/05 through 12/31/07.  Placed in service deadline is 12/31/08 for real property, unless asset is in an area where 60% + of housing was destroyed.  Then the service deadline is 12/31/10.

2.  Both new residential and nonresidential property qualify.

3.  Qualified property is MACRS GDS of 20 years or less, off-the-shelf software, MACRS 25 year Water Utility Property and qualified leasehold improvements.

4.  50% Bonus Depreciation

5.  Sect 179 deduction increased by $100,000 and Investment Limit increased by $600,000 for property placed in service on or before 12/31/07.

6  .Qualified property must meet all:

  • Code Section 168(k)(2)(A)(i), MACRS 20 year or less property, three (3) year computer software, water utility property, qualified leasehold improvement property, nonresidential or residential real (section 1250) property
  • 80% or more of the use of the property must be in the GO Zone area and is in the active conduct of the taxpayer’s trade or business in GO Zone area.
  • Original use of the property must commence on or after 08/28/05.
  • Property must be acquired by taxpayer on or after 08/28/05 and no written binding contract for the acquisition was in affect before 08/28/05.

Section 1250 Property must be placed in service by taxpayer on or before 12/31/07.  12/31/08 or 12/31/10 in the case of residential or nonresidential (section 1250) property.

For any additional information, please do not hesitate to ask us either on the questions page or under this post in the comments.  We understand that the nature of this can be confusing.  Also, we would like to know whether or not this particular bonus depreciation has had an effect or not.   If you have made any investments in the region specifically resulting from the additional depreciation allowances, we would love to hear about it.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.

New York Liberty Zone Depreciation

Continuing with the segment on Bonus Depreciation, this post will address depreciation rules for property in the New York Liberty Zone.  A little over eight years ago, the atrocious events of September 11 left our country devastated physically, emotionally, and economically.  With regards to the economic turmoil that ensued, particularly in the area of the World Trade Center, special provisions were made for property put into service in what is known as the New York Liberty Zone.  Below is what you need to know including the geographic boundaries of the Liberty Zone.

As stated on the IRS Supplement to Publication 946, the area defined as the Liberty Zone is property “located on or south of Canal Street, East Broadway (east of its intersection with Canal Street), or Grand Street (east of its intersection with East Broadway) in the Borough of Manhattan in the City of New York, New York.”  For a detailed map, click here

Eligibility and Essential Info on Bonus Depreciation for Property in the Liberty Zone:


New York Liberty Zone Depreciation

1.  Qualified property must be:

  • Depreciated under MACRS with a recovery period of 20 years or less.
  • Off-the-shelf computer software (SL w/ FM at 3 years) Sect 167(f)(1)(B)
  • Water Utility property
  • Section 1250 property that rehabilitates damaged property or replaces property destroyed or condemned as a result of 9/11

2.  Additional Requirements:

  • 80% or more of the use of the property must be in the New York Liberty Zone.
  • Property must be used in the active conduct of a trade or business by the taxpayer in the Liberty Zone.
  • Original use of the property must commence on or after 9/11/01 in the Liberty Zone
  • Property must be acquired by purchase as defined in Code Section 179(d)(2) by taxpayer on or 9/11/01
  • Property must be placed in service by taxpayer on or before 12/31/06 or 12/31/09 for section 1250 property

3.  Does not qualify for Bonus Depreciation under Sect 168(k), but does qualify for a 30% Bonus Depreciation under Sect 1400L(b)(1)(A). Property that qualified under 168(k) is specifically excluded.

4.  ect 1400L(b)(1)(A) is more liberal and will cover property not eligible under Sect 168(k).  Property placed in service after 12/31/04 and before 1/1/07 may also qualify for New York Liberty Zone.

5.  Liberty Zone Bonus Depreciation is available for residential and nonresidential real property that replaces certain destroyed or condemned real property and for used property as long as the taxpayer was the first person to use the property in the New York Liberty Zone.

6.  Sect 168(k) eligible property is also eligible under New York Liberty Zone rules.

7.  Sect 179 Deduction is increased by $35,000.

8.  Mandatory MACRS ADS property disqualified

9.  Leasehold Improvement property is depreciated over 5 years with straight line and the half year convention

10  No AMT adjustment is required.  I.e., same method, convention & Rec Pd as regular tax.

We understand that the concepts around Bonus Depreciation for property in the New York Liberty Zone may be rather confusing.  Therefore, if you have any questions, or would like any further information, please state so in the comments section, or under the questions page.  Also, you may find it interesting to read Governer Pataki’s letter to bussiness owners concerning this issue here.

More information about Bassets eDepreciation software can be found at Bassets.net. While there you can set up a demonstration, download a free evaluation copy and get a personalized pricing estimate.