Sect. 2022: Additional first-year depreciation for 50% of the basis of certain qualified property

Generally, businesses are allowed to recover the cost of capital expenditures over time through depreciation expense. IRC Section 168(k) allows for additional first-year depreciation, for 50% of the basis, of certain qualified property placed in service after December 31, 2009. The new law extends the additional first-year depreciation deduction to qualified property acquired and placed in service during 2010.

Section 401(a), Extension of Bonus Depreciation, of the Tax Relief Act of 2010, extends the additional first-year depreciation deduction to include tax years 2011 and 2012.

A taxpayer must use Form 4562, Depreciation and Amortization (PDF), to report depreciation on a tax return. The Instructions for Form 4562 contain information on how to fill out, and when to file the Form 4562. The Form 4562 and instructions (PDF) will be updated in the near future for returns filed in tax year 2010.

More information on depreciation can be found on the following links:

About Emil Estafanous, CPA
Certified Public Accountant (CPA) Tax Professional committed in representing taxpayers and resolving their tax problems.

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