The property that qualifies has stayed consistent since bonus began in 2001. The allowance is only available for new property which is:
Property which must be depreciated using the MACRS alternative depreciation system (ADS) does not qualify. If ADS is elected, however, the property may qualify. A listed property, such as a passenger automobile, which is used 50 percent or less for business, does not qualify. If business use of such a property falls to 50 percent or less, bonus depreciation and any amount expensed under Code Sec. must be recaptured. Property amortized under Code Sec. 197 does not qualify.
Bonus depreciation is applied in each year based on the Asset Category and Sub-category you have selected for each asset.
You can elect, for any class of property, not to deduct any special allowances for all property in such class placed in service during the tax year. To make an election, you must attach a statement to your tax return indicating what election you are making and the class of property for which you are making the election.
Assuming that the election out of bonus depreciation is not made, the first-year depreciation cap for passenger automobiles that qualify for bonus depreciation is increased by $8,000 for vehicles placed in service in 2008, 2009, 2010, 2011 and 2012.
For vehicles acquired after September 10, 2001, and placed in service before January 1, 2005 the increase was $4,600 if the 30-percent rate applied and by $7,650 if the 50-percent rate applied. If a taxpayer elects out of the 50-percent rate in favor of the 30-percent rate, the applicable increase is $7,650.
Prior to 2007, when applicable, the depreciation bump-up amounts are tripled ($13,800 if 30% applied and $22,950 if 50% applied) for electric vehicles (after 2006 electric vehicles are treated as regular passenger vehicles).
The bump-up amounts are not reduced in a short tax year. The Code Sec. 179 allowance may be applied against the bump-up amount.
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