Tax Plan Analysis: for Business – 100% Cost Recovery
Temporary 100% Cost Recovery for Certain Qualifying Business Property
Prior to the new Tax Cuts law, taxpayers were allowed additional bonus depreciation of 50% of the property’s adjusted basis if it was new to the taxpayer and had its original use by the taxpayer, which means wasn’t purchased as a used item.
The new Tax Cuts Law, allows for 100% bonus depreciation for the adjusted basis of the property if placed in service after September 27, 2017 and before January 1, 2024. There is a phase down of the bonus depreciation starting in 2023 to 80%; in 2024, the bonus depreciation will be 60%; in 2025, in drops to 40%; and in 2026, it drops to 20%.
Sandy’s elaboration: A big winner will be qualified new sports utility vehicles (SUV) and vans used in a business. Normally, these can only be written off up to $25,000 of the business use. However, using 100% bonus depreciation allows a complete write off for the business use of a new SUV or van to the extent used in business. This makes an SUV or van just as good as a new qualified truck, which is also 100% deductible. Again, this is just another benefit for having a business.
All content on this site is the property of Taxbot, LLC and/or Sandy Botkin. You may link to any article that you wish, or share via the social media buttons below. However, please do not copy articles or images for use on other sites without express written permission.