7912 / What temporary bonus depreciation rules may apply in the context of a cattle program?
Editor’s Note: The 2017 tax reform legislation generally allowed 100 percent bonus depreciation for business owners with respect to property that is placed in service after September 27, 2017 and before January 1, 2023. Further, under the 2017 tax reform legislation, the requirement that the property be originally placed into service by the taxpayer is removed (i.e., tax reform permits accelerated expensing of used assets, see Q ).1
Temporary Bonus Depreciation Rules
The rules governing bonus depreciation have been amended several times. Under the 2017 tax reform legislation, the following rules apply.
Bonus first-year depreciation applies only to qualified property. It is claimed in the first year that the property is placed in service. It is the following percentage of the unadjusted depreciable basis of qualified property:
- Property placed in service after September 27, 2017 and before January 1, 2023: 100 percent expensing.
- Property placed in service after December 31, 2022 and before January 1, 2024: 80 percent expensing.
- Property placed in service after December 31, 2023 and before January 1, 2025: 60 percent expensing.
- Property placed in service after December 31, 2024 and before January 1, 2026: 40 percent expensing.
- Property placed in service after December 31, 2025 and before January 1, 2027: 20 percent expensing.
- 2027 and thereafter: 0 percent expensing.2
In the case of qualified property acquired by the taxpayer before September 28, 2017, and placed in service by the taxpayer after September 27, 2017, different rules apply. If the property was placed in service before January 1, 2018, 50 percent expensing applies. If the property was placed in service in 2018, 40 percent expensing applies. If the property was placed in service in 2019, 30 percent expensing applies, and if the property is placed in service after 2019, zero percent expensing is permitted.3