Key issues under temporary 100-percent expensing and extended 50-percent bonus depreciation provisions of 2010 Act

Washington National Tax Services

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the Act) extends 50-percent bonus depreciation through December 31, 2012 (December 31, 2013, for long-production-period property (LPPP) and certain aircraft), and temporarily increases the available deduction to 100 percent. Prior to this modification, bonus depreciation had been set to expire on December 31, 2010 (December 31, 2011, for LPPP and certain aircraft).

The Act also temporarily allows 100-percent expensing for qualifying property acquired and placed in service after September 8, 2010, and before January 1, 2012, (January 1, 2013, for LPPP and certain aircraft). Under this provision, qualified property acquired and placed in service after September 8, 2010, pursuant to a written binding contract entered into after December 31, 2007, meets the 100-percent expensing requirements. Property that meets these requirements is not eligible for the 50-percent bonus depreciation deduction. However, property that does not meet the 100-percent expensing requirements still may be eligible for 50-percent bonus depreciation.

This WNTS Insight addresses key technical issues arising under the Act's statutory language, some of which may require IRS guidance for certainty of interpretation.

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