V. Increase and Extension of Bonus Depreciation
ØA. For property that would qualify for the 30%
additional first-year
depreciation under the Job Creation and Workers Assistance Act of 2002 the first year bonus depreciation rate is
increased to 50% of the
adjusted basis. (The 50% is in lieu of 30%, not in addition to it.)
ØB. This generally applies to property acquired after
May 5, 2003 and placed
in service before January 1, 2005 (January 1, 2006 for long-term production property).
ØC. For "luxury automobiles", the limit on
first year depreciation is increased
from $4,600 to $9,200 (an amount that is not indexed), but bonus depreciation is not available where the auto
is not used more than
50% for business purposes.
ØD. To provide an incentive for further investments
and to prevent a mere
windfall for previously agreed purchases, property will not qualify if there was a binding written contract for
acquisition before May 6, 2003.
ØE. The basis of the property for further depreciation
will be reduced by the bonus
depreciation amount.
ØF. Bonus depreciation is deductible for both regular
and alternative minimum
tax.