Bonus Depreciation Essay

2287 Words 10 Pages
The Discussion of Bonus Depreciation Deduction in the United States
May 6, 2015


The term paper researches the history of bonus depreciation allowance provision, the usefulness to the decision making of corporate taxpayers, and how the temporary changes in recent years affect cash flow of businesses. Under Section 168(k) of IRC, bonus depreciation is a special depreciation allowance to deduct income tax of corporate taxpayers. Though this ranges from 30% to 100% as determined by annual election of congress, bonus depreciation actually results in substantial present value tax savings for businesses when they purchase new qualified property. The introduction section is an overview of bonus depreciation, how it is relevant to
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Before H.R.5771 legislation in December 2014, multi-industry had already requested for 50% bonus depreciation extension and later lettered to Congress urging reinstatement of bonus depreciation in 2015. Personally, I could thoroughly gain understanding in this important concept of taxation through the research of the history, reasoning behind code, and numerical effects of temporarily modified provision of corporate bonus depreciation.
How it is relevant to corporate taxpayers, and how changes affect them. Bonus depreciation provision affects businesses decision-making in investing new property in a particular year. Bonus depreciation is widely concerned by corporate taxpayers regardless of the type of industry. For example, manufacturing corporations have primary investments on new property and equipment; nonmanufacturing firms typically have at least modest investment in new property. Also, bonus depreciation’s provision changes directly affect tax compliance of taxpayers as well as tax professionals’ advice to their clients. Finally, multiple changes in bonus depreciation amount are potential indicators of the federal economy situation which influence federal budget deficit.
Overview of depreciation. Depreciation deductions affect a corporation’s budget. When a business invests in a new, long-term asset, the purchasing price generally is a key part of the company's budget. To help mitigate the effect of large capital expenditure, the

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