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jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3159
Experience:  I've prepared all types of taxes since 1987.
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Is there a limit of Bonus Depreciation allowable for assets

Resolved Question:

Is there a limit of Bonus Depreciation allowable for assets purchased and placed in service for 2011?                                           Please give a reference so i can confirm the answer.

The asset is $4,500,000 in is a piece of manufacturing equipment and will be installed in South Carolina.                                  Does South Carolina limit bonus Depreciation?
Thank you
Submitted: 5 years ago.
Category: Tax
Expert:  jgordosea replied 5 years ago.



There was not ever generally a limit on the amount of qualifying property eligible for the special 50 percent depreciation allowance, also known as bonus depreciation, under Internal Revenue Code Section 168(k) which has been around a few years.

Aircraft and listed property under section 280F (such as automobiles) do have dollar limitations under this section.


(Another expert pointed out that the new rate will be 100% for 2011. The same rules apply as in the past for the definition of qualifying property and dollar limitations, however, since the new law only changed the rate and date.)



South Carolina does not recognize bonus depreciation in IRC Section 168(k).

See SC1040 INSTRUCTIONS 2009 (Rev. 9/25/09)

(At least they did not do so through 2009 so we would not expect that to change in response to the recently enacted federal income tax law.)

Taxpayers that claim bonus depreciation under federal law must add back the difference between the bonus depreciation taken and the depreciation which would have been allowed without bonus depreciation for South Carolina income tax.

Please let me know if you need any additional source material.

Best regards.

Edited by John Gordos EA on 1/2/2011 at 10:46 PM EST
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Customer: replied 5 years ago.
John: You didn't answer whether the $4,500,000 i ALL deductible in 2011!!!!
Expert:  jgordosea replied 5 years ago.

Hello again,


Sorry if it was not clear that I am saying that there is no dollar limit on the amount of qualifying property for which the section 168(k) deduction can be claimed.


The code allows any cost amount to be claimed for qualifying property, whether it is 4, 40 or 400 million dollars.


Of course, you should confer with your tax practitioner to ensure correct application of these provisions (and the possible interactions with other sections) under the particular facts and circumstances in your case.


I hope this clarifies for you that there is no dollar limit.


IRS Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.



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