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7/21/2021
VerifiedHi.. my name is ***** ***** I am a licensed CPA. I will be assisting you tonight.
I have a couple of questions on this:
1. Can the client claim 100% bonus depreciation on the asset? It sounds to me like this would be property that would be eligible for bonus, so nailing down 5 or 7 year property isn’t terribly important.
2. Is the taxpayer in a loss for the year of purchase? If so, there could be some NOL planning opportunities with bonus depreciation and the carry back rules, if the loss occurred in 2020. If the asset was placed in service in 2021, then the loss will need to be carried forward.
I think that is a reasonable conclusion. Even if the IRS were to disagree and you elected out of bonus depreciation, the worst case is that the depreciable life would extend a couple more years. You would still get the deductions.
Hope this helps. Let me know if you have any follow ups on this topic. Have a nice evening!
Doug
VerifiedDoug Eidel, CPA and 87 other Tax Specialists are ready to help you
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