2017 Bonus Depreciation

Technical topics regarding tax preparation.
#1
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S-Corp traded two vehicles in December 2017 in like kind exchange, both weighing over 6000 lbs. One vehicle is new, and the other is noted as used, with about 4,000 miles. Am I correct that 100% bonus depreciation can be taken on the new one, but not on the used one due to it being a 1031 exchange? It appears that even if used, can now take bonus depreciation, but subject to certain rules - one being a 1031 exchange.
 

#2
Coddington  
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You only get bonus on the excess basis in the exchange. The new bonus rules incorporate section 179(c)(3).
-Brian

Director of Tax Accounting Methods & Credits
SourceAdvisors.com

Opinions my own.
 

#3
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Sorry, I'm still confused. On the new vehicle, I can take 100% bonus depreciation on the reduced basis of vehicle (cost - deferred gain of old vehicle), correct?

On used vehicle, are you saying I can do the same? I made a note in a CPE class that bonus depreciation is not allowed on used property acquired in a 1031 exchange, and I can't get my depreciation software to take it either.

I am going to the actual bill and re-read that as well. Thanks for the input!
 

#4
Doug M  
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Bonus depreciation is not eligible on used property. (not just 1031 property)
 

#5
Coddington  
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Starting 9/28/17, used property is eligible for bonus. The section 179 rules to which I referred apply to property that doesn't meet the original use test, used property in other words. Assuming the old bonus depreciation regulations still apply, the remaining carryover basis and the excess basis of the acquired asset gets 100% bonus for the new car. For the old car it would just be the excess basis.
Last edited by Coddington on 19-Feb-2018 7:24pm, edited 1 time in total.
-Brian

Director of Tax Accounting Methods & Credits
SourceAdvisors.com

Opinions my own.
 

#6
Doug M  
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Didn't know that, thanks Brian
 

#7
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Yeah Doug, they changed the rules on us. Depreciation should be so simple, but I can't keep track of all the new laws. Thanks Brian for the input. I'll keep working to see what I'm doing wrong!
 

#8
Coddington  
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It is quite possible that your software is wrong.
-Brian

Director of Tax Accounting Methods & Credits
SourceAdvisors.com

Opinions my own.
 


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