Measuring the Value of 100% First-Year Depreciation

Michael M. Watts, CPA, JD

One of the most significant provisions of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 is the enactment of a 100% depreciation deduction in the year that property is placed in service. Property generally qualifies if it has a recovery period of 20 years or less and is placed in service after September 8, 2010, and before the end of 2011. As with the prior 50% bonus first-year depreciation, the original use of the property must commence with the taxpayer (i.e., the property must be new). Section 401 of the act also extended the 50% bonus first-year depreciation through 2012. In addition, certain aircraft and long-production-period property can qualify for the 100% deduction through 2012.