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06-14-2011, 11:04 AM #1
irs section 168k bonus depreciation
has anyone's tax mercenary been comfortable applying for section 168k 100% bonus depreciation for a building for a machine shop? Looking at putting up a new building for a minster press here in 2011 and saw an ag magazine talking about 100% depreciation. Just curious if it only applies to agriculture... but I don't read that in what I am reading on the irs pages.
06-14-2011, 01:23 PM #2
06-19-2011, 02:42 AM #3
As I read it, the 100% bonus depreciation applies to items with a 10 to 20 year service life. That would include most farm structures because they have GDS lives ranging from 10 to 20 yrs. Buildings for non-farm business use have a GDS life of 39 yrs, so they wouldn't qualify. However, it looks like any land improvements associated with your new building would qualify for the 100% bonus depreciation since those improvements have a GDS life of 15 yrs.
From a common sense approach it would also appear that the 100% bonus depreciation doesn't apply to to buildings for general business use. If it did, and a company could essentially expense it off rather than carrying it for 39 years, we'd be seeing a lot more business construction going on all over the country rather than the piddling amount that's actually happening now.
06-19-2011, 10:56 AM #4
I have made the same point to my legislators about this. I don't mind the farmers being able to expense things.... or even depreciate them within a reasonable amount of time, but if any business could build a new addition and depreciate it all in 2011 or 2012 there would be a lot of them that would do it. Myself I want to add a 60 x 75 x 25' eve height section onto my machine shop. I have a 100,000 lb Minster E2 Hevistamper laying in the driveway I want to get running and I don't have enough building to do it in now. I am probably going to get something going for it this fall anyway but the decision would be much easier if this depreciation deal extended to me.