Hello,
I am just wondering if anyone has availed of the current tax cuts extension (Bush Tax cuts) that potentially allows business to deduct bonus depreciation (50% and 100%) and section 179 expensing on the same asset?
I have tried to configure a multi-level method, creating two lines, one for bonus and one for section 179 (same year-2010, but different period - just to make each unique). However, bonus depreciation should be calculated off APC less section 179 expensing (NBV).
After creating a depreciation key using the new multi-level method, I noticed that after creating an asset, the depreciation calculation for special depreciation only uses the first line of the multi-level method (section 179 expensing) totally ignoring the second line (bonus depreciation).
I've tried to play around different ways of configuring multi-level method but kept getting the same results.
If you have idea on how to handle this, please let me know.
Thank you.
Nancy
Hi Nancy
In India we have a similar requirement for charging 20% special dep in the 1st year of acquisition, in addition to the normal rate of depreciation,say,5%
The Multi Level method in such case looks like this
Multi Level Method _Acq Year YearsPeriod_Base Val _Percent
Z1 _9999 _1 001 _20% (Spl Dep)
M1 9999999 001 _ 5% (Normal Dep)
With this setting, it calculates both the depreciations
You can also charge Special Depreciation manually from ABSO using tr types 720/721
BR,Ajay M
Thank you Ajay. It looks like you were referring to two multi-level methods; one for normal depreciation and one for special depreciation. I was looking for configuration help on special depreciation only.
Just to illustrate, sample asset should be calculated below on FEDERAL book on its first year of acquisition:
Orig APC - $1000.00
Special depr - ( 50.00) APC x Sp. Depr of 5% ( 1000 x 5%)
Bonus depr - ( 475.00) NBV x Bonus Depr of 50% (1000 - 50 = 950 x 50%)
NBV before normal depr - 475.00 (1000 - 50 - 475)
Normal depr - ( 95.00) HY depr on NBV (475 x 20%)
NBV at end of first year - 380.00
I've tried to create one multi-level method that has both special and bonus depreciation configuration (two-line item) but it looks like the second line is being ignored when creating an asset, literally getting special depreciation calculation only ($50) and none for bonus ($475). That said, normal depreciation is now based on $950 instead of $475 as shown above.
Looking forward to your suggestions. Thank you.
Nancy
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