After reading the chapter, review the following topics below, choose one (1) and
ID: 2476335 • Letter: A
Question
After reading the chapter, review the following topics below, choose one (1) and contribute to either:
Bonus Depreciation
Research the concept of bonus depreciation. Why is this available? Are there any proposed changes to bonus depreciation? How does bonus depreciation, MACRS and §179 interact?
Luxury Automobiles
If a car loses more than 20% of its sales value in the first year, why can you only take a maximum of $3,160 in depreciation? Is bonus depreciation or §179 available for luxury automobiles? Should there be a luxury auto limitation? Should the limit be higher?
Intangibles
Should you be able to amortize goodwill and going concern values? How do you arrive at the value? Does goodwill last 15 years and if not why do you have to use 15 years?
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#1Bonus Depreciation
Research the concept of bonus depreciation. Why is this available? Are there any proposed changes to bonus depreciation? How does bonus depreciation, MACRS and §179 interact?
#2Luxury Automobiles
If a car loses more than 20% of its sales value in the first year, why can you only take a maximum of $3,160 in depreciation? Is bonus depreciation or §179 available for luxury automobiles? Should there be a luxury auto limitation? Should the limit be higher?
#3Intangibles
Should you be able to amortize goodwill and going concern values? How do you arrive at the value? Does goodwill last 15 years and if not why do you have to use 15 years?
Explanation / Answer
Answer: Bonus Depreciation
A bonus depreciation is an additional amount of deductible depreciation that is awarded above and beyond what would normally be available. Bonus depreciation is always taken right away, in the first year that the depreciable item is placed in service. This type of incentive is offered either as an additional incentive or as a measure of relief for small businesses that want to buy additional equipment.
There is no proposed changes.
Section 179 of the Internal Revenue Code (IRC) gives firms in all lines of business and all sizes the option, within certain limits, of expensing part or all of the cost of new and used qualified property they acquire in the year when the assets are placed in service. Business taxpayers that cannot (or choose not to) claim the allowance may recover capital costs over longer periods and at slower rates by claiming the appropriate depreciation deductions under the Modified Accelerated Cost Recovery System (MACRS) or Alternative Depreciation System (ADS).