Section 179 and Bonus Depreciation Expensing Allowances: Current Law, Legislative Proposals in the 112th Congress, and Salient Economic Effects

Expensing is the most accelerated form of depreciation for tax purposes. Section 179 of the Internal Revenue Code (IRC) allows a taxpayer to expense (or deduct as a current expense rather than a capital expense) up to $500,00 of the total cost of new and used qualified depreciable assets it buys and places in service in 2011, within certain limits. Firms unable to take advantage of the Section 179 expensing allowance may recover the cost of qualified assets over a longer periods, using the appropriate depreciation schedules. While the Section 179 expensing allowance is not targeted at firms that are relatively small in employment, asset, or receipt size, the rules governing its use limit its benefits to such firms, for the most part. Under IRC Section 168(k), a taxpayer may expense the full cost of qualified assets bought and placed in service in 2011, with certain exceptions. Taxpayers that could claim the so-called 100% bonus depreciation allowance have the option of monetizing any unused alternative minimum tax credits they have from tax years before 2006, within certain limits, and writing off the cost of the qualified assets over a longer period. This report examines the current status, legislative history, and salient economic effects of the two expensing allowances. It also discusses initiatives in the 112th Congress to modify them. The report will be updated as legislative activity warrants. Bills: H.R. 1773, H.R. 3630, S. 12


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#	File Name	Document Date	Order ID:	Number of Pages	Price
1	RL31852.pdf	Dec 12, 2011	RL31852	17	$29.95	Add to Cart

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