Federal Taxation of Entities (including tax preparation) (23-33%)

Question 1

what is section 1245 property?

Answer 1

§ 1245 PROPERTY

Bonus Rate. The bonus rate for qualifying property (1] 1237A) (other than long
production property and certain noncommercial aircraft discussed below) acquired and
placed in service after September 27 , 2017, is:

~ 100 percent for property placed in service in 2017 through 2022,

~ 80 percent for property place in service in 2023,

~ 60 percent for property place in service in 2024,

~ 40 percent for property place in service in 2025, and

~ 20 percent for property place in service in 2026 (Code Sec. 168(k) (6) (A)).

The bonus rate for property acquired before September 28, 2017, is 50 percent if
placed in service before 2018, 40 percent if placed in service in 2018, and 30 percent if
placed in service in 2019 (Code Sec. 168(k) (8)).

A taxpayer was allowed to elect to apply the 50—percent rate instead of the 100—per—
cent rate for all qualified property placed in service during the taxpayer’s first tax year
that included September 28, 2017 (Code Sec. 168(k) (10); Reg. §1.168(k)—2(t) (3)). The
election applied to all qualified bonus depreciation property placed in service during the
tax year and is not made separately for each property class.

Question 2

how do you determine property eligible for a Section 179 and bonus depreciation deduction?

Answer 2

refer to “depreciation: Lisa’s cost recovery by the numbers bulldozer” exhibit and previous flashcard