Jane Co. Inc is thinking of using either section 179 depreciation or bonus depreciation. What is...

Jane Co. Inc is thinking of using either section 179 depreciation or bonus depreciation. What is the benefit of using bonus depreciation over section 179 depreciation.

One of following is right answer:

a. You can use bonus depreciation to create a loss.

b. You cannot use bonus depreciation to create a loss.

c. You can use bonus depreciation to off set section 179 income.

d. You can use section 179 depreciation to create a loss.

Justify your choice.

Expert Solution

Answer is Option B -You cannot use bonus depreciation to create a loss.

Bonus depreciation allows to get bonus depreciation and results in tax incentive. A bonus depreciation can be deducted from purchase of eligible assets like machinery, computer, furniture etc. A percentage of cost is deducted. It can apply to more spending per year. It is applicable to business assets which can be depreciated with a recovery period of 20 year or less.

Section 179 deduction can be made only by start using the asset. Helps to deduct cost of property on their income and treats taxes as expenses.

jeff jeffy answered 2 years ago

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