Claiming "Bonus" Depreciation: The "Trade or Business" or "Held for the Production of Income" Test

Abstract

<p>The Tax Relief Act of 2010<strong>1 </strong>increased 50 percent “bonus” depreciation to 100 percent for qualified investments after September 8, 2010 and before January 1, 2012<strong>2 </strong>and authorized 50 percent “bonus” depreciation for qualified property placed in service after December 31, 2011 and before January 1, 2013.<strong>3 </strong>The move to 100 percent bonus depreciation (with no limit on the maximum amount) has generated a great deal of interest in the change in eligibility rules. Recently, questions have been raised as to whether farm buildings are eligible and, if so, under what conditions.</p>