Level 2

Bonus Depreciation on Asset Disposal or Distribution

Forum|Forum|6 years ago
April 26, 2020
1 reply
12 views

An S Corp with 2 vehicles purchased in 2018 will likely dissolve in 2020. 1 Vehicle took 100% Bonus Depreciation and the other took accelerated Bonus Depreciation . Should the bonus depreciation be recaptured as ordinary income on 4797 on the final return, or could the net book value of the assets be distributed as income to the shareholders in the dissolution?

Thank you!

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Level 15

What is accelerated bonus depreciation?

In any case, distributions of assets are a deemed sale by the S Corp at FMV. FMV is likely higher than tax book value in this situation.

The more I know the more I don’t know.

Level 2

Thank you for your response.

https://www.irs.gov/newsroom/tax-law-offers-100-percent-first-year-bonus-depreciation

This was the additional Bonus Depreciation I was referring to.

Intuit Community Champion

Intuit Community Champion

I believe the point was that it is just "bonus depreciation" not "accelerated bonus depreciation". The later term does not exist.

It may be 50 or 100 percent, but it is still referred to as bonus.