IRS Issues Guidance On Bonus Depreciation

On March 29, 2011, the Internal Revenue Service issued Revenue Procedure 2011-26 (the "Revenue Procedure"), which provides guidance on the rules applicable to the 50-percent and 100-percent first-year depreciation deductions ("bonus depreciation") for qualified property that were added to the Internal Revenue Code of 1986, as amended (the "Code"), by the Small Business Jobs Act of 2010 (the "SBJA") and the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the "Tax Relief Act").

The SBJA and the Tax Relief Act extended until January 1, 2013 (January 1, 2014 for certain long-lived and transportation property), the date before which qualified property (as defined in Code section 168(k)(2)) must be placed in service to qualify for 50-percent bonus depreciation. Under prior law, 50-percent bonus depreciation was not available for qualified property placed in service after December 31, 2009. The Tax Relief Act increased to 100 percent the