The Section 179 depreciation deduction privilege allows eligible businesses to deduct 100% of the cost of qualifying new and used assets in Year 1.

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For small business owners who operate as a pass-through entity (a partnership or a sub S), the bonus depreciation deduction ultimately comes through on their individual tax returns.

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The generous bonus depreciation and small business deduction rules begin to drastically phase out in January 2012, which will likely cause a dramatic reversal in investment and other indicators.

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So why do we allow a tax deduction for the depreciation of real estate?

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What are the deduction, credit, and depreciation rules going to be?

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There is also a "special depreciation allowance" that under some scenarios permits a first-year deduction of 50% of the vehicle's cost.

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The interest deduction that built up the 2.6 billion dollar debt and the depreciation deductions that reduced the basis in the building created rental losses.

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Note: the 50% bonus depreciation can be more valuable than the Sec. 179 write-off provision because the Sec. 179 deduction is limited to business taxable income with any excess carried forward, says Butler.

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