Code section · 2009
American Recovery and Reinvestment Act of 2009, Section 1201
Pub. L. 111-5, Section 1201 (Feb. 17, 2009)
U.S. statute
Audio summary
A short audio walkthrough of this rule: what it says and why it matters for your study.
What it holds
Extended 50% bonus depreciation through December 31, 2009, continuing the Economic Stimulus Act of 2008 framework.
Why it matters for your study: This law kept the 50% bonus available for cost segregation components placed in service in 2009. Without it, the bonus from the 2008 act would have expired.
Where this comes from
The Economic Stimulus Act of 2008 had revived 50% bonus depreciation for property placed in service during 2008. That window was short. Congress passed the American Recovery and Reinvestment Act in February 2009 as a larger economic recovery package.
Section 1201 of that law extended the bonus window. Property placed in service in 2009 could now qualify, continuing the framework started by the 2008 act.
What it established
Section 1201 extended the 50% additional first-year depreciation allowance under Section 168(k) through December 31, 2009. The basic rules were the same as 2008. Qualified property had to have a MACRS recovery period of 20 years or less. The property had to be original-use property (placed in service new).
The extension followed the same framework as prior law. No new categories were added. The rate stayed at 50%.
How it shows up in a study
For buildings placed in service during 2009, a cost segregation study could produce a 50% first-year bonus on the reclassified components. The study breaks out 5-year, 7-year, and 15-year property from the building's total cost. Those components, not the building shell, qualified for the bonus.
This is another link in the bonus depreciation timeline. When a study covers a building placed in service in 2009, the 50% bonus rate from this law applies to the first-year deduction.
What it does not mean
The extension ran through 2009. Property placed in service in 2010 needed a separate act to qualify, and Congress did extend bonus again for that year.
The 50% rate was also not the full cost in year one. Half of the short-life components' basis still spread over the regular MACRS schedule. Full 100% bonus did not arrive until the 2010 law.
- Category
- Bonus depreciation & expensing
- Applies to
- All property types
- Status
- Vetted
This page explains a tax authority in plain words. It is not tax advice for your situation. The way this authority applies to your property is reviewed by a licensed tax professional. Citation is provided so you or your advisor can read the primary source.