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Scales qualify for bonus tax depreciation

Sept. 1, 2002
Air-Weigh on-board scales qualify for a special bonus tax depreciation that can result in a total allowed depreciation in the first year of about 40%

Air-Weigh on-board scales qualify for a special bonus tax depreciation that can result in a total allowed depreciation in the first year of about 40% to 45% of its cost. Other advantages are available for trucking companies that have a net operating loss in 2001 or 2002.

The tax rule, enacted after the 9/11 tragedy, applies to new equipment with a recovery period less than 20 years purchased after Sept 10, 2001, and amounts to a special bonus 30% depreciation. The bonus depreciation is in addition to the regular depreciation, which will result in the total allowed depreciation in the first year of about 40% to 45% of the equipment cost. Property must be generally placed in service before Jan 1, 2005.

Special rules apply for taxpayers that have a net operating loss in tax years ending in 2001 and 2002. These taxpayers may carryback a net operating loss five years, instead of a two-year carryback. When combined with residual value at the time of truck or trailer trade-in, the return on investment in Air-Weigh on-board scales is increased.

Parties interested in this special depreciation or using the five-year carryback option should consult their tax advisors. The bonus depreciation is part of the Job Creation & Worker Assistance Act of 2002. For a description of depreciation requirements, access www.irs.gov and enter 3991 in the forms/pub search. Open the 3991 PDF file and go to page 13 of the document.