Bonus Depreciation
The Bonus Depreciation Rules allow a taxpayer to depreciate 50% of qualified tangible personal property, as long as the purchase was consummated and the item placed in service in 2008. Contracts completed in 2007 and delivered in 2008 do not qualify.

In addition, taxpayers are allowed to apply normal MACRS depreciation to the 50% of tax basis remaining. For the first year, MACRS allows a 20% deduction. In this case, you would get the 50%, then 20% of the remaining 50% - or another 10% of the original cost - for a total of 60% of the original cost as a deduction in 2008.

So if you purchase qualified equipment worth $500,000, you would get the following benefit:

Taxpayers can also generate a tax loss from the depreciation deductions to carry back to recover taxes paid in prior years.

IMPORTANT POINT #4: The Bonus Depreciation applies only to new equipment.

IMPORTANT POINT #5: On rent-to-sell transactions, only the original lessee can use the Bonus, and only if they convert the rental to a purchase within the first three months of the transaction.