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Bonus Depreciation on Asset Disposal or Distribution

bhwagcpa
Level 1

An S Corp with 2 vehicles purchased in 2018 will likely dissolve in 2020.  1 Vehicle took 100% Bonus Depreciation and the other took accelerated Bonus Depreciation .  Should the bonus depreciation be recaptured as ordinary income on 4797 on the final return, or could the net book value of the assets be distributed as income to the shareholders in the dissolution?

Thank you!

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3 Replies 3
sjrcpa
Level 15

What is accelerated bonus depreciation?

In any case, distributions of assets are a deemed sale by the S Corp at FMV. FMV is likely higher than tax book value in this situation.


ex-AllStar
bhwagcpa
Level 1

Thank you for your response.

https://www.irs.gov/newsroom/tax-law-offers-100-percent-first-year-bonus-depreciation

This was the additional Bonus Depreciation I was referring to.

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Rick19744
Level 3
Level 3

I believe the point was that it is just "bonus depreciation" not "accelerated bonus depreciation".  The later term does not exist.  

It may be 50 or 100 percent, but it is still referred to as bonus.