2008 Bonus Depreciation: Test 1 – Description of Property (Treas. Reg. 1.

168(k)-1(b)(2))

Is the property No Is the property Is the property

No No
water utility No
MACRS computer Is the property
property that property
software qualified Does not qualify for
has a recovery defined &
defined under leasehold bonus depreciation
period of 20 depreciated
section improvement?
years or less? under section
167(f)(1)?
168?

Yes Yes Yes

Yes

Is the property
No
excluded from Is the property Is the property No Did the No
the application No Satisfies the "type of
required to be NY Liberty taxpayer elect property test" go to
of section 168 depreciated Zone leasehold out of bonus
because of original use test
under ADS? improvement? depreciation?
168(f)?

Yes Yes Yes

Yes

Does not qualify

for bonus
depreciation Release Date:
Last Updated: 1/2009
2008 Bonus Depreciation:
Test 2 – Original Use (Treas. Reg. 1.168(k)-1(b)(3)) Did the original use
commence after
12/31/07?

No Yes

The property satisfies

Was the property the "Original Use"
initially used by the requirement
taxpayer for
personal purposes
before converting it
to
business use?
No Yes

The property satisfies

the "Original Use"
requirement
Was the used
property
reconditioned or
rebuilt?

No Yes

Was the Did the taxpayer

property part of a recondition or
sale-leaseback or rebuild the property
syndication after title was
transaction? acquired?

Yes No
No Yes

The capital expenditures

to recondition satisfies
Does not qualify for
the "Original Use" Test
bonus depreciation Was the sale- Was more than 80%
leaseback or of cost for the
syndication recondition property
transaction within 3 from original parts?
months from date
place in service?
Yes No
No Yes
The property satisifies
the "Original Use"
Does not qualify for requirement
The property satisifies bonus depreciation
Does not qualify for
the "Original Use" Release Date:
bonus depreciation
requirement Last Updated: 1/2009
2008 Bonus Depreciation:
Test 3 – Acquisition of Property (Treas. Reg. 1.168(k)-1(b)(4))
Test 4 – Placed-in-Service Date (Treas. Reg. 1.168(k)-1(b)(5))
Is the property
long-production
period property?*

Yes No

Was the qualified Was the qualified

property placed in property placed in
service before service before
1/1/10? 1/1/09?
Yes No
Yes No No Bonus
No Bonus Depreciation
Depreciation
Is the property
self-constructed?

Yes No

Did construction Was contract

begin after binding after
12/31/07? 12/31/07?
Yes No Yes No

Does the No Bonus

property contain Was contract Depreciation
Did the taxpayer incur
components? >10% of the total cost* of binding before
property by 1/1/2008? 1/1/09?
Yes No Yes No

Yes No
The property No Bonus
Were the Did construction satisfies the Depreciation
components self- begin before No Bonus “Acquisition
constructed? Depreciation The acquisition
1/1/09? rule of 1.168(k)- property” and
Yes No 1(b)(4)(i) is met “Placed in
pursuant to the service”
The property No Bonus safe-harbor in requirements
satisfies the Depreciation 1.168(k)-
“Acquisition 1(b)(4)(iii)(B)(2)

Go to next property” and

* Total cost does not include preliminary activities such as planning, designing, securing financing, exploring,
page “Placed in
or researching.
service”
• Note: Long production period property is defined in IRC § 168(k)(2)(B) as property which has a recovery
requirements
period of at least 10 years or is transportation property and is subject to interest capitalization rules by reason
of IRC § 263A(f)(1)(B)(ii) or (iii), i.e., having an estimated production period exceeding two years or an
estimated production period exceeding one year and a cost exceeding $1M.
Release Date:
Last Updated: 1/2009
2008 Bonus Depreciation:
Test 3 – Acquisition of Property (Treas. Reg. 1.168(k)-1(b)(4))
Test 4 – Placed-in-Service Date (Treas. Reg. 1.168(k)-1(b)(5))

From
previous
Yes page No

Did component
construction begin Was component
before 12/31/07? contract binding
before 12/31/07?

No Yes No

Yes

Did larger Did larger Did larger

property property property
construction construction construction
Yes begin before N begin before begin before N
1/1/09? o 1/1/09? 1/1/09? o
Yes
Did larger Did component Yes
property construction No Was component
construction begin before contract binding
begin before 1/1/09? before 1/1/09?
N Yes N
1/1//09?
o o
No Bonus The Component = no No Bonus Yes No
Yes Depreciation property bonus Depreciation
satisfies the Larger prop. = no
bonus The
“Acquisition
property
property” The Component = no
satisfies the
The and “Placed property bonus
“Acquisition
property in service” satisfies the Larger prop. = no
property”
satisfies the The requirement “Acquisition bonus
and “Placed
“Acquisition s property”
property in service”
property” satisfies the and “Placed requirement
and “Placed “Acquisition in service” s
in service” property” requirement
requirement and “Placed s
s in service”
requirement
s The
property
satisfies the
“Acquisition
property”
Release Date:
and “Placed
in service” Last Updated: 1/2009
requirement
s