The 100% deduction for the purchase of qualified business property is automatic, but an election can be made not to use it. Usually, the election out is made on a timely filed return, but the IRS can grant more time to do this. In one instance, an S corporation bought property and used bonus depreciation, which passed through to the owner who died that year. The deduction created a huge net operating loss that he couldn’t use; the election out would have been a better option. Once this was realized by the owner’s estate, the IRS granted more time to elect out of bonus depreciation. The lesson: Don’t assume that bonus depreciation is the right way to go in all situations…consider the circumstances and whether an election out is warranted. #IdeaoftheDay
