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The Taxman Comes: Bracing for the End of Bonus Depreciation

By Nancy A. Geary
August 01, 2005

Part One of a Two-Part Series

Imagine a very successful equipment leasing company that showed little or no profit for the last 4 years, and so, paid little or no federal taxes. This year, that same company could show a $5 million profit and face a federal tax bill that could easily total $2 million.

What happened? In 2001 through 2004, the company took full advantage of federal bonus depreciation provisions on all qualifying assets it acquired. But bonus depreciation expired last December, taking with it the company's ability to deduct hundreds of thousands of dollars from its taxable income starting in 2005.

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