9-11 Bonus Depreciation

Has anyone found a good way to have the system calculate the 30% bonus depreciation for US Federal Tax for assets purchased between 9/11/01 and 9/11/04? We’re using mid-year convention, and have assets with several different depreciation lives. Milt

Dear Milt, Could you please tell me more about this Bonus. I currently work for the Danish Subsidiary of a US compapy setting up fixed assets and would like to know if this applies to us as well.

Italians have a complex decpreciation system. I know that Navision Italia (www.navision.it) developed country-specific objects which cover those needs. One of the solutions applied in italy may fit with that decpreciation bonus. Try to ask for “anticipated depreciation” (in italian “ammortamenti anticipati”)

Hi, You can setup any depreciation method using Depreciation Tables.

The bonus depreciation was a tax incentive to encourage businesses to continue expanding in the aftermath of 9/11/01. It allows an initial 30% depreciation of certain assets purchased between 9/11/01 and 9/11/04, while still allowing the normal depreciation of the balance in the same year. The details are best reviewed from the official irs source: http://www.irs.gov/pub/irs-pdf/p946.pdf Thanks for your interest Milt

Milt, I think what you’ll need to do is an adjustment to reduce the basis of the asset for tax purposes in Navision. I’m not really up on the 30% rule, but it sounds to me almost like a percentage application of the Section 179 deduction. So, in order to calculate the “proper” depreciation, you will need to reduce the tax basis by the 30% bonus. You will find that you can do almost anything you want in Navision’s Fixed Asset granule, but you may have to work at it a bit. For instance, Valentin stated that you can set up any depreciation method using a table. This is true, but … 1)You need to set up your MACRS and Alt-Min tables. Navision does not come loaded with them. 2) If using the tables, you need to set your tax depreciation beginning date as the first day of the fiscal year. If you don’t do this, Navision will calc the tax depreciation on a part year basis, BUT, the part (usually half-year) is already built into the tables. 3) Be aware that Navision doesn’t have anyway for you to automatically determine if the mid-quarter rules apply to you or not. This is a manual process that you must do after the end of the year. Then, if mid-quarter applies, you have to go back manually and change the depreciation table that applies to each asset (ie - tell the system to use the midquarter table instead of the half-year table for “Asset X”.) I’ve got some experience with doing all this if you want some more “advice” outside of the forum. Best of luck, Mark.

Mark, Thanks for the detailed reply. I’ve tried several different ways within Navision to do this. Each has its own problems. 1. Using a manually calculated initial depreciation. Subsequent depreciation calculations incorrectly depreciate the original acquisition cost. 2. Using tables. The date issues you mentioned are critical. I can make individual tables for every combination of date convention/depreciation years, but then I cannot separate the Special (Bonus) Depreciation from normal depreciation as required by the tax forms. 3. Manual Write-Down. The depreciation calculation for first year is based on the original, not the Written-Down value. 4. Negative Acquisition cost. This calculates the correct value for depreciation, but gives wrong numbers for the acquisition cost. I could use a custom report to sort out the real acquisition cost vs. bonus depreciation based on “Reason Code” (not available on standard form), but this seems clumbsy. I’ll have to go with #4 if I can’t find a better solution. Has Navision considered this issue? We’re into the second year of this law change. To the U.S. Congress: Thanks for the gesture, but the implemantation costs are worse then the benefit achieved. Simplification of the tax code would be a much better gift. Milt

Milt, Your question “Has Navision Considered this issue” is a good and my answer is probably not. Fixed Assets was written for the European market and has very little US specific functionality. Good luck, mark.

In Spain, we normaly create 2 Depreciation books: one with G/L integration and other without integration. Firts book accumulate G/L depreciation, Second book accumulate fiscal depreciation. Fiscal depreciacion can be diferent (Ley de acompañamientos del presupuesto, 28/12). Each book can have diferent depreciation method, starting date and ending date. If you substract firts and second accumulated, you can obtein fiscal adjustment. Best regards from bcn.

On the Navision US Partner site, Document 11583, MACRS Tax Depreciation, has been updated to give instructions for the handling of the 30% bonus depreciation.

David, I’d love to read this document. How does an end-user/programmer like me get access to the Navision US Partner site? Milt

Milt Have you tried using Custom 1 or Custom 2 to claculate the 30% bonus. You could run the Custom depreciation for the 30% once for each asset and have it posting back to the G/L account for accumulated depreciation and depreciation expense. Cheers Peter