Bonus Depreciation
Definition
A US provision letting businesses deduct a large percentage of the cost of qualifying assets in the first year, on top of or instead of regular depreciation. The applicable percentage has changed over time and should be checked for the year.
Related Terms in US Tax
C Corporation
A US corporation taxed as a separate entity, paying corporate income tax on its profits, with shareholders then taxed on dividends — the classic double taxation. It contrasts with pass-through structures.
S Corporation
A US corporation that elects to pass income, deductions and credits through to shareholders, who report them on their individual returns, avoiding corporate-level income tax. Eligibility rules and an election are required.
LLC Taxation
How a US limited liability company is taxed, which is flexible: a single-member LLC is taxed by default as a sole proprietorship, a multi-member LLC as a partnership, and either can elect corporate or S-corp treatment.
Pass-Through Entity
A business whose income is not taxed at the entity level but passes through to the owners, who report it on their own returns. Sole proprietorships, partnerships, S corporations and most LLCs are pass-throughs.
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