No, deferred depreciation is not eligible for bonus depreciation. Bonus depreciation applies to qualified property that is newly placed in service during the tax year. Deferred depreciation typically refers to depreciation that was not claimed in prior years but is now being caught up, often through a Form 3115 (Change in Accounting Method) adjustment or a Section 481(a) adjustment.

Here’s why deferred depreciation does not qualify for bonus depreciation:

  1. Bonus Depreciation Requires New Property Placement
    • Bonus depreciation is available only for property placed in service during the current tax year. Deferred depreciation generally applies to assets that were placed in service in previous years.
  2. Catch-Up Depreciation is Taken Over Time or as a 481(a) Adjustment
    • If you are catching up on depreciation that should have been taken in prior years, you typically claim it as an adjustment. This catch-up amount is not considered a newly placed-in-service asset.
  3. Bonus Depreciation is a Forward-Looking Incentive
    • The purpose of bonus depreciation is to incentivize investment in new or newly acquired property, not to provide tax benefits on past missed depreciation.