With all due respect, the bonus depreciation on luxury autos did not work for tax year 2014 at all. Bonus depreciation was a valid option in the tax law for that year but the software never handled it correctly on luxury autos. I understand taking the option out for 2015 at the beginning of 2015, but the functionality was never there during 2014 and never showed up in the 2015.1 update for use in depreciating 2014 auto additions. What you are basically saying is Sage waited the entire year before putting the coding in for 2014 because Congress delayed action and that because Congress didn't make bonus depreciation law for the next year too, you just didn't code the functionality for 2014 at all. That's a pretty big fail.

So since the law this time covers bonus deprecation at 50% for 2015 through 2017, bonus at 40% for 2018 and bonus at 30% for 2019, Sage will have this hard coded into the software with the 2016.1 update, correct? There is no question as to what the law will be through the end of 2019. I sincerely hope when the coding is complete, the software reflects the 5 years of legislation and especially that the luxury auto piece is finally fixed too.

Vehicles that cost less than $15,800 are not considered to be luxury vehicles and have no limitation placed on depreciation. In the example above, the vehicle is not subject to the luxury depreciation rules so the calculated depreciation of $2,900 is allowed. If the vehicle had cost more than $15,800---and ignoring section 179 and section 168 bonus for this example---the calculated depreciation would be greater than the IRS imposed luxury auto depreciation limit of $3,160 for first year depreciation. If the car cost $25,000 or $50,000 or $75,000, the depreciation would be limited to $3,160 in year one.

For 2015, the most depreciation that can be claimed on a passenger vehicle weighing less than 6,000 pounds and used 100% for business is $3,160 if the cost of that vehicle is more than $15,800 and no section 179 or bonus depreciation is elected.

The luxury auto limits have been around for years and years and are clearly explained in numerous sources and publications. The U.S. Master Tax Guide and The Master Depreciation Guide go into excruciating detail about every possible limitation and scenario that could affect depreciation on a vehicle. This includes luxury auto depreciation limits, how section 179 and 168 work, what happens if the vehicle is a heavy SUV, what happens if business use is less than 100%, what happens if business use began at 100% but later declines and so on. For the average passenger vehicle, it's not that complicated.

Basically, for passenger vehicles used 100% for business weighing less than 6,000 pounds and costing less than $15,800, there are no depreciation limits. For passenger vehicles used 100% for business weighing less than 6,000 pounds and costing more than $15,800, first year depreciation is capped at $3,160 in 2015. If section 168 bonus is elected, the bonus election is capped at $8,000, making first year depreciation $11,160 at the most. There is no logic. It's just an arbitrary rule set by the government to prevent businesses from buying Maseratis and writing them off via section 179 or section 168 all at once. The capped depreciation is a disincentive from putting an expensive car in your business.

None of which is relevant to your contention that the calculation in incorrect in SFA.

The coding of 168 Allowance has been in the system since the 2002.1.1 release. None of this is new code. The 168 allowance has been in the system in one form or another, varying with the Tax code, since March of 2002. It would be incorrect to say that the 168 Allowance was not coded into the system correctly for 2014 assets if (and this is the fun part) entered into the 2015.1 product.

If assets were setup in 2014.1 for 2014 Property Type A or T using MA200, before the calculation will be correct in the 2015.1, the Depreciation method must be changed to a non-168 method and changed back. This can be accomplished through the use of the 168 Allowance switch by first running the switch selecting the “Do not take the 168 allowance” option, then running the switch selecting the “Take the 168 50% Allowance”.

As far as splitting out the Bonus and depreciation in the first year – I can only refer you back to my first reply. I will rephrase a bit:

From page 7 of the 4562 instructions:

“If you take the 50% special depreciation allowance, you must reduce the amount on which you figure your regular depreciation or amortization deduction by the amount deducted. Also, you will not have any AMT adjustment for the property if the depreciable basis of the property for the AMT is the same as for the regular tax.”

By reducing the basis first and having the total depreciation allowed amount capped for Property Type A and T assets, then for any qualified vehicle with a value greater than $22,320, there will be no calculated depreciation in the first year.

Delray, Lovisa already responded that Sage is NOT handling the calculation correctly and indicated a workaround for 2014 and prior autos with section 168 elections. I do not know what it is you are not understanding. If a passenger vehicle weighing less than 6,000 pounds and costing more than $15,800 is placed in service in 2015 and the business elects section 168 bonus depreciation, the correct total depreciation amount should be $11,160----$8,000 of section 168 Allowance and $3,160 of capped regular luxury auto depreciation. Our organization put exactly such an auto in service in 2015 and Sage only calculates $3,160 of depreciation. THIS IS WRONG. The software has a flaw and it is a KNOWN flaw. I don't know what else to tell you but until the software generates expense of $11,160, it's WRONG. I sent you Publication 946 which clearly shows $11,160 as the depreciation amount for a bonused auto in 2014, 2015 law is now known to be the same. I also referred you to the U.S. Master Tax Guide and the Master Depreciation Guide which both provide countless examples of how to properly calculate depreciation with a section 168 allowance on a luxury auto. It is very clear the total expense should be $11,160.

So just in case I'm missing something, show me where Sage gives a calculated answer of $8,000 for the 168 Allowance and $3,160 on the Current YTD for the TAX and AMT books and we will agree that the software doesn't have a flaw. Until you can definitely show me that, and since I've got the software running 2015.2 and it is NOT giving that answer, I'm pretty sure you are going to have trouble showing where Sage handles the calculation correctly.

And, by the way, your example is incorrect. For a vehicle costing $22,320 electing bonus, the calculation is as follows:
Section 168 Allowance $8,000. Reduce depreciable basis $22,320 - $8,000 = $14,320. $14,320 x 20% = $2,864. Maximum allowable regular depreciation $3,160. Bonus plus calculated = $10,864. Bonus plus max = $11,160. Correct depreciation to be reported on form 4562 for a vehicle costing $22,320 is the lesser of the two or $10,864 for 2015. For any vehicle costing $24,000 or more, depreciation for 2015 would be $11,160. The $3,160 cap is AFTER bonus and you get to take BOTH. The law is very clear on that.