Gulf Opportunity Zone (GO Zone)
The following is an excerpt from the Baldwin County Economic Development Alliance.
DEPRECIATION
Special allowance for certain property acquired on or after August 28, 2005
The Act allows a 50% bonus depreciation allowance for GO Zone business property that is placed in service before 2008 (before 2009, for nonresidential real and residential rental property) and exempts such depreciation allowances from the alternative minimum tax. Qualified GO Zone property is property that meets four requirements:
1. It must be one of the following six types of property:
(i) property to which the general MACRS rules apply and that has a recovery period of 20 years or less,
(ii) computer software not covered by §197 to which the general MACRS rules apply,
(iii) water utility property to which the general MACRS rules apply,
(iv) qualified leasehold improvement property to which the general MACRS rules apply,
(v) nonresidential real property, or
(vi) residential rental property.
1. Substantially all of the use of the property must be in the GO Zone and must be in the active conduct of a trade or business by the taxpayer in such Zone.
2. The original use of the property in the GO Zone must begin with the taxpayer on or after August 28, 2005.
3. The property is acquired by the taxpayer by purchase (within the meaning of §179(d)) on or after August 28, 2005, but only if no written binding contract for the acquisition was in effect before August 28, 2005. (However, property is not precluded from qualifying for the additional first-year depreciation merely because a binding written contract to acquire a component of the property is in effect before August 28, 2005.) Qualified GO Zone property does not include property that is depreciated under the alternative depreciation system, tax-exempt bond-financed property, or qualified revitalization buildings.
In electing the depreciation benefit, neither application to nor approval by the State is necessary.
Recapture rules apply if the property ceases to qualify as GO Zone property.
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