Fixed Assets 5.0c question.

We need a depreciation method to handle the 30% bonus depreciation allowance that went into effect this year.

According to the 2002 tax guide, a special 30-percent depreciation allowance is available for property acquired after 9/10/01 - 9/11/04. The provision permits a taxpayer to claim an additional first-year depreciation allowance on new MACRS property for which the recovery period is 20 years or less. The regular MACRS deduction is computed after reducing the adjusted basis of the property by any Code 179 expense allowance and the additional first year depreciation.

For example: $100,000 asset with a 5yr class life (with a half-year convention) using this method:

Recovery Year
2002 bonus depreciation= $30,000
2002 $70,000 x 20%= $14,000
2003 $70,000 x 32%= $22,400
2004 $70,000 x 19.20%= $13,440
2005 $70,000 x 11.52%= $8,064
2006 $70,000 x 11.52%= $8,064
2007 $70,000 x 5.76%= $4,032
TOTAL $100,000

Notice that the basis switches to $70,000. Baan's declining balance method would use the original basis of $100,000. How do get the bonus depreciation while reducing the basis to the $70,000?

Thanks.