The Housing and Economic Recovery Act of 2008 includes a stimulus to businesses using a refundable credit in place of the 2008 Bonus Depreciation because the increased depreciation allowed under The Economic Stimulus Act of 2008 would not benefit corporations operating at a loss. In general, only corporations can claim the credit however automotive partnerships can also claim the credit.

The Housing and Economic Recovery Act of 2008 amends §168(k) of the Internal Revenue Code by adding §168(k)(4), allowing corporations to elect not to claim the 50-percent additional first year depreciation for certain new property acquired after March 31, 2008, and placed in service generally before January 1, 2009, and instead to increase their business credit limitation under §38(c) or alternative minimum tax (AMT) credit limitation under §53(c).
 
Recently published Revenue Procedure 2008-65 clarifies the rules regarding the effects of making the §168(k)(4) election, the property eligible for the election, and the computation of the amount by which the business credit limitation and AMT credit limitation may be increased if the election is made.
 
The refundable credit is available to corporations that have unused credits allocable to research expenditures (Code Sec. 41) and the AMT (Code Sec. 53) from tax years before January 1, 2006. The election applies to new property acquired under a written contract after March 31, 2008 and placed in service before January 1, 2009.
 
This election is made by the corporate taxpayer for its first taxable year ending after March 31, 2008. If the election to apply §168(k)(4) is made, the election applies to all eligible qualified property placed in service by the taxpayer in the taxpayer's first taxable year ending after March 31, 2008, and in any subsequent taxable year. The election can only apply to property for which the taxpayer has also elected to claim bonus depreciation under the provisions of the Economic Stimulus Act of 2008.
 
The refundable credit is equal to the bonus depreciation amount, which is defined as 20 percent of the excess of (1) the aggregate amount of depreciation that would be allowable if the taxpayer took the additional 50 percent first year depreciation deduction, less (2) the aggregate amount of depreciation that would be allowable if the additional first year depreciation deduction did not apply to the property. The maximum bonus depreciation amount cannot exceed the lesser of $30 million or 6 percent of the business credit amount and the AMT credit amount.