Bacterial gene content variation during the course of evolution has been widely acknowledged and its pattern has been actively modeled in recent years. Gene truncation or gene pseudogenization also plays an important role in shaping bacterial genome content. Truncated genes could also arise from small-scale lateral gene transfer events. Unfortunately, the information of truncated genes has not been considered in any existing mathematical models on gene content variation. In this study, we developed a model to incorporate truncated genes. Maximum-likelihood estimates (MLEs) of the new model reveal fast rates of gene insertions/deletions on recent branches, suggesting a fast turnover of many recently transferred genes. The estimates also suggest that many truncated genes are in the process of being eliminated from the genome. Furthermore, we demonstrate that the ignorance of truncated genes in the estimation does not lead to a systematic bias but rather has a more complicated effect. Analysis using the new model not only provides more accurate estimates on gene gains/losses (or insertions/deletions), but also reduces any concern of a systematic bias from applying simplified models to bacterial genome evolution. Although not a primary purpose, the model incorporating truncated genes could be potentially used for phylogeny reconstruction using gene family content.