100% Bonus Depreciation Regulations Finalized

100% Bonus Depreciation Regulations Finalized

The IRS has adopted previously issued proposed regulations dealing with the 100 percent bonus depreciation deduction. In addition, some clarifying changes to previously issued final regulations are made. In general, the changes relate to:

• the definition of qualified used property;

• the election to claim bonus depreciation on components acquired or self-constructed after September 27, 2017, for larger self-constructed property for which manufacture, construction, or production began before September 28, 2017;

• application of the mid-quarter convention;

• clarifications to the definition of qualified improvement property, predecessor, and class of property; and

• clarifications to the rules for consolidated groups

Background

The 100% additional first year depreciation deduction was created in 2017 by the Tax Cuts and Jobs Act and generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify.

The deduction applies to qualifying property (including used property) acquired and placed in service after September 27, 2017. The final regulations provide clarifying guidance on the requirements that must be met for property to qualify for the deduction, including used property.

Please call our office at 214-731-7664, we can help you determine if your business assets qualify for the bonus depreciation deduction.