WASHINGTON — The Treasury Department and the Internal Revenue Service today
released final regulations and additional proposed regulations under section 168(k) of the Internal Revenue
Code on the new 100% additional first year depreciation deduction that allows
businesses to write off most depreciable business assets in the year they are
placed in service by the business.
The regulations released today on IRS.gov have been submitted to the Federal
Register and may vary slightly from the published documents due to minor
editorial changes. The documents published in the Federal Register will be the
official documents.
The final regulations finalize the proposed regulations issued in August 2018 which implement
several provisions included in the Tax Cuts and Jobs Act (TCJA). The proposed
regulations contain new provisions not addressed previously.
The 100% additional first year depreciation deduction 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 acquired and placed in service
after Sept. 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. The final regulations also provide rules for qualified
film, television and live theatrical productions.
Additionally, in the proposed regulations, the Treasury Department and IRS
propose rules regarding (i) certain property not eligible for the additional
first year depreciation deduction, (ii) a de minimis use rule for determining
whether a taxpayer previously used property; (iii) components acquired after
Sept. 27, 2017, of larger property for which construction began before Sept.
28, 2017; and (iv) other aspects not dealt with in the previous August 2018
proposed regulations. The proposed regulations also withdraw and repropose
rules regarding application of the used property acquisition requirements (i)
to consolidated groups, and (ii) to a series of related transactions.
For details on claiming the deduction or electing out of claiming it, see
the final regulations or the instructions to Form 4562, Depreciation and Amortization (Including
Information on Listed Property). For tax years that include Sept. 28, 2017, see
Rev. Proc. 2019-33 for further information about making a
late election or revoking an election.
Taxpayers who elect out of the 100% depreciation deduction must do so on a
timely-filed return. Those who have already timely filed their 2018 return and
did not elect out but still wish to do so have six months from the original
deadline, without an extension, to file an amended return.
For more information about this and other TCJA
provisions, visit IRS.gov/taxreform.
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