The Internal Revenue Service recently issued a revenue procedure letting a taxpayer make a late election, or to revoke an election, under section 168(k) for certain property acquired by the taxpayer after Sept. 27, 2017, and placed in service by the taxpayer during its taxable year that includes Sept. 28, 2017.
The Tax Cuts and Jobs Act also known as the TCJA made several changes to bonus depreciation, according to the IRS news release discussing the important topic. For example, the additional first year depreciation deduction percentage was increased from 50 to 100 percent.
The property eligible for the additional first year depreciation deduction was expanded to include certain used depreciable property and certain film, television, or live theatrical productions; the placed-in-service date was extended to before Jan. 1, 2027. Finally, the date on which a specified plant is planted or grafted by the taxpayer was extended to before Jan. 1, 2027, the news release added.
Additional Deduction Elections
The Internal Revenue Service also noted that there are three additional first year depreciation deduction elections. A taxpayer can elect not to deduct the additional first year depreciation for all qualified property that is in the same class of property and placed in service by the taxpayer in the same tax year.
Secondly, a taxpayer can elect to deduct 50-percent, instead of 100 percent, additional first year depreciation for all qualified property acquired after Sept. 27, 2017, and placed in service by the taxpayer during its taxable year that includes Sept. 28, 2017, according to the news release.
Finally, a taxpayer can elect to deduct additional first year depreciation for any specified plant that is planted after Sept. 27, 2017 and before Jan. 1, 2027, or grafted after and before those dates to a plant that has already been planted. If the taxpayer opts to make this election, the additional first year depreciation deduction is allowable for the specified plant in the taxable year in which that plant is planted or grafted, the Internal Revenue Service news release explained,
Revenue Procedure 2019-33 (PDF) applies to these elections for the taxable year that includes Sept. 28, 2017. If a taxpayer did not make these elections timely for that taxable year, the Revenue Procedure lets the taxpayer make late elections by filing an amended return or a Form 3115 for a limited period of time. If a taxpayer did make these elections timely for that taxable year, the revenue procedure also lets the taxpayer revoke the elections by filing an amended return or a Form 3115 for a limited period of time, the Internal Revenue Service release stated.
For more information and further more detailed explanations about this topic, the Internal Revenue Service news release said updates on the implementation of the TCJA can be found on the Tax Reform page of IRS.gov.
Source: Internal Revenue Service
