Proposed Rules Address 100-Percent Depreciation Deduction
Proposed regulations address the new 100-percent depreciation deduction that allows businesses to write off most depreciable business assets in the year they are placed in service. Background The Tax Cuts and Jobs Act (TCJA) ( P.L. 115-97) amended Code Sec. 168(k) to increase the percentage of the additional first year depreciation deduction from 50 percent to 100 percent for property acquired after September 27, 2017. It also expanded the property eligible for the additional first year depreciation to include certain used depreciable property and certain film, television, or live theatrical productions. Generally, the 100-percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Such assets include in part machinery, equipment, computers, appliances, and furniture. The proposed regulations provide guidance on what property qualifies for the deduction, and rules for qualified film, television, live theatrical productions and certain plants. Property of a Specified Type In order to be considered qualified property, the proposed regulations require that property must be:
- MACRS property that has a recovery period of 20 years or less;
- computer software as defined in, and depreciated under, Code Sec. 167(f)(1);
- water utility property as defined in Code Sec. 168(e)(5);
- a qualified film or television production as defined in Code Sec. 181(d);
- a qualified live theatrical production as defined in Code Sec. 181(e); or
- a specified plant as defined in Code Sec. 168(k)(5)(B) and for which the taxpayer has made an election to apply Code Sec. 168(k)(5)(B).
You are unauthorized to view this page.