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Depreciation and Expensing: New Rules and Limits Under Current Tax Law

Section 179 Property, First-Year Bonus Depreciation, Limitations on Personal Use Property and More

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, July 24, 2018

Recorded event now available

This CPE course will guide tax professionals and advisers on the depreciation and expense limitations under the new tax law. The panel will discuss rules for bonus depreciation deductions, IRC Sec. 179 expensing deductions, depreciation for property used in a business, limitations on personal use property, and recent guidance and tax planning opportunities for depreciation and expenses.

Description

The new tax law includes favorable changes for taxpayers for recovering costs of capital expenses for business purposes. Changes to certain depreciation and expensing rules lowered the cost of acquiring capital assets, providing tax benefits and planning opportunities to businesses.

The new expensing and cost recovery changes the analysis for cost recovery in determining the appropriate tax treatment for tangible property expenditures. Before tax reform, taxpayers could deduct 50% of the cost of tangible personal property placed in service during the tax year followed and apply accelerated depreciation to the remaining 50% of the cost.

Now, taxpayers may take 100% bonus depreciation on qualified property acquired and placed in service after Sept. 27, 2017, subject to a phase-out beginning in the year 2023. The definition of “qualified property” has also been expanded to include used assets subject to specific limitations.

The expansion of IRC §179 increases the maximum amount a taxpayer may expense up to $1 million and increases the threshold amount to $2.5 million, expanding the availability of IRC §179 to more taxpayers. IRC §179 property now includes specific depreciable tangible personal property, and the definition of “qualified property” for IRC §179 purposes now covers some improvements made to nonresidential real property as well. Tax professionals and advisers must be knowledgeable of the requirements and nuances of the new depreciation and expensing rules to properly advise and develop tax saving techniques for taxpayers.

Listen as our panel provides a detailed analysis of the new rules for depreciation and expensing and provides planning considerations for tax professionals and advisers.

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Outline

  1. Overview of the new depreciation and expensing rules under current tax law
  2. Bonus depreciation rules and appropriate tax treatment of tangible property
  3. Determining qualified property under the new rules and limitations
  4. Applicable recovery periods for real property
  5. Expansion of IRC §179 expensing and necessary requirements for application
  6. Planning considerations to ensure tax savings for taxpayers

Benefits

The panel will review these and other critical issues:

  • Application of the depreciation and expensing rules under current tax law
  • Bonus depreciation challenges and limitations
  • IRC §179 expansion and deduction requirements
  • Determining “qualified property” bonus depreciation and IRC §179 purposes
  • Limitations on personal use property
  • Understanding the recovery periods for real property and considerations for electing out of interest expense deduction limitations
  • Comparing bonus depreciation and IRC §179 in deductions and factors regarding NOL limitations
  • Planning methods to ensure tax savings for taxpayers

Faculty

Plaks, Michael
Michael Plaks
Enrolled Agent
REI Tax Firm

Mr. Plaks has been in private practice since 1996, providing tax preparation, consulting, and IRS representation...  |  Read More

Napoli, John
John P. Napoli
Partner
Seyfarth Shaw

Mr. Napoli is co-managing partner of the firm’s New York office. He practices in the areas of federal, state and...  |  Read More