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Section 168(k) Bonus Depreciation Regulations: Claiming 100% First-Year Depreciation Deduction

Identifying Qualified Property, Interplay with Section 179, Percentage Deductible

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

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Conducted on Tuesday, September 20, 2022

Recorded event now available

This course will provide tax advisers and compliance professionals with a thorough and practical guide to the IRS regulations on bonus depreciation for new and used property. The panel will outline the bonus depreciation provisions, detail depreciation calculation methods, and discuss how to report this tax-saving deduction.

Description

With bonus depreciation allowed at 100 percent through 2022, taxpayers can fully deduct the cost of eligible property. Bonus depreciation continues after 2022 and through 2026; however, the percentage deductible is lower than the 100 percent available now.

According to the IRS, the property must meet four requirements to qualify:

  1. the depreciable property must be of a specified type
  2. the original use of the property must commence with the taxpayer, or used depreciable property must meet the requirements of Section 168(k)(2)(E)(ii)
  3. the depreciable property must be placed in service by the taxpayer within a specified time or must be planted or grafted by the taxpayer before a specified date
  4. the taxpayer must acquire the depreciable property after Sept. 27, 2017.

The interplay with Section 179 and whether it or bonus depreciation is more valuable can be a critical tax-saving determination. Unlike Section 179, there is no phase-out range or maximum deduction for bonus depreciation. Since bonus depreciation is mandatory, tax professionals must understand Section 168(k) requirements and when and how to elect out of bonus depreciation treatment as needed.

Listen as our experienced panel provides a thorough and practical exploration of Section 168(k) bonus depreciation provisions, including the most recent regulatory guidance.

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Outline

  1. Tax reform law Section 168(k) bonus depreciation provisions
  2. Qualifying property
  3. Percentage deductible by year
  4. Section 179 vs. 168(k) deductions
  5. Calculating the depreciation deduction
  6. Electing out
  7. State treatment of bonus depreciation
  8. Planning opportunities and risks

Benefits

The panel will discuss these and other priority topics:

  • What rules determine whether property qualifies for the 100 percent first-year depreciation deduction under Section 168(k)?
  • What is considered qualified improvement property and eligible for the 100 percent deduction?
  • What percentage bonus depreciation is allowed for purchases in varying years?
  • When should a taxpayer elect out of bonus depreciation treatment?
  • When is Section 179 a better alternative to bonus depreciation?

Faculty

McGuire, David
David McGuire
Shareholder
McGuire Sponsel

Mr. McGuire's client work concentrates on depreciation law, fixed assets and cost segregation. Before founding the...  |  Read More

Sharma, Sumit
Sumit Sharma, CCSP, ASA
Principal
KBKG

As a Principal, Mr. Sharma specializes in Cost Segregation and Fixed Assets in the northeast regional market. He joined...  |  Read More