New Business-friendly Rules for Bonus Depreciation and Section 179

Posted on by Craig Mathias

Ref: IRS Reg-104397-18 (8/8/18)

A simplified summary of items allowed for 100% federal bonus depreciation currently through 12/31/2026:

  • New personal property used for business (special rules for vehicles) with a MACRS recovery period of 20 years or less.
  • Used personal property used for business UNLESS acquired from a related party (or used by the control person in another business previously)
  • Computer software
  • Qualified film, television or live production allowable under Code Sec 181

NOT allowed after 1/1/2018 is Qualified [leasehold] Improvement Property (QIP).

HOWEVER, according to the IRS FS-2018-9, a Section 179 expense election can be made for QIP (2018 limit of $1 million subject to phaseouts) UNLESS the improvement involves:

  • the enlargement of a building
  • any elevator or escalator
  • the internal structural framework of the building
  • roofs, HVAC, fire protection systems, alarm systems and security systems

These are very detailed regulations.  Please call for discussion if you feel that they apply to you.