Making or Revoking Bonus Depreciation Elections

On July 31, 2019 the IRS issued a revenue procedure prescribing taxpayer’s the ability to make a late election, or revoke an election made under section 168(k) for certain property acquired subsequent to September 27, 2017 and placed into service during its taxable year.

The Tax Cuts and Jobs Act made several changes to the rules governing bonus depreciation, including increasing the deductible percentage from 50 to 100 percent in the first year. Additionally, the property eligible for bonus depreciation has expanded to include used depreciable property (if new to the purchaser and put into use that year) and media equipment such as certain equipment used in film, television, or live theatrical productions. The next expansion in the rules provides that the placed-in-service date was extended to before January 1, 2027.

There are three additional first year depreciation deduction elections. The additions are expansions to taxpayer abilities, not limitations. For example, a taxpayer may 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. Another option for the taxpayer is to elect to deduct 50-percent, instead of 100%, additional first year depreciation for all qualified property acquired after September 27, 2017, and placed in service by the taxpayer during its taxable year that includes September 28, 2017.

If these elections have not been made, or the taxpayer would like to revoke the election made, the taxpayer may make/revoke elections by filing an amended return or by filing Form 3115.