The law increases the bonus depreciation percentage from 50 percent to 100 percent for qualified property acquired and placed in service after September 27, 2017, and before January 1, 2023. The bonus depreciation percentage for qualified property that a taxpayer acquired before September 28, 2017, and placed in service before January 1, 2018, remains at 50 percent. Special rules apply for longer production period property and certain aircraft.
The definition of property eligible for 100 percent bonus depreciation was expanded to include used qualified property acquired and placed in service after September 27, 2017, if all the following factors apply:
- The taxpayer or its predecessor didn’t use the property at any time before acquiring it.
- The taxpayer didn’t acquire the property from a related party.
- The taxpayer didn’t acquire the property from a component member of a controlled group of corporations.
- The taxpayer’s basis of the used property purchased is not figured in whole or in part by reference to the seller or transferor adjusted basis.
- The taxpayer’s basis of the used property is not figured under the provision for deciding basis of property acquired from a decedent.
- Also, the cost of the used property eligible for bonus depreciation doesn’t include the basis of property determined by reference to the basis of other property held at any time by the taxpayer (for example, in a like-kind exchange or involuntary conversion).
The law added qualified film, television and live theatrical productions as types of qualified property that may be eligible for 100 percent bonus depreciation. This provision applies to property acquired and placed in service after Sept. 27, 2017.
Under the TCJA, certain types of property are not eligible for bonus depreciation in any taxable year beginning after December 31, 2017.
The law also eliminated qualified improvement property placed in service after December 31, 2017 as a specific category of qualified property.
For more information and details about property that isn’t eligible for bonus depreciation, see Fact Sheet 2018-9 and FAQs on additional first-year depreciation deduction (bonus).
For details on claiming the deduction or electing out of the deduction, see the instructions to Form 4562, Depreciation and Amortization (Including Information on Listed Property).