The Treasury Department and the Internal Revenue Service today released the last set of final regulations implementing the 100% additional first-year depreciation deduction that allows businesses to write off the cost of most depreciable business assets in the year they are placed in service by the business.
The 100% additional first-year depreciation deduction was created in 2017 by the Tax Cuts and Jobs Act and generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances and furniture generally qualify.
The deduction applies to qualifying property (including used property) acquired and placed in service after Sept. 27, 2017. The final regulations provide clarifying guidance on the requirements that must be met for property to qualify for the deduction, including used property.
Additionally, the final regulations provide rules for consolidated groups and rules for components acquired or self-constructed after Sept. 27, 2017, for larger self-constructed property on which production began before Sept. 28, 2017.
For details on claiming the deduction, see the final regulations and the instructions to Form 4562, Depreciation and Amortization (Including Information on Listed Property).
In addition, the Treasury Department and the Internal Revenue Service plan to issue procedural guidance for taxpayers to opt to apply the final regulations in prior taxable years or to rely on the proposed regulations issued in Sept. 2019.
For more information about this and other TCJA provisions, visit IRS.gov/taxreform