The following elections are addressed in the Revenue Procedure. Conversely, some of these elections may now be preferred by taxpayers. Now that QIP has a recovery period of 15 years, and is therefore eligible for bonus depreciation, certain elections taxpayers may have made for 2018 and/or 2019 may cause unintended consequences for taxpayers. 2020-22.įurthermore, QIP for which the taxpayer deducted or deducts the cost or other basis of such property as an expense is also not affected by this Revenue Procedure.ĭepreciation Elections Affected by the Revenue ProcedureĪlso addressed in the Revenue Procedure are certain elections relating to depreciation. Any changes to depreciation for such QIP, or other depreciable property, affected by a late election or withdrawn election are made in accordance with Rev. 163(j)(7)(C) to be treated as an electing farming business. 163(j)(7)(B) to be treated as an electing real property trade or business or under IRC Sec. It should be noted that the Revenue Procedure is not applicable to QIP placed in service by a taxpayer that made a late election, or withdrew an election, under IRC Sec. The Revenue Procedure discusses the procedures for taxpayers to implement the retroactive change.Ĭertain QIP Not Affected by the Revenue Procedure
IRC 168 HOW TO
Since the change was retroactive to January 1, 2018, taxpayers have needed guidance on how to update tax returns already filed for 2018 and possibly for 2019. Not only is there a reduced recovery period for QIP, but the new classification also provides that QIP acquired by a taxpayer after September 27, 2017, and placed in service after December 31, 2017, is eligible for bonus depreciation. Specifically, a change in the recovery period of qualified improvement property (“QIP”) provides a significant tax benefit for certain taxpayers. Revenue Procedure 2020-25 (the “Revenue Procedure”), released by the IRS on April 17, provides much needed guidance for taxpayers on how to make certain adjustments resulting from the recent CARES Act.
IRC 168 LICENSE