Depreciation and Expensing: New Rules and Limits Under Current Tax Law

The new tax law includes favorable changes for taxpayers for recovering costs of capital expenses for business purposes. Changes to certain depreciation and expensing rules lowered the cost of acquiring capital assets, providing tax benefits and planning opportunities to businesses.

The new expensing and cost recovery changes the analysis for cost recovery in determining the appropriate tax treatment for tangible property expenditures. Before tax reform, taxpayers could deduct 50% of the cost of tangible personal property placed in service during the tax year followed and apply accelerated depreciation to the remaining 50% of the cost.

Now, taxpayers may take 100% bonus depreciation on qualified property acquired and placed in service after Sept. 27, 2017, subject to a phase-out beginning in the year 2023. The definition of “qualified property” has also been expanded to include used assets subject to specific limitations.

The expansion of IRC §179 increases the maximum amount a taxpayer may expense up to $1 million and increases the threshold amount to $2.5 million, expanding the availability of IRC §179 to more taxpayers. IRC §179 property now includes specific depreciable tangible personal property, and the definition of “qualified property” for IRC §179 purposes now covers some improvements made to nonresidential real property as well. Tax professionals and advisers must be knowledgeable of the requirements and nuances of the new depreciation and expensing rules to properly advise and develop tax saving techniques for taxpayers.

Listen as our panel provides a detailed analysis of the new rules for depreciation and expensing and provides planning considerations for tax professionals and advisers.

1. Overview of the new depreciation and expensing rules under current tax law
2. Bonus depreciation rules and appropriate tax treatment of tangible property
3. Determining qualified property under the new rules and limitations
4. Applicable recovery periods for real property
5. Expansion of IRC §179 expensing and necessary requirements for application
6. Planning considerations to ensure tax savings for taxpayers

The panel will review these and other critical issues:

• Application of the depreciation and expensing rules under current tax law
• Bonus depreciation challenges and limitations
• IRC §179 expansion and deduction requirements
• Determining “qualified property” bonus depreciation and IRC §179 purposes
• Limitations on personal use property
• Understanding the recovery periods for real property and considerations for electing out of interest expense deduction limitations
• Comparing bonus depreciation and IRC §179 in deductions and factors regarding NOL limitations
• Planning methods to ensure tax savings for taxpayers

Learning Objectives

After completing this course, you will be able to:

• Understand the depreciation and expensing rules under current tax law
• Identify eligible qualified property for bonus depreciation and IRC §179 purposes
• Recognize the limitations for bonus depreciation and IRC §179 deductions
• Determine the placed-in-service date of an asset for bonus depreciation

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years plus business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of depreciation and expensing rules, the technical calculations and planning opportunities of related provisions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).