Section 168(k) Bonus Depreciation Regulations: Claiming 100% First-Year Depreciation Deduction

With bonus depreciation allowed at 100 percent through 2022, taxpayers can fully deduct the cost of eligible property. Bonus depreciation continues after 2022 and through 2026; however, the percentage deductible is lower than the 100 percent available now.

According to the IRS, the property must meet four requirements to qualify:

1. the depreciable property must be of a specified type
2. the original use of the property must commence with the taxpayer, or used depreciable property must meet the requirements of Section 168(k)(2)(E)(ii)
3. the depreciable property must be placed in service by the taxpayer within a specified time or must be planted or grafted by the taxpayer before a specified date
4. the taxpayer must acquire the depreciable property after Sept. 27, 2017.

The interplay with Section 179 and whether it or bonus depreciation is more valuable can be a critical tax-saving determination. Unlike Section 179, there is no phase-out range or maximum deduction for bonus depreciation. Since bonus depreciation is mandatory, tax professionals must understand Section 168(k) requirements and when and how to elect out of bonus depreciation treatment as needed.

Listen as our experienced panel provides a thorough and practical exploration of Section 168(k) bonus depreciation provisions, including the most recent regulatory guidance.

1. Tax reform law Section 168(k) bonus depreciation provisions
2. Qualifying property
3. Percentage deductible by year
4. Section 179 vs. 168(k) deductions
5. Calculating the depreciation deduction
6. Electing out
7. State treatment of bonus depreciation
8. Planning opportunities and risks

The panel will discuss these and other priority topics:

• What rules determine whether property qualifies for the 100 percent first-year depreciation deduction under Section 168(k)?
• What is considered qualified improvement property and eligible for the 100 percent deduction?
• What percentage bonus depreciation is allowed for purchases in varying years?
• When should a taxpayer elect out of bonus depreciation treatment?
• When is Section 179 a better alternative to bonus depreciation?

Learning Objectives

After completing this course, you will be able to:

• Identify situations when electing out of bonus depreciation could benefit a taxpayer
• Determine the criteria for determining whether a depreciable property is eligible for 100 percent first-year of service depreciation deduction under Section 168(k)
• Decide what percentage depreciation is deductible based on the property type and year of acquisition
• Ascertain when Section 179 is more advantageous than the 168(k) deduction

• 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).