Time is running out for taxpayers looking to take a depreciation deduction on certain property they have used in 2017. Individuals and calendar-year corporations must generally file the election with the IRS by October 15th.
The 100% depreciation deduction was created by the recent Tax Cuts and Jobs Act legislation. The deduction allows businesses to write off most depreciable business assets in the year they are placed in service. The deduction is retroactive and does apply to qualifying property that was acquired and placed in service after September 27th, 2017 and may affect many 2017 returns. The new law increased the depreciation percentage from 50% to 100% for qualifying property.
The depreciation deduction applies to business assets that are depreciable with a recovery period of 20 years or less. Property that generally will qualify for this deduction includes computers, equipment, machinery, appliances, furniture, certain plants, theatrical productions. The definition of property eligible for 100% bonus depreciation was expanded to include used qualified property acquired and placed in service after Sept. 27th, 2017, if all the following factors apply:
- The taxpayer or its predecessor didn’t use the pro
perty 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 is not figured in whole or in part by reference to the adjusted basis of the property in the hands of the seller or transfer
- 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
If you want to elect out of the 100% depreciation deduction and elect out of the 50% deduction from the prior tax law, must do so by attaching a statement with their federal tax return. If you have already filed your 2017 income tax return and want to elect out, you must file an amended return.
If you need help filing for the depreciation or just filing your federal income tax return in general, Polston Tax can help! Our team of tax accountants and preparers can help make sure you take advantage of all the deductions and credits. Call us today at 844-841-9857 or click below to schedule a free consultation.