September 20, 2019   //   Tax   //   By PKF Mueller Solutions


Final Regulations Issued on 100% Bonus Depreciation, Increasing Cost Segregation Opportunities

The IRS has issued final regulations regarding property constructed under contracts in place before the bonus activation date of September 28, 2017. The new rules specify that the “acquisition date” is the later of:

  1. The date on which the contract is entered into;
  2. The date on which the contract is enforceable under State law;
  3. If the contract has one or more cancellation periods, the date on which all cancellation periods end; or
  4. If the contract has one or more contingency clauses, the date on which all conditions subject to such clauses are satisfied.

For self-constructed property, the acquisition date is now the date that the taxpayer begins manufacturing, constructing, or producing the property.

Qualified Improvement Property Update

One issue the new regulations did not address is the technical correction necessary to make Qualified Improvement Property a 15-year depreciable asset. So building renovations and tenant improvements are currently considered “building” assets, not eligible for bonus depreciation after December 31, 2017. These assets may still be segregated to identify personal property within the improvements that qualifies for 100% bonus.

Property Required to Be Depreciated Under ADS

In addition, the regulations clarified that if property owners elect to use Alternate Depreciation System (ADS) depreciation on real property in order to avoid business interest expense limitations, it does not restrict them from taking bonus depreciation on other eligible assets.

For more on cost segregation opportunities, visit [] or contact Cathy Harris at or 757-589-0020.
Republished permission courtesy of The Harbor Tax Group.