First year depreciation deduction under section 168 | KPMG | GLOBAL
close
Share with your friends

Proposed regulations: Additional first year depreciation deduction under section 168

First year depreciation deduction under section 168

The U.S. Treasury Department and IRS today released for publication in the Federal Register proposed regulations (REG-104397-18) as guidance about the increased and expanded first year depreciation deduction for qualified property pursuant to measures added to the Code by the new tax law (Pub. L. No. 115-97, enacted December 22, 2017).

1000

Related content

 

 

As noted in a related Treasury release, the increased first year depreciation will allow certain businesses to expense equipment purchases and make capital investments in their companies. The new tax law increased the first year depreciation deduction from 50% to 100% for qualified property acquired and placed in service after September 27, 2017. The first year allowance is 100%, and is then decreased by 20% annually for qualified property placed in service after December 31, 2022. The new tax law also expanded the definition of “qualified property” to include certain used depreciable property and certain film, television, or live theatrical productions.  The proposed change also extends the placed-in-service date by “seven years from January 1, 2021, to January 1, 2027.”

A related IRS release—IR-2018-159—directs taxpayers to the instructions for Form 4562, Depreciation and Amortization (Including Information on Listed Property), for details on claiming or electing out of the deduction. Taxpayers who elect out of the 100% depreciation deduction must do so on a timely filed return. The IRS release explains that taxpayers that have already filed their 2017 return and either did not claim the mandatory deduction on qualifying property, or did not elect out but still wish to do so, will need to file an amended return.

The purpose of this report is to provide text of the proposed regulations (that are scheduled to be published in the Federal Register on August 8, 2018). A report of initial impressions about these regulations will be provided in a future report by KPMG.

© 2018 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit