IRS Outlines Options to Revise Bonus Depreciation Elections

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By Laura Davison

Sept. 15 — Businesses have a menu of options for accounting for bonus depreciation in 2014, after the accelerated expensing allowance was extended after some taxpayers had already filed.

“This is welcome relief if you didn’t take bonus and you wanted to,” Christian Wood, a principal at McGladrey LLP, told Bloomberg BNA.

In Revenue Procedure 2015-48 released Sept. 15, IRS outlined options to amend returns to claim missed bonus depreciation for assets brought into service in 2014, revoke an election or file a change in method of accounting for the current year to claim missed bonus for the 2014 assets, said Kate Abdoo, a tax manager at McGladrey.

“It is definitely helpful for fiscal year taxpayers and taxpayers with a short tax year in 2014,” she said.

No Election, No Problem

The guidance also explains how taxpayers can elect an increased alternative minimum credit limitation if they forgo an accelerated depreciation deduction for property placed into service in 2014. Corporate taxpayers may claim credits allocable to research expenditures or alternative minimum tax liabilities from before 2006, instead of electing a 50 percent first-year depreciation bonus.

The guidance is tied to issues addressed in the Tax Increase Prevention Act of 2014, which amended tax code Sections 168 and 179 to allow corporate taxpayers to choose not to claim the shorter depreciation schedule.

Rev. Proc. 2015-48 “is as flexible as it is complex,” Abdoo said. “Taxpayers need to make sure they understand the various options they have and are working with their advisers to understand the deadlines to a particular option.”

Legislation to make permanent bonus depreciation is scheduled to be marked up by the House Ways and Means Committee on Sept. 17. The bill (H.R. 2510) would permanently let businesses deduct 50 percent of qualified purchased property immediately; include improvements to owned retail stores and restaurant, not just those that are leased; and let businesses choose to forgo bonus depreciation in order to claim some of their unused corporate alternative minimum tax credits. 

Rev. Proc. 2015-48 is scheduled for publication in Internal Revenue Bulletin 2015-40 on Oct. 5.

To contact the reporter on this story: Laura Davison in Washington at ldavison@bna.com

To contact the editor responsible for this story: Brett Ferguson at bferguson@bna.com

Text of Rev. Proc. 2015-48 is in TaxCore.