Final regulations have been issued by the Treasury Department and the Internal Revenue Service implementing the 100% additional first-year depreciation deduction that allows businesses to write off the cost of most depreciable business assets in the year they are placed in service by the business.
The 100% additional first-year depreciation deduction was created in 2017 by the Tax Cuts and Jobs Act and generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property. Machinery, equipment, computers, appliances, and furniture generally qualify. While the bonus depreciation has been around for a while, the TCJA amended it to include certain used depreciable property and certain film, TV, or live theatrical productions and increased the first-year depreciation deduction to 100 percent (up from 50 percent).
The deduction applies to qualifying property (including used property) acquired and placed in service after September 27, 2017. The final regulations provide clarifying guidance on the requirements that must be met for property to qualify for the deduction, including used property.
Additionally, the final regulations provide rules for consolidated groups and rules for components acquired or self-constructed after September 27, 2017, for larger self-constructed property on which production began before September 28, 2017.
To claim the deduction, taxpayers should use Form 4562, Depreciation and Amortization (Including Information on Listed Property).
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