The Tax Cuts and Jobs Act (TCJA) significantly expands bonus
depreciation under Section 168(k) of the Internal Revenue Code for
both regular tax and alternative minimum tax (AMT) purposes. Now,
the IRS has released proposed regulations that clarify the
requirements that businesses must satisfy in order to claim bonus
depreciation deductions. Although the regulations are only proposed
at this point, the IRS will allow taxpayers to rely on them for
property placed in service after September 27, 2017 for tax years
ending on or after September 28, 2017.
Previous law
Under pre-TCJA law, businesses could claim a first-year bonus
depreciation deduction equal to 50% of the basis of qualifying new
(not used) assets placed in service in 2017. The deduction was
available for the cost of qualifying new assets, including
computers, purchased software, vehicles, machinery, equipment and
office furniture. Used assets did not qualify for the
deduction.
