Deadline for new depreciation deduction fast approaching

IRS headquarters in Washington, D.C.
IRS headquarters in Washington, D.C.

Business taxpayers who placed qualifying property in service during 2017 but haven’t claimed the new 100-percent depreciation deduction are running out of time to file the election with the IRS.

Individuals and calendar-year corporations must generally file the election with the IRS by Oct. 15.

The deduction, created by the Tax Cuts and Jobs Act, allows businesses to write off most depreciable business assets in the year they are placed in service. Because the deduction is retroactive and applies to qualifying property acquired and placed in service after Sept. 27, 2017, it may affect many 2017 returns. (See IRS Fact Sheet 2018-09 for details.)

The depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less, as well as certain other property. Machinery, equipment, computers, appliances, furniture, certain plants, and qualified film, television and live theatrical productions generally qualify. Taxpayers who elect out of the 100-percent depreciation deduction, as well as the 50-percent deduction available under prior law, must do so by attaching a statement to a timely filed return. Those who have already filed their 2017 return on time and did not elect out but still wish to do so need to file an amended return.

See more in the proposed regulations, in Publication 946 and in Form 4562.

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