IRS Offers Guidance on Not Claiming Depreciation

The IRS recently issued a revenue procedure to help companies that don’t want to claim the 50 percent depreciation deduction on new property included in the stimulus bill.

Rev. Proc. 2009-33 provides guidance regarding the ability of corporations to elect not to claim the 50-percent depreciation deduction for certain extension property placed in service before Jan. 1, 2010, and instead increase their business credit limitation and AMT credit limitation.

Section 1201(b) of the American Recovery and Reinvestment Tax Act of 2009 amends Section 168(k)(4) of the Tax Code to allow corporations to elect not to claim the 50-percent additional first-year depreciation deduction provided by Section 168(k)(1) for certain property placed in service generally before Jan. 1, 2010, and instead to increase their business credit limitation under Section 38(c) and alternative minimum tax credit limitation under Section 53(c).

Specifically, the new revenue procedure provides guidance to corporations regarding the property eligible for this election, the time and manner for making the elections provided by the new Section 168(k)(4)(H), and the computation of the amount by which the business credit limitation and AMT credit limitation may be increased if the elections provided by Section 168(k)(4)(H) are or are not made.