BONUS DEPRECIATION AFTER THE PATH ACT

As part of the Protecting Americans From Tax Hikes (PATH) Act of 2015, P.L. 114-113, Division Q, Congress made a notable change to the definition of qualifying property for bonus depreciation purposes that received little attention, overshadowed by the fanfare given to the extension of bonus depreciation through 2019 (through 2020 for certain longer-lived and transportation property). Applicable to improvements placed in service starting in 2016, Congress created “qualified improvement property,” a class of nonresidential real property now eligible for bonus depreciation irrespective of its recovery period. Taxpayers will have to determine separately if real property improvements are eligible for bonus depreciation and what their applicable recovery period is (generally 15 or 39 years for nonresidential real property). To be clear, not all nonresidential real property is eligible to be classified as qualified improvement property for bonus depreciation purposes.  Author: Nathan P. Clark, CPA.  Source:  The Tax Adviser.  Learn more…