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Final regulations for additional first-year depreciation allowance (pending OIRA review)

Additional first-year depreciation allowance, review

OMB’s Office of Information and Regulatory Affairs (OIRA) has received for review from the U.S. Treasury Department final regulations under section 168(k)—the “bonus depreciation” provision added to the Code by the 2017 tax law (Pub. L. No. 115-97) or the law that is also known as the “Tax Cuts and Jobs Act” (TCJA).

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Treasury regulations that are identified as “major” regulations are subject to review by OMB’s OIRA before being issued, pursuant to Executive Order 13771.

According to OIRA, the following regulations were received for review on July 25, 2019:

  • RIN: 1545-BO74: Additional first-year depreciation allowance   
  • RIN: 1545-BP32: Revisions to the section 168(k) final regulations [TCJA]

The final regulations are described on the OIRA website, as follows:

Revising regulations under 26 U.S.C. 168(k) by adding 1.168(k)-2 (additional first-year depreciation allowance for qualified property) to provide rules for implementing modifications to 26 U.S.C. 168(k), made by the enactment of Pub. L. 115-97 (Tax Cuts and Jobs Act of 2017) section 13201.

Background

Under the TCJA provision, qualified property is generally eligible for 100% bonus depreciation if it is acquired and placed in service after September 27, 2017, and before 2023 (with certain long-lived property, transportation property, and aircraft eligible through 2023). Bonus depreciation phases out after 2022 on a set schedule. Both new and used property are generally eligible for bonus depreciation.

The proposed bonus depreciation regulations were released in August 2018. Read a KPMG report providing initial impressions of the proposed regulations: TaxNewsFlash

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