IRS announced relaxed sec 179 rules and de minimis rules for 162 deductions and Bonus
Sec 179 -- The PATH Act retroactively extended and made permanent the $500,000 expensing limitation and $2 million investment ceiling amount . It indexed these amounts for inflation and expensing of qualified real property in hade permanent witoy the carryove limitations. HVAC units are now eligible for expensing. .
Sec 162 -- The next new rules apply only to non residential property. Final tangible property regs permit businesses to elect to expense their outlays for “de minimis” business expenses for an amount paid during the tax year to acquire or produce a unit of property or acquire a material or supply. You must follow these rules if you do not have a qualified CPA to prepare a Financial Statement: (1) written accounting procedures are in place at the beginning of the year to treat these expenses as deductible provided they have a useful life of 12 months or less and cost less than $2500; (2) you must treat the entire amount as an expense; and (3):if you have an applicable financial statement ( such as a financial statement required to be filed with the Securities and Exchange Commission or a certified audited financial statement accompanied by an independent CPA's report and used for credit or reporting purposes) the amount deducted can increase to $5000 per invoice.
Assets expensed under the de minimis safe harbor election may be deducted in the year of purchase, assuming that the costs that otherwise qualify as ordinary expenses, and assuming the costs don't have to be capitalized under the UNICAP rules of sec 263.
Bonus depreciation -- The new rules also make more building improvements eligible for bonus depreciation. Under the old law, the qualified leasehold improvement property that qualified for bonus depreciation included any improvement to an interior portion of a building that was nonresidential real property, if (1) the improvement was made under or pursuant to a lease; (2) the interior building portion was to be occupied exclusively by the lessee or sublessee; (3) the improvement was placed in service more than 3 years after the date the building was first placed in service by any person (i.e., not necessarily the taxpayer) and (4) the improvement was a structural component of the building. However, qualified leasehold improvement property didn't include any improvement for which the expense was attributable to (a) enlargement of the building, (b) any elevator or escalator, (c) any structural component benefiting a common area, or (d) the internal structural framework of the building.
The PATH Act now relaxed the rules by making: (1) building improvements eligible for bonus depreciation regardless of whether the improvements are property subject to a lease; (2) the improvement need not be placed in service more than three years after the date the building was first placed in service; and (3) structural components of a building that benefit a common area are no longer excluded from the definition of qualified improvements.
A qualified improvement property is any improvement to an interior portion of a building that is nonresidential real property if the improvement is placed in service after the date the building was first placed in service. But qualified improvement property doesn't include any improvement for which the expense is attributable to: the enlargement of the building; any elevator or escalator; or the internal structural framework of the building.
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