New 100-Percent Depreciation Deduction Benefits Business Taxpayers
Tax reform legislation passed in 2017 includes changes that affect businesses. One of these changes allows businesses to write off most depreciable business assets in the year they place them in service.
Key Facts About This Deduction
Here are some facts about this deduction to help businesses better understand how to claim it:
- The 100-percent depreciation deduction generally applies to depreciable business assets with a recovery period of 20 years or less and certain other property.
- Machinery, equipment, computers, appliances, and furniture generally qualify.
- The 100-percent depreciation deduction applies to qualifying property acquired and placed in service after September 27, 2017.
Election Out of the Deduction
- Taxpayers who elect out of the 100-percent depreciation deduction for a class of property must do so on a timely filed return.
- Those who have already timely filed their 2017 return and did not elect out can still do so.
- These taxpayers have six months from the original filing deadline to file an amended return.
- For calendar-year corporations, this means October 15, 2018.
Frequently Asked Questions
What is the 100-percent depreciation deduction?
The 100-percent depreciation deduction allows businesses to fully expense the cost of eligible depreciable assets in the year they are placed in service, rather than spreading the deduction over multiple years.
What types of assets qualify for this deduction?
Assets with a recovery period of 20 years or less generally qualify, including machinery, equipment, computers, appliances, and furniture used in business operations.
When does the deduction apply?
The deduction applies to qualifying property that was acquired and placed in service after September 27, 2017.
Can a business choose not to take the 100-percent deduction?
Yes, businesses can elect out of the 100-percent depreciation deduction for any class of property. This must be done on a timely filed return, or within six months by filing an amended return.
What is the deadline to file an amended return to elect out for 2017?
For calendar-year corporations, the deadline to file an amended return to elect out of the 100-percent depreciation deduction for the 2017 tax year is October 15, 2018.