Taxpayers with qualified property must act to take advantage of changes to the treatment of qualified improvement property, which is now eligible for bonus depreciation. Here are some considerations for taxpayers and their advisers.
Tax accounting (methods and periods)
The IRS issued procedures for how taxpayers can take advantage of the recently enacted technical correction to the rules for qualified improvement property (QIP).
Real property or farming trades or businesses can withdraw their decision to elect out of Sec. 163(j)’s business interest expense limitation for a 2018, 2019, or 2020 tax year.
FASB issued a standard that is designed to reduce cost and complexity in accounting for income taxes.
Change is hard, especially without a Form 3115, Application for Change in Accounting Method.
The IRS released its updated procedures for automatic accounting method changes, which are accounting method changes that can be made without the IRS’s consent.
A recent law change invites new strategies.
The IRS issued its annual notice specifying the special per-diem rates, including the transportation industry meal and incidental expenses rates, the rate for the incidental-expenses-only deduction, and the rates and list of high-cost localities for purposes of the high-low substantiation method.
Taxpayers that use the accrual method and receive advance payments for good or services were given new rules by the IRS on when to include the advance payments in income.
The Tax Cuts and Jobs Act made some widely applicable but, perhaps, lesser-known changes to accrual accounting rules.
The IRS provided the limitations on depreciation deductions for passenger automobiles first placed in service in 2019 and the amounts of income inclusion for lessees of passenger automobiles first leased during 2019.
Rev. Proc. 2019-13 allows a deduction in succeeding years of excess unrecovered basis remaining after the Sec. 280F first-year limitation.
The IRS issued a safe-harbor procedure that taxpayers may follow for determining the deduction for depreciating passenger vehicles when they are eligible for 100% bonus depreciation but are also subject to the Sec. 280F limits on deductions for luxury automobiles.
The cash method and other favorable rules are now more widely available with Tax Cuts and Jobs Act changes.
TCJA changes also include that eligible property does not have to be new.
The IRS announced procedures for taxpayers to change their accounting method to comply with the amendment of Sec. 451(b) enacted by the tax law known as the Tax Cuts and Jobs Act.
The IRS issued final regulations on the use of negative adjustments under Sec. 263A’s simplified methods for determining costs that must be capitalized.
The IRS is proposing to remove regulations on advance payments and long-term contracts to reflect amendments to Sec. 451 included in the law known as the Tax Cuts and Jobs Act.
The IRS issued proposed regulations providing guidance on Sec. 168(k), which was amended by P.L. 115-97, known as the Tax Cuts and Jobs Act, to increase the allowable first-year depreciation deduction for qualified property from 50% to 100%.
Forthcoming regulations will cover consolidated groups and carryforward of pre-TCJA interest expense.