IRS Provides Guidance for Bonus Depreciation Extension

The Internal Revenue Service has released new guidance for taxpayers making certain elections and filing amended returns to take advantage of the tax extenders in last December’s PATH Act for bonus depreciation.

In Revenue Procedure 2016-48, the IRS noted the PATH Act of 2015 generally extends the application of the additional first-year depreciation deduction, known as bonus depreciation, along with the election out of bonus depreciation for round 5 extension property, and the expensing provision for qualified real property, for property placed in service in 2015.

Section 124(c)(1) of the PATH Act amended the Tax Code by extending the application of Section 179 expensing from any taxable year beginning after 2009 and before 2015 to any taxable year beginning after 2009 and before 2016.

The PATH Act also amended the Tax Code by extending the placed-in-service date for property to qualify for the 50-percent additional first-year depreciation deduction.

In addition, the law amended the Tax Code by allowing corporations to elect not to claim the 50-percent additional first-year depreciation deduction for certain property placed in service generally after Dec. 31, 2014, and before Jan. 1, 2016, and instead to increase their alternative minimum tax credit limitation under Section 53(c) of the Code.

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