IRS Finalizes Regulations for 100 Percent Bonus Depreciation

The U.S. Internal Revenue Service (IRS) has released the last set of final regulations implementing the 100 percent additional first-year depreciation deduction that allows companies to write off the cost of most depreciable business assets, including business aircraft, in the year they are placed in service. These final regulations further clarify the increased deduction that initially went into effect in 2017 and expand the qualified property that are placed in service after Sept. 27, 2017 and before Jan. 1, 2027 (Jan. 1, 2028, for certain aircraft).

Additionally, the final regulations provide clarifying guidance on the requirements that must be met for property to qualify for the deduction, including used property. Finally, the latest revisions also withdraw a portion of the proposed regulations published on Sept. 24, 2019.

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Instructions on claiming the deduction, including special guidance for aircraft and other products with long-production periods, are contained in IRS Form 4562.

The IRS plans to issue procedural guidance for taxpayers to apply the final regulations in prior taxable years or to rely on the proposed regulations issued on Sept. 24, 2019.