Find liquidity through the look-back depreciation opportunity
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) includes a technical correction of an error in the Tax Cuts and Jobs Act of 2017 (TCJA) related to the depreciation of qualified improvement property (QIP). In the TCJA, Congress intended to allow a 15-year recovery period (20 years for alternative depreciation system) and 100% bonus depreciation eligibility for QIP. Due to a drafting error, however, the statute failed to include QIP as eligible property for purposes of the recovery period and the bonus depreciation rules. As a result, QIP was subject to a 39-year recovery period and was not eligible for bonus depreciation.
The CARES Act corrects the error in the TCJA and allows the 15-year recovery period and bonus depreciation eligibility retroactively for property placed into service after Dec. 31, 2017. Accordingly, taxpayers now can claim additional depreciation for QIP placed in service in 2018 and 2019.