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Assistant Editor: Clinton Larson
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of HLB International
Resurrecting Depreciation Provisions
The higher deduction levels of Section 179, along
with the bonus depreciation provision, expired
December 31, 2014, as did approximately 60 other
tax extender provisions. While tax legislation can be
challenging to predict, recent events have given us
some glimmer of hope that the lapsed depreciation
provisions will be resurrected and even improved.
Legislative Movement
The House of Representatives passed a bill in
February 2015 to make the lapsed Section 179
provisions permanent, including indexing the
$500,000 maximum allowance and the $2 million
phase-out threshold for inflation starting in 2016.
More recently, two new pieces of legislation have
been introduced in the House.
One increases
bonus depreciation from 50 percent to 100 percent,
and both make bonus depreciation permanent,
mirroring legislation passed in the House during
the last Congressional session but failing to get
Senate attention.
In June, the Senate Finance Committee broached
the topic of tax extenders and decided to extend 52
lapsed tax provisions, generally with a two-year
extension through 2016 and retroactive application
back to January 1, 2015. Items included were the
extension of 50 percent bonus depreciation; extension
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of the expensing limit of eligible Section 179
property to $500,000, as well as investment-based
phase-out amount to $2 million and an expanded
definition of what qualifies as Section 179 eligible
property; an election to accelerate AMT credits in
lieu of additional first-year depreciation; continued
allowance of accelerated depreciation for business
property on an American Indian reservation; and
the 15-year recovery periods for qualified leasehold
improvement property, qualified retail improvement
property and qualified restaurant property.
Decision Could Come Soon
Although the lapsed depreciation provisions seem
likely to be extended again, permanency of bonus and
Section 179 provisions are still in question and will
await full Congressional action, anticipated this fall.
Hopefully, this will save taxpayers and the IRS from
the recent tradition of tax extender passage agony in
the final week of December, if not later.
C O N TA C T
Julie Helms
Cost Segregation Senior Manager
612.253.6511
jhelms@eidebailly.com
.