Title: CARES Act Makes Qualified Improvement Property Eligible for Bonus Depreciation | Wolters Kluwer
Headings: CARES Act Makes Qualified Improvement Property Eligible for Bonus Depreciation
CARES Act Makes Qualified Improvement Property Eligible for Bonus Depreciation
Bonus depreciation of QIP
QIP definition clarified
Taking action: Form 3115 and amended return options
Automatic accounting method changes
Bonus depreciation elections and QIP
Other election-out considerations
Wolters Kluwer United States

Content: The technical correction in the CARES Act has no impact on this property. QIP definition clarified
QIP is an internal structural improvement (section 1250 property) made to nonresidential real property after the real property is placed in service. However, QIP does not include expenditures attributable to: the enlargement of a building,
an elevator or escalator, or
the internal structural framework of a building. The CARES Act clarifies that the improvement must be “made by the taxpayer.” This means that a taxpayer may not purchase real estate and treat improvements previously made by the seller as QIP. However, this requirement is not expected to affect lessors who gave construction allowances to tenants that allow them to depreciate improvements the tenants built. Taking action: Form 3115 and amended return options
Taxpayers who filed returns that used a 39-year recovery period to depreciate post-2017 QIP file a Form 3115, Application for Change of Accounting Method, or an amended return in order to take advantage of the new 15-year recovery period. However, the IRS has informally confirmed that it will issue additional guidance in the coming weeks.