IRS Now Allows Taxpayers to Revoke or Make Late Bonus Depreciation Elections by Angie Adames, CPA

Posted on August 15, 2019 by Angie Adames

The IRS has issued new regulations permitting taxpayers to change the bonus depreciation treatment of certain property acquired after Sept. 27, 2017, and placed in service during a tax year that includes Sept. 28, 2017.

The Tax Cuts and Jobs Act (TCJA) that went into effect on Jan. 1, 2018, made several changes to bonus depreciation, such as:

  1. Increasing the availability of a first-year depreciation deduction for qualifying property from 50 percent to 100 percent,
  2. Expanding the definition of qualifying property to include certain used, previously owned assets that taxpayers buy and put into business service before January 1, 2027.
  3. Allowing taxpayers to refrain from deducting the additional first year depreciation for all qualified property that is in the same class of property and placed in service by the taxpayer in the same tax year, and
  4. Permitting taxpayers to deduct 50 percent, instead of 100 percent, additional first-year depreciation for all qualified property acquired after September 27, 2017, and placed in service by the taxpayer during its taxable year that includes September 28, 2017.

This final provision has been a cause of concern for taxpayers who already filed their federal returns for the tax year that included Sept. 28, 2017, and who failed to make a timely election due to the limited amount of time they had to analyze the effects of such action.

Under the most recent IRS guidance, taxpayers that did not make timely elections for the 2017 tax year have a limited window of time to now make or revoke the bonus depreciation elections for certain property, by filing amended tax returns or Forms 3115, Application for Change in Accounting Method, with the taxpayer’s timely filed federal tax return for the first, second, or third tax year succeeding the 2016 tax year or the 2017 tax year. This is particularly helpful for taxpayers that chose to be conservative and did not previously take bonus depreciation on qualifying improvement property (QIP) they put into service after Sept. 27, 2017.

About the Author: Angie Adames, CPA, is an associate director of Tax Services with Berkowitz Pollack Brant, where she provides tax and consulting services to real estate companies, manufacturers and closely held business. She can be reached at the firm’s Miami office at (305) 379-7000 or via email at

Information contained in this article is subject to change based on further interpretation of tax laws and subsequent guidance issued by the Internal Revenue Service.