DALLAS, Dec. 21, 2015 /PRNewswire/ -- The Protecting Americans from Tax Hikes Act of 2015 ("PATH" or "Act"), which was signed into law by the President on December 18, 2015, has many favorable year depreciation changes.
Bonus Depreciation
Bonus depreciation has been a benefit for taxpayers every year since September 11, 2001, with the exception of a three-year hiatus for the tax periods from 2005 through 2007, and will now be a benefit for taxpayers from 2015 through 2019 (and as usual, with an additional year for certain properties with a longer production period).
However, this year's Act provides for a gradual phasedown of bonus depreciation. The bonus depreciation percentage (as an immediate write-off) is as follows for 2015 through 2019:
The special depreciation allowance under Section 168(k) generally provides the following four requirements for property to be eligible for bonus depreciation through December 31, 2019:
Important Details
15-Year Recovery Period for Qualified Leasehold, Restaurant, and Retail Properties
As many thought, the provision for the 15-year recovery period for qualified leasehold, restaurant, and retail properties under Section 168(e)(3) was made permanent. Prior to its permanency, this provision has been extended from October 22, 2004 through December 31, 2014 without missing a year.
Energy Tax Incentives
The PATH of 2015 will extend the Energy Efficient Commercial Buildings Deduction through December 31, 2016. Section 179D offers a tax deduction (not to be confused with the energy investment tax credits (e.g., 10% and 30%), which are available for alternative energy sources—solar, geothermal, wind, etc., placed in service on or before December 31, 2016) of up to $1.80/sf to those investing in energy-efficient improvements to reduce energy use within the building envelope (e.g., insulation, doors, windows, etc.), heating ventilation and air conditioning, and energy-efficient lighting. The building's energy systems must be a specified percentage more efficient than the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) 2001 standards to qualify.
Important Detail
Because the deduction is totally predicated on square footage, taxpayers with a significant amount of square footage (i.e., 50,000 square feet or more) would be prime candidates. There is also a provision in Section 179D that allows designers of government buildings (which include architects and engineers) to take the deduction for any federal, state, or municipal property they designed.
About Ryan
Ryan is an award-winning global tax services firm, with the largest indirect and property tax practices in North America and the seventh largest corporate tax practice in the United States. With global headquarters in Dallas, Texas, the Firm provides a comprehensive range of state, local, federal, and international tax advisory and consulting services on a multi-jurisdictional basis, including audit defense, tax recovery, credits and incentives, tax process improvement and automation, tax appeals, tax compliance, and strategic planning. Ryan is a three-time recipient of the International Service Excellence Award from the Customer Service Institute of America (CSIA) for its commitment to world-class client service. Empowered by the dynamic myRyan work environment, which is widely recognized as the most innovative in the tax services industry, Ryan's multi-disciplinary team of more than 2,100 professionals and associates serves over 12,000 clients in more than 40 countries, including many of the world's most prominent Global 5000 companies. More information about Ryan can be found at ryan.com.
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