Bonus Depreciation: Making Informed Decisions About Upcoming Capital Investments

Mastering the Latest Guidance and Navigating the Complexities of the Qualifying Rules

Qualifying property must be placed in service by Dec. 31, 2011

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Tuesday, August 9, 2011

Recorded event now available

or call 1-800-926-7926
Course Materials

This teleconference will explain the federal rules and guidance for 100% bonus depreciation, review the landscape of state matches or decouplings, and discuss potential tax advantages and pitfalls in upcoming corporate investment decisions.

Description

Over the next few months, companies, their federal tax professionals and outside tax advisors must make critical decisions about capital investments. Equipment must be placed in service by Dec. 31, 2011, to qualify for a 100% bonus depreciation deduction approved by Congress in 2010.

IRS Rev. Proc. 2011-26 provides long-awaited guidance on qualifying for the latest bonus depreciation and applying limits and special exceptions. However, this guidance does not simplify the complex decisions involving acquisition dates, improvements to existing property, like-kind exchanges, etc.

State policies on 100% bonus depreciation are a mishmash of complete matches, outright decouplings and phased-in allowances of the tax benefit. Tax professionals and advisors must soon navigate the material rules to help companies make investment decisions before the Dec. 31 deadline.

Listen as our panel of experienced federal tax advisors updates you on the federal rules for, and state approaches to, 100% bonus depreciation and explores complex aspects of decisions about qualifying equipment, leasehold and other investments.

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Outline

  1. Background: Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010
    1. Providing 100% bonus depreciation for qualifying property:
      1. That was placed in service between Sept. 8, 2010 and Dec. 31, 2011
      2. Whose original use commenced with the taxpayer after Sept. 8, 2010
      3. That was subject to a binding written contract commencing after Dec. 31, 2007
  2. IRS Rev. Proc. 2011-26
    1. Amplified on legislation to say that qualifying costs must be paid or incurred after Sept. 8, 2010
    2. Important for self-constructed assets such as leasehold improvements
    3. Limited exception election for larger, self-constructed projects
    4. Step-down election for 50% bonus depreciation, in lieu of 100% bonus depreciation, for qualifying property placed in service in a tax year that includes Sept. 9, 2010
  3. Related compliance and planning issues to keep in mind
    1. Certain types of property that aren’t presently subject to bonus depreciation will qualify, if they also meet the definition of “qualified leasehold improvement property”
    2. Remedies for fiscal-year taxpayers filing returns prior to retroactive extension of bonus depreciation
    3. Sect. 3.02(2)(b) safe harbor
    4. Safe harbor election for Sect. 280(F) property
    5. Other issues
  4. State matches of or decouplings from federal 100% bonus depreciation
    1. States that completely track bonus depreciation
    2. States that don’t recognize it
    3. States that gradually allow subtractions to recover for addback

Benefits

The panel will analyze these and other key bonus depreciation topics:

  • Qualifying rules: The most relevant guidance in Rev. Proc. 2011-26.
  • Continuing challenges: What you need to know about the binding contract exceptions, possibilities for bonus depreciation on tenant leasehold improvements and other improvements to existing property, like-kind exchanges, Sect. 280 limitations, etc.
  • State matches: Which states where your company files income tax returns match or part from this latest federal bonus depreciation?
  • Take bonus depreciation or not: In which situations might a business taxpayer not welcome the 100% bonus depreciation?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Mary Burke Baker
Mary Burke Baker
Government Affairs Advisor
K&L Gates

Her practice specializes in business and individual federal tax matters, including technical tax issues. She has more...  |  Read More

Tom Windram
Tom Windram
Managing Director
RSM McGladrey

He is assigned to the firm's Washington National Tax Practice and also serves as national leader of its Federal Tax...  |  Read More

McGuire, David
David McGuire
Director
McGuire Sponsel

Mr. McGuire's client work concentrates on depreciation law, fixed assets and cost segregation. Before founding the...  |  Read More

Meyette, Edward
Edward (Ed) Meyette
Partner
Crowe

Mr. Meyette leads the firm's Tax Accounting Methods Practice and works with large and middle-market companies...  |  Read More

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