1. Tax Developments
http://www.ryan.com/Tax-Gateway/Tax-Developments?year=2014&month=12&id=816d474b-fdcd-43db-aefd-4c45b0b8300a[12/30/2014 2:25:43 PM]
TAX DEVELOPMENTS
Retroactive Increase to
Mass Transit and Parking
Benefit.
Included as part of the Tax
Increase Prevention Act of
2014 signed by the
President on December 19,
2014 were changes to
mass... >More
50% Bonus Depreciation
Reinstated for One Year.
On December 16, 2014, the
Senate voted to renew a
collection of expired tax
provisions commonly
referred to as “tax
extenders,” while the...
>More
View all Tax Developments >
PRESS ROOM
Ryan Named to the 2014
Best Places to Work in
New York City List.
Ryan, a leading global tax
services firm with the
largest indirect and property
tax practices in North
America, today announced
that the Firm... >More
TAX GATEWAY
Search by Topic
Search by State
Tax Developments
Articles
Events
Webinars
2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 |
2002 | 2001 | 2000 | 1999
All | JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP | OCT | NOV | DEC
Tax Developments
Share
December 22, 2014
FOR IMMEDIATE RELEASE
50% Bonus Depreciation Reinstated for One Year.
On December 16, 2014, the Senate voted to renew a collection of
expired tax provisions commonly referred to as “tax extenders,” while
the House approved the same bill earlier this month. As such, we expect
the President to sign the full bill before Christmas. The Tax Increase
Prevention Act of 2014 will provide for the reinstatement for one year
several tax provisions in connection with tax depreciation under the
Modified Accelerated Cost Recovery System (MACRS).
Most notably, the Tax Increase Prevention Act of 2014 will extend the
50% first-year bonus depreciation allowance for one year for qualifying
property placed in service in the tax year through 2014. For anyone that
has dealt with tax depreciation from both a federal and state tax
perspective, bonus depreciation shouldn’t be a foreign issue. In fact,
bonus depreciation has been in play every year since September 11,
2001, with the exception of a three-year hiatus for the tax periods from
2005 through 2007.
The special depreciation allowance under Section 168(k) generally
provides the following four requirements for property to be eligible for
50% bonus depreciation:
1. The depreciable property must be a certain type [i.e., qualified
property—tangible property under MACRS with a recovery
CAPABILITIES ABOUT US CAREERS TAX GATEWAY CONTACT RYAN GLOBAL
2. Tax Developments
http://www.ryan.com/Tax-Gateway/Tax-Developments?year=2014&month=12&id=816d474b-fdcd-43db-aefd-4c45b0b8300a[12/30/2014 2:25:43 PM]
Ryan Named to the 2014
Best Places to Work in
Pennsylvania List; Ranks
Second in the Large
Employer Category.
Ryan, a leading global tax
services firm with the
largest indirect and property
tax practices in North
America, today announced
that the Firm... >More
View all News Releases >
period of 20 years or less (including off-the-shelf software) and
qualified leasehold improvement property];
2. The original use of the depreciable property must commence
with the taxpayer after the relevant bonus depreciation date (i.e.,
bonus depreciation is available only for new equipment);
3. The depreciable property must be acquired by the taxpayer
before January 1, 2015; and
4. The depreciable property must be placed in service before
January 1, 2015.
The most pressing issue for taxpayers at this time is placing their new
acquisitions into service before January 1, 2015. Federal tax rules
define “placed in service” as property that is ready and available for its
intended use. For example, if a taxpayer builds out office space that is
ready and available for use before January 1, 2015; however, the space
isn’t occupied until February of 2015, the leasehold improvements
would still qualify for bonus depreciation, as well as qualified leasehold
improvement property as noted below, if all the other requirements are
met.
In addition to the bonus depreciation changes, the Tax Increase
Prevention Act of 2014 will reinstate the 15-year recovery period for
qualified leasehold improvements, including restaurant and retail
improvement property. Generally, most lessees’ improvements will
qualify as qualified leasehold improvement property; however, the
biggest hurdle for qualified leasehold improvement property, as well as
bonus depreciation, is that the improvement needs to be placed in
service more than three years after the date the building was first
placed in service. For example, if the taxpayer leased and built out
space in a building that was only two years old, the leasehold
improvements would neither qualify for bonus depreciation nor the 15-
year recovery period and would be deemed as leasehold improvement
property (not qualified leasehold improvement property) and thus
depreciated over a 39-year recovery period without qualifying for bonus
depreciation.
Further, the Tax Increase Prevention Act of 2014 will extend the Energy
Efficient Commercial Buildings Deduction through December 31, 2014.
Section 179D offers a tax deduction (not to be confused with the energy
tax credits for alternative energy sources—solar, geothermal, wind, etc.)
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 for Heating,
Refrigerating, and Air-Conditioning Engineers (ASHRAE) 2001
standards to qualify. Since 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 includes architects and engineers) to take the deduction for any
federal, state, or municipal property they designed.
The Tax Increase Prevention Act of 2014 also increases the deduction
and investment limits under Code Section 179. Generally, Section 179
permits a business that satisfies limitations on annual investment to
elect to expense the cost of qualifying property rather than depreciate
the cost over time. For the tax year beginning in 2014, taxpayers are
permitted to expense up to $500,000 of the cost of qualifying property
under Section 179, reduced (dollar by dollar) by the amount by which
the qualified investment exceeds $2,000,000. Qualifying property
![Tax Developments
http://www.ryan.com/Tax-Gateway/Tax-Developments?year=2014&month=12&id=816d474b-fdcd-43db-aefd-4c45b0b8300a[12/30/2014 2:25:43 PM]
TAX DEVELOPMENTS
Retroactive Increase to
Mass Transit and Parking
Benefit.
Included as part of the Tax
Increase Prevention Act of
2014 signed by the
President on December 19,
2014 were changes to
mass... >More
50% Bonus Depreciation
Reinstated for One Year.
On December 16, 2014, the
Senate voted to renew a
collection of expired tax
provisions commonly
referred to as “tax
extenders,” while the...
>More
View all Tax Developments >
PRESS ROOM
Ryan Named to the 2014
Best Places to Work in
New York City List.
Ryan, a leading global tax
services firm with the
largest indirect and property
tax practices in North
America, today announced
that the Firm... >More
TAX GATEWAY
Search by Topic
Search by State
Tax Developments
Articles
Events
Webinars
2014 | 2013 | 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | 2006 | 2005 | 2004 | 2003 |
2002 | 2001 | 2000 | 1999
All | JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP | OCT | NOV | DEC
Tax Developments
Share
December 22, 2014
FOR IMMEDIATE RELEASE
50% Bonus Depreciation Reinstated for One Year.
On December 16, 2014, the Senate voted to renew a collection of
expired tax provisions commonly referred to as “tax extenders,” while
the House approved the same bill earlier this month. As such, we expect
the President to sign the full bill before Christmas. The Tax Increase
Prevention Act of 2014 will provide for the reinstatement for one year
several tax provisions in connection with tax depreciation under the
Modified Accelerated Cost Recovery System (MACRS).
Most notably, the Tax Increase Prevention Act of 2014 will extend the
50% first-year bonus depreciation allowance for one year for qualifying
property placed in service in the tax year through 2014. For anyone that
has dealt with tax depreciation from both a federal and state tax
perspective, bonus depreciation shouldn’t be a foreign issue. In fact,
bonus depreciation has been in play every year since September 11,
2001, with the exception of a three-year hiatus for the tax periods from
2005 through 2007.
The special depreciation allowance under Section 168(k) generally
provides the following four requirements for property to be eligible for
50% bonus depreciation:
1. The depreciable property must be a certain type [i.e., qualified
property—tangible property under MACRS with a recovery
CAPABILITIES ABOUT US CAREERS TAX GATEWAY CONTACT RYAN GLOBAL](https://image.slidesharecdn.com/cb2706c4-b84f-476b-b10f-56db666d370f-141230133056-conversion-gate01/85/50-Bonus-Depreciation-Reinstated-for-One-Year-1-320.jpg)
![Tax Developments
http://www.ryan.com/Tax-Gateway/Tax-Developments?year=2014&month=12&id=816d474b-fdcd-43db-aefd-4c45b0b8300a[12/30/2014 2:25:43 PM]
Ryan Named to the 2014
Best Places to Work in
Pennsylvania List; Ranks
Second in the Large
Employer Category.
Ryan, a leading global tax
services firm with the
largest indirect and property
tax practices in North
America, today announced
that the Firm... >More
View all News Releases >
period of 20 years or less (including off-the-shelf software) and
qualified leasehold improvement property];
2. The original use of the depreciable property must commence
with the taxpayer after the relevant bonus depreciation date (i.e.,
bonus depreciation is available only for new equipment);
3. The depreciable property must be acquired by the taxpayer
before January 1, 2015; and
4. The depreciable property must be placed in service before
January 1, 2015.
The most pressing issue for taxpayers at this time is placing their new
acquisitions into service before January 1, 2015. Federal tax rules
define “placed in service” as property that is ready and available for its
intended use. For example, if a taxpayer builds out office space that is
ready and available for use before January 1, 2015; however, the space
isn’t occupied until February of 2015, the leasehold improvements
would still qualify for bonus depreciation, as well as qualified leasehold
improvement property as noted below, if all the other requirements are
met.
In addition to the bonus depreciation changes, the Tax Increase
Prevention Act of 2014 will reinstate the 15-year recovery period for
qualified leasehold improvements, including restaurant and retail
improvement property. Generally, most lessees’ improvements will
qualify as qualified leasehold improvement property; however, the
biggest hurdle for qualified leasehold improvement property, as well as
bonus depreciation, is that the improvement needs to be placed in
service more than three years after the date the building was first
placed in service. For example, if the taxpayer leased and built out
space in a building that was only two years old, the leasehold
improvements would neither qualify for bonus depreciation nor the 15-
year recovery period and would be deemed as leasehold improvement
property (not qualified leasehold improvement property) and thus
depreciated over a 39-year recovery period without qualifying for bonus
depreciation.
Further, the Tax Increase Prevention Act of 2014 will extend the Energy
Efficient Commercial Buildings Deduction through December 31, 2014.
Section 179D offers a tax deduction (not to be confused with the energy
tax credits for alternative energy sources—solar, geothermal, wind, etc.)
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 for Heating,
Refrigerating, and Air-Conditioning Engineers (ASHRAE) 2001
standards to qualify. Since 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 includes architects and engineers) to take the deduction for any
federal, state, or municipal property they designed.
The Tax Increase Prevention Act of 2014 also increases the deduction
and investment limits under Code Section 179. Generally, Section 179
permits a business that satisfies limitations on annual investment to
elect to expense the cost of qualifying property rather than depreciate
the cost over time. For the tax year beginning in 2014, taxpayers are
permitted to expense up to $500,000 of the cost of qualifying property
under Section 179, reduced (dollar by dollar) by the amount by which
the qualified investment exceeds $2,000,000. Qualifying property](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)