CARES Act fixes legislative glitch to Qualified Improvement Property

A legislative glitch in the Tax Cuts and Jobs Act has been corrected through recent coronavirus relief measures.

The Coronavirus Aid, Recovery and Economic Security (CARES) Act contains a technical correction to the portion of the TCJA passed in 2017 requiring Qualified Improvement Property (QIP) to be depreciated over 39 years, rendering property ineligible for bonus depreciation.  The correction in the CARES Act retroactively qualifies QIP placed in service in 2018 or 2019 for the 100% depreciation deduction.

What is QIP?

Qualified Improvement Property is generally defined as an improvement to the interior part of the building if the improvement is placed in service after the building was placed in service. The exceptions are that qualified improvement property does not include an enlargement of the building, the construction of any elevator or escalator, or the internal structural framework of the building.  In short, QIP is a non-structural improvement made to the interior of an existing building.  Under the CARES Act, this property has a 15-year recovery period and is qualified for 100% bonus depreciation deduction.

What does this mean for me?

You may be eligible for additional depreciation deductions on your 2018 and 2019 projects if you did not already take the maximum amount of depreciation via Section 179.  Antares Group has assembled a team to review all projects completed in 2018 and 2019 and will be in contact with each of our clients who completed projects within this time frame to determine the best plan of action for their organizations.

Please call us if we can help you in this rapidly changing environment.

This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.