The CARES Act was passed into law on March 27, 2020 and we will be providing information on how taxpayers are affected and what actions BRAYN is taking to advocate for our clients.
Qualified Improvement Property (QIP)
Section 2307 of the CARES Act is a technical amendment regarding Qualified Improvement Property (QIP). This technical amendment makes most interior building renovation costs made in 2018 and beyond eligible for 100% bonus depreciation. QIP does not apply to residential property, new construction, an enlargement of the building, elevators, escalators, and internal structural framework of the building. Other costs that are likely excluded are HVAC systems or equipment on the roof or outside of the building, certain storefronts, building envelope improvements, roof decks, solar panels, and exterior signage.
BRAYN is taking the following actions to guide our clients and their CPAs:
- Advising current clients with ongoing cost segregation studies affected by this update
- Notifying clients with prior cost segregation studies that may be affected, and advising on options to further accelerate deductions
- Providing guidance to clients and CPAs on how to claim missed depreciation deductions from QIP, retroactively and on current and future projects
The IRS issued Rev. Proc. 2020-25 on April 10, 2020 outlining how to implement the QIP changes including an amended return, administrative adjustment request (AAR), or a Form 3115, Change in Accounting Method. Certain late elections and the ability to revoke previously made elections are allowed. We will continue to evaluate forthcoming regulations and guidance that affects taxpayers and CPAs.
Right now, cash flow is vital, and BRAYN is doing what we can to help. For more information on QIP and Bonus Depreciation, including a copy of our worksheet with rules and guidance, please send an email to firstname.lastname@example.org.