The Internal Revenue Service (IRS) today issued final regulations that provide added guidance regarding the additional first year depreciation deduction under Internal Revenue Code section 168(k), including the correction to qualified improvement property (QIP) depreciation made by the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

The rulemaking clarifies "the increased deduction and the expansion of qualified property, particularly to certain classes of used property, authorized by the Tax Cuts and Jobs Act," the IRS notes. As further explained by the IRS, the rules provide:

• Rules relevant to the definition of qualified property
• Rules for consolidated groups
• Rules regarding components acquired or self-constructed after September 27, 2017, for larger self-constructed property for which manufacture, construction, or production began before September 28, 2017
• Rules regarding the application of the mid-quarter convention, as determined under section 168(d)
• Changes to the definitions in the 2019 Final Regulations for the terms qualified improvement property, predecessor, and class of property

The rules also withdraw a portion of the regulations that the IRS proposed last September on bonus depreciation and move the rules for consolidated groups "from §1.168(k)-2(b)(3)(v) of the 2019 Proposed Regulations to new §1.1502-68 of these final regulations," the IRS notes.

The 137-page text of the final regulations is posted here.

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