The Tax Cuts and Jobs Act of 2017 introduced a significant amount of change for income tax regulations. The changes include new rules applying to the treatment of fixed assets.
A new update for Sage Fixed Assets, version 2018.1, is due late January or early February 2018.
- Bonus Depreciation (Section 168(k) Allowance): In general, for qualified property acquired after 9/27/2017 and placed in service by 12/31/2022, the 50% bonus rate is increased to 100%, and then phased-out over the following years.
- Section 179 Expensing expands for business property placed in service in taxable years beginning on or after 1/1/2018 limit to $1,000,000
Recovery Period for Real Property Effective for property placed in service 1/1/2018 and later:
- Eliminated the 15-year qualified leasehold, retail, and restaurant improvement property classes
- Assigned a 15-year recovery period to qualified improvement property, assuming a technical correction is made.
Additional Rules:
- Auto Limits increased for vehicles placed in service after 12/31/2017 – 2017 current year limits on depreciation for vehicles is $3,160, with an additional allowance of $8,000 for the 168 Allowance. The new limit will be $10,000 with no change on the 168 Allowance.
- Depreciation of Farm Property placed in service after 12/31/2017 A decrease in the 7-year recovery period for new farming machinery and equipment to 5 years, and elimination of the rule requiring use of the 150 declining balance percentage on property used in a farming business thus 200% DB can be used
- Like-kind exchange treatment is no longer allowed for depreciable tangible personal property, and intangible and non-depreciable personal property, Like-kind exchanges are limited to real property
Please consult your financial advisor prior to implementing any new tax regulation. The above information may change from time to time. Always verify with your advisor and the official IRS website prior to implementing.
More information can be found on Sage City.
