Bloomberg BNA reports that the IRS is expected to announce proposed regulations for the full expensing provision under Code Section 168(k) sometime late-June or early-July.
The recently-passed tax reform legislation amended Code Section 168(k) to permit business to immediately expense certain property placed into service after September 27, 2017, rather than waiting to take depreciation deductions over the life of the property. This full expensing puts money in the pockets of taxpayers much quicker, giving the taxpayer a chance to reinvest the money in new projects.
This, however, creates opportunity for abuse (according to the IRS) or for tax savings (according to savvy taxpayers). For the first time, qualified property is not required to be new property. Rather, used property can qualify if it is the taxpayer’s first use of the property. The IRS is wary that related parties may buy used property from one another to take advantage of the full expensing of such property. A disallowance provision for related parties is one of the issues being considered by the IRS for the proposed regulations.