Proposed Regulations on Additional First Year Depreciation Deduction Released: Today, Treasury and the IRS released proposed regulations that provide guidance regarding the additional first year depreciation deduction under section 168(k). As amended by P.L. 115-97, Section 168(k) allows a 100-percent additional first year depreciation deduction for qualified property acquired and placed in service after September 27, 2017, and placed in service before January 1, 2023 (with some exceptions).

OMB Reviewing Proposed Regulations on State and Local Tax Credits, Charitable Contributions: The Office of Management and Budget (OMB) is currently reviewing proposed regulations governing state and local tax credits and charitable contributions. Effective this year, P.L. 115-97 capped state and local tax deductions at $10,000. The proposed regulations address efforts by some states to offer residents a way to recharacterize certain tax payment as deductible charitable contributions.

Miscellaneous Guidance:Today, Treasury and the IRS announced in Notice 2018-62 that they intend to issue proposed regulations providing clarification regarding the contribution limits provided in section 529A(b)(2). Section 529A allows a state (or its agency or instrumentality) to establish and maintain a tax-advantaged savings program under which contributions may be to an “ABLE account” for the purpose of paying for the qualified disability expenses of the designated beneficiary of the account.

In addition, Treasury and the IRS released Notice 2018-63, which extends the application of the HFA Hardest Hit Fund safe harbor to homeowners who may be affected by the new $10,000 limitation on deductible property taxes. Under the modified safe harbor, participating homeowners may allocate mortgage payments actually made first to deductible mortgage interest, and thereafter use any reasonable method to allocate the remaining balance of payments made to real property taxes, mortgage insurance premiums, home insurance premiums, and principal.