Imagine you're the proud owner of Los Pollos Hermanos, a fast-food empire with 14 locations in the American southwest that you've built on the twin pillars of perfectly seasoned fried chicken and meticulously maintained restaurants.
And it was at that moment that your tax preparer made a face that was deeply, deeply concerning. She went on to explain,"yeah, about that...you're going to have to depreciate that $1 million over 39 years."that your improvements would give rise to an immediate $1 million deduction. And you were right. But now, your trusted accountant has informed you that instead, you'll recover that investment over nearly FOUR DECADES.
Soon after, three new classes of assets were added to Section 168: qualified leasehold improvements, qualified restaurant property, and qualified retail improvement property.
The benefit of qualifying as QIP, however, were a bit of a unicorn in the tax law. QIP continued to have a 39-year life, but Section 168 was amended to allow bonus depreciation not only on assets with a life of 20 years or less, but also on property meeting the definition of QIP. So yes, QIP, despite having a 39-year life, was the rare 39-year asset that was eligible for bonus depreciation.
Once again, this would be doubly beneficial, because as part of the TCJA, bonus depreciation was increased from 50% to 100%. This means that yes, had things worked out the way they were designed, the $1 million you spent to clean up your Los Pollos locations would have qualified as QIP, been granted a 15-year life, and thus been eligible for 100% bonus depreciation.
What a mess. The concept of depreciation is complex enough....please don’t make it anymore complicated lol
Law Law Latest News, Law Law Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: politico - 🏆 381. / 59 Read more »
Source: NBCNews - 🏆 10. / 86 Read more »