The IRS last week issued a taxpayer friendly revenue procedure (Rev. Proc. 2019-33). It will permit taxpayers to change their bonus depreciation treatment for property acquired after Sept. 27, 2017, and placed in service during a tax year that includes Sept. 28, 2017.
This relief is being granted in response to comments received about the bonus depreciation proposed regulations that were issued in August of 2018. With the late issuance of these proposed regulations many taxpayers had already filed their federal returns for the tax year and didn’t have a chance to analyze how the proposed regulations would have effected their returns and make a timely election.
Taxpayers may make the late elections or revocations of elections provided in the revenue procedure by filing amended returns or, for taxpayers that are partnerships subject to the centralized partnership audit regime, by filing an administrative adjustment request, for the 2016 tax year or the 2017 tax year before the taxpayer files its federal tax return for the first tax year succeeding the 2016 tax year or the 2017 tax year.
The alternative would be for taxpayers to file a Form 3115, Application for Change in Accounting Method, with the taxpayer’s timely filed federal tax return for the first, second, or third tax year succeeding the 2016 tax year or the 2017 tax year. Late elections or revocations under this revenue procedure will be treated as automatic changes in method of accounting with a Sec. 481(a) adjustment only during this limited period of time.
If you have additional questions contact the tax professionals at Ketel Thorstenson, LLP.