Thanks to the "retail glitch" fix in the CARES Act one of the simpler avenues is to maximize depreciation in fixed asset intensive businesses through a fixed asset ledger "scrub." Qualified Improvement Property ("QIP") – the subject of the retail glitch fix – can be reallocated without a site visit and utilizing only a tax fixed asset ledger.
As part of the TCJA, the ability to depreciate an improvement made by the taxpayer - after the building was first placed in service - to an interior portion of a building considered nonresidential real property (i.e. QIP) was modified so that its useful life was 39 years, making it ineligible for the additional first year depreciation (section 168(k)) deduction. There are specific rules governing the definition of QIP, but it generally includes new flooring, lighting fixtures, sprinkler systems, and other types of remodeling and interior improvements.
The CARES Act fixed this glitch in the TCJA, such that QIP is now generally 15-year property and therefore eligible for the section 168(k) deduction. This amendment is retroactive and applies to property placed in service after December 31, 2017.
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