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Qualified Improvement Property

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Level 1

So we can op to select the 15 year instead of the 39 year, however, if Congress has not updated the Technical Correction and it is a Democratic Congress, then is it a good idea to use the 15 year?

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Employee
Employee

Ray, thanks for joining community.

QIP is 39 year property due to a *defect* in tax reform and you may not elect to change that. Congress is aware they *should* provide a technical correction to make QIP 20 year or less property, but they have not done that yet. Because QIP is 39 year property, it does not qualify for bonus depr, but it does qualify for Sec 179 expense. So if you can use Sec 179, that might be an option to get a current year deduction for your client.

“Qualified section 179 real property. For property placed in service in tax years beginning after 2017, qualified section 179 real property is qualified improvement property (as defined in section 168(e)(6)), and certain specified improvements to nonresidential real property placed in service after the nonresidential real property was first placed in service.”

https://www.irs.gov/publications/p946

Good luck!

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Employee
Employee

Ray, thanks for joining community.

QIP is 39 year property due to a *defect* in tax reform and you may not elect to change that. Congress is aware they *should* provide a technical correction to make QIP 20 year or less property, but they have not done that yet. Because QIP is 39 year property, it does not qualify for bonus depr, but it does qualify for Sec 179 expense. So if you can use Sec 179, that might be an option to get a current year deduction for your client.

“Qualified section 179 real property. For property placed in service in tax years beginning after 2017, qualified section 179 real property is qualified improvement property (as defined in section 168(e)(6)), and certain specified improvements to nonresidential real property placed in service after the nonresidential real property was first placed in service.”

https://www.irs.gov/publications/p946

Good luck!

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Level 1

I have QIP on non-residential. I am not over the $2.5MM nor in excess of $1MM of 179.  I have the box checked under the "General Section" QIP - Nonresidential for Section 179 and MACRS 31.5/39-year SL Nonresidential Real Poperty selected for the method, however Lacerte is not taking 179 on the improvements.  I have entered the amount in Current Section 179 expense and it still does not included it.  If I change the method to 15YR SL Improvements it takes it as bonus (which I do not think is correct).  Any thoughts on how to get the 179 with 39 year? 

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Level 1

Answered my own question. Business income limitiation.

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