How to handle proposed bonus depreciation changes of the TCJA of 2017

Our tax department has shared the following with us:

On August 3, 2018, the government issued proposed regulations under section 168(k) providing long-awaited guidance regarding the 100% bonus depreciation provisions of the Tax Cuts and Jobs Act of 2017 (“TCJA”).  Below summary provides an overview of the proposed regulations and discusses potential implications to our situation.

• Property acquired or self-constructed under a written binding contract entered into on or before September 27, 2017, is not eligible for 100% bonus depreciation.

• A similar rule applies for components (of a larger property) acquired or self-constructed under a written binding contract entered into on or before September 27, 2017. However, consistent with prior regulations, the ineligible component does not preclude 100% bonus depreciation for the larger property. – In Lehman’s terms, portions of a larger project are broken into segregated pieces (components), and some may not qualify due to the “written binding contract” date, while other parts of a project may qualify.  We would make this distinction by setting up separate assets (some that may get 100% bonus, some that may not).