Section 168(k) Administrative Solutions Possible for QIP Error; Partnership Remedial Allocations

On August 16, the Senate Finance Committee sent a letter to Treasury clarifying the drafting error in the Tax Cuts and Jobs Act that failed to make qualified improvement property (QIP) eligible for 100% bonus depreciation under section 168(k). Ellen Martin, a tax policy adviser in the Treasury Office of Tax Legislative Counsel, commented that the letter was welcome but may not be enough for an administrative solution. Martin explained that the limited QIP discussion in the proposed regulations is due to the fact that the IRS and Treasury are still weighing the options of what can be done, including an administrative fix. In addition to the QIP issue, the IRS and Treasury are open to addressing the outstanding partnership issues in section 168(k). Martin invited taxpayers to comment on the practical application of the section 168(k) proposed regulations to remedial allocations, specifically addressing how a partnership that wants to use bonus depreciation for section 704(c) contributed property (but not for other similar partnership property) is treated.

Read more: Regulators Anticipate Legislative Changes to Bonus Depreciation; IRS Open to Change of Partnership Treatment in Bonus Rules  
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Read the Senate Finance Committee Letter 8.16.18 Member Letter – Technical Corrections