Depreciation Section 179 Expense Deduction. For 2018, the new law increases the maximum amount a taxpayer may expense under Section 179 to $1,000,000 and increases the phase-out threshold amount to $2,500,000. The provision provides that the maximum amount a taxpayer may expense, for tax years beginning after 2017, is $1,000,000 of the cost of qualifying property placed in service for the tax year. The $1,000,000 amount is reduced (but not below zero) by the amount by which the cost of qualifying property placed in service during the tax year exceeds $2,500,000. The $1,000,000 and $2,500,000 amounts, as well as the $25,000 sport utility vehicle limitation, are indexed for inflation for tax years beginning after 2018. The new law expands the definition of Section 179 property to include certain depreciable tangible personal property used predominantly to furnish lodging or in connection with furnishing lodging. Property used predominantly to furnish lodging or in connection with furnishing lodging generally includes beds and other furniture, refrigerators, ranges, and other equipment used in the living quarters of a lodging facility such as an apartment house, dormitory, or any other facility (or part of a facility) where sleeping accommodations are provided. The new law also expands the definition of qualified real property eligible for Section 179 expensing to include any of the following improvements to nonresidential real property placed in service after the date such property was first placed in service: Roofs; Heating, ventilation, and air-conditioning property; Fire protection and alarm systems and Security systems.
Domestic Production Activities Deduction. For 2018, the domestic production activities deduction under IRC section 199 is no longer allowed.