Implications of the TCJA for Bonus Depreciation in the Partnership Context

On September 13, 2019, the Treasury Department and the IRS released final regulations under Code Section 168(k), adopting (with some modifications) previously proposed regulations regarding revisions to the bonus depreciation regime made by The Tax Cuts and Jobs Act of 2017 (“TCJA”). The final regulations consider, among other things, certain implications of the new rules for the application of bonus depreciation in the partnership context. 

The discussion that follows summarizes aspects of the final regulations that address the extent to which partnership special basis adjustments (under Code Sections 734(b) and 743(b)) and remedial allocations (under Code Section 704(c)) will be eligible for bonus depreciation following enactment of the TCJA.  In addition, the material below discusses special rules that govern application of additional first-year depreciation in situations where property is acquired, placed in service, and contributed to a partnership, all in the same taxable year.

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