As part of the Tax Cuts & Jobs Act and its overhaul of the tax code, Congress created a new class of assets known as Qualified Improvement Property (“QIP”). Congress intended for this new asset class to be eligible for bonus depreciation (currently allowed at 100% of the cost of the asset), however, due to a drafting error, QIP was not added to the list of 15-year assets (causing it to retain its 39-year life). This is a problem, given that bonus depreciation is only available to assets with lives of 20-years or fewer. While taxpayers knew and understood the intent of Congress, there was nothing to be done to correct this short of waiting for Congress to issue a technical correction.
On March 14, 2019, Senators Pat Toomey (R-PA) and Doug Jones (D-AL) introduced the Restoring Investments in Improvements Act, which aims to correct this error by establishing that QIP has a life of 15-years (as originally intended). On March 26th, 2019, a similar bill was introduced in the House by Congressman Jimmy Paneta (D-CA) and Congresswoman Jackie Walorski (R-IN). While these bills havn’t yet been brought to the floor for a vote, these are significant, bipartisan steps toward correcting the law to accurately reflect the original intent of Congress. We’ll be providing updates as additional news becomes available on this topic.