Back in 2017, SWACCA's public policy team successfully lobbied to extend the 100 percent first year depreciation in the Tax Cuts and Jobs Act to used property so that SWACCA members could remove tax considerations from the business decision on whether to buy new or used construction equipment. Earlier this week, the IRS has published a final rule clarifying outstanding issues arising from its initial 2019 regulations governing the additional first year depreciation deduction for used property that is now section 168(k) of the Internal Revenue Code. The final rule clarifies implementation of the 100 percent additional first year depreciation deduction that allows businesses to write off the cost of most depreciable business assets in the year they are placed into service by the business. The 100 percent depreciation applies to depreciable business assets with a recovery period of 20 years or less and certain other property. The IRS notes that machinery, equipment, computers, appliances, and furniture generally qualify. The deduction applies to both new and used qualifying property acquired and placed into service after September 27, 2017. Specifically, with respect to used property, the September 2019 rule provided that property is treated as used by the taxpayer or a predecessor at any time prior to acquisition by the taxpayer or predecessor if the taxpayer or the predecessor had a depreciable interest in the property at any time prior to such acquisition, whether or not the taxpayer or the predecessor claimed depreciation deductions for the property. The final rule clarifies the determination of whether the taxpayer or a predecessor had a depreciable interest in the property at any time prior to acquisition. The rule also clarifies the 2019 rule's requirement that only the five calendar years immediately prior to the taxpayer's current placed-in-service year of the property are taken into account (Five-Year Safe Harbor) in making this determination. The final rule is effective as of January 11, 2021 Click here to read more from our colleagues at SWACCA.