CARES Act – Qualified Leasehold Improvements (QIP)

By: Timothy Lynn

The CARES Act corrects an error in the drafting of the Tax Cut & Jobs Act of 2017 (the TCJA). The TCJA changed the treatment of Qualified Improvement Property, causing it to be 39 year property that is not eligible for bonus depreciation. The correction changes QIP to 15-year property that is eligible for 100% bonus depreciation treatment. The change is made as a technical correction to the TCJA, meaning that the 15 year treatment and bonus depreciation treatment should be in effect for tax years 2018 and forward.

Any taxpayers who had QIP for 2018 should consider amending their 2018 tax returns to take the bonus depreciation and request a refund or claim the shorter depreciation period by electing a change in accounting method on their 2019 return.