The Internal Revenue Service (IRS) recently issued final regulations on tax deductions for business equipment, meals and entertainment and building rehabilitation. The regulations apply to taxable years beginning with 2020.
Business equipment: Under the new regulations, businesses can write off the cost of most depreciable business assets in the year they are placed in service. Qualifying assets generally include new and used machinery, equipment, computers, appliances and furniture with a recovery period of 20 years or less that were acquired and placed into service after Sept. 27. Form 4562 provides additional information.
Meals and entertainment: The 2017 Tax Cuts and Jobs Act (TJCA) for the most part eliminated the deduction for any expenses related to activities generally considered entertainment, amusement or recreation. However, taxpayers may still deduct business expenses related to food and beverages if certain requirements, as outlined in the Oct. 9 Federal Register, are met.
Building rehabilitation credit: The TJCA amended the rehabilitation credit so that taxpayers now claim the credit over a five-year period. The amendments generally apply to a taxpayer's qualified rehabilitation expenditures paid or incurred after Dec. 31, 2017. In a Sept. 15 news release, the IRS stated that taxpayers may claim the credit all in one year under pre-TCJA rules if: 1) the taxpayer owned or leased the building on Jan. 1, 2018 and the entire period thereafter, or 2) The 24- or 60-month period selected for the substantial rehabilitation test began by June 20, 2018.