Bonus Depreciation: A Case Study in TEI Advocacy.

• Author: McLeish, Watson M.

Welcome to another installment of Advocacy Agenda, a periodic column that aims to share select insights and observations of interest to TEI members about the post-tax reform advocacy environment in Washington, D.C. The historic tax reforms enacted in Public Law 115-97, colloquially known as the Tax Cuts and Jobs Act (TCJA), have inspired many TEI members to become more involved in the Institute's advocacy activities at the federal level. Last fiscal year, well over 100 members working for companies in different industries across the country participated in one or more working groups to help shape TEI's advocacy positions concerning major TCJA-related guidance proposals. The result was a major contribution to the administrative record on behalf of U.S. corporate taxpayers and the in-house tax professionals who support them.

At the time of this writing, from a guidance standpoint, approximately sixty percent of the TCJNs provisions have been fully implemented. Many of the TCJA's other provisions--which you may know by their distinctive acronyms --have been the subject of proposed, temporary, or even final guidance to varying degrees. Unsurprisingly, these provisions also represent some of the TCJA's most significant reforms from a corporate income tax perspective and will ultimately require reams of regulatory or other administrative guidance to implement. That guidance has been the principal focus of TEI's TCJA-related advocacy efforts to date, the results of which are now beginning to show.

In late summer and early fall 2018, a diverse cross-industry group of TEI members worked to analyze and comment on the newly proposed Treasury regulations under Section 168(k) of the Internal Revenue Code (REG-104397-18). As amended by the TCJA, Section 168(k) generally allows a 100-percent additional first-year depreciation deduction (bonus depreciation) for qualified property acquired and placed in service after September 27, 2017. The proposed regulations were intended to address the statutory requirements for depreciable property to qualify for bonus depreciation under Section 168(k), which Congress had amended to promote capital investment, stimulate economic growth, and reduce taxpayer costs. Many TEI members, however, saw in the proposed regulations significant--and unwarranted--departures from existing law that would have negatively impacted not only the cost of previously committed capital but also the cost of tax compliance for their companies...