Double Check please? Fixed asset entry

[BulldogTom]

Under TCJA a roof overhaul on a commercial property is a "Qualified Improvement" 39 years, and eligible for §179 expensing.    So the entry in ATX Fixed Asset screen for the sub-category should be 12 - 39 yr Qualified Improvement Property.

Do I have this all correct?   It is a large re-roof on the property and I don't want to mess this one up.

Thanks

Tom
Modesto, CA

[Lion EA]

I don't know, but want you to research &/or wait for someone who's sure. I thought QIP was NOT exterior, interior only, not structural, no envelope, not even elevators, nonresidential.

[Lee B]

What is qualified improvement property examples?

Examples of such qualifying improvements include installation or replacement of drywall, ceilings, interior doors, fire protection, mechanical, electrical and plumbing. Excluded from the definition are improvements attributable to internal structural framework, enlargements to the building, and elevators or escalators

[BulldogTom]

From IRS website, see the last bullet point.

FS-2018-9, April 2018

Businesses can immediately expense more under the new law

A taxpayer may elect to expense the cost of any section 179 property and deduct it in the year the property is placed in service. The new law increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. For taxable years beginning after 2018, these amounts of $1 million and $2.5 million will be adjusted for inflation.

The new law also expands the definition of section 179 property to allow the taxpayer to elect to include the following improvements made to nonresidential real property after the date when the property was first placed in service:

• Qualified improvement property, which means any improvement to a building’s interior. However, improvements do not qualify if they are attributable to:

1.  the enlargement of the building,
2.  any elevator or escalator or
3.  the internal structural framework of the building.

• Roofs, HVAC, fire protection systems, alarm systems and security systems.

These changes apply to property placed in service in taxable years beginning after Dec. 31, 2017.

Tom
Modesto, CA

[BulldogTom]

OK, after thinking about this over the weekend, I believe I figured out the instructions.   I read it as Roofs being QIP, but I think what the instructions are saying is there are two things that are eligible for §179:   QIP and Roofs, HVAC, Fire, Alarm and Security systems.   So I think I should use the same coding on the return for 39 year commercial property and take the §179 on it.

I hope I have this right.

Tom
Modesto, CA

[jklcpa]

1 hour ago, BulldogTom said:

OK, after thinking about this over the weekend, I believe I figured out the instructions.   I read it as Roofs being QIP, but I think what the instructions are saying is there are two things that are eligible for §179:   QIP and Roofs, HVAC, Fire, Alarm and Security systems.   So I think I should use the same coding on the return for 39 year commercial property and take the §179 on it.

I hope I have this right.

Tom
Modesto, CA

You are correct.  A roof is specifically excluded from QIP but IS one of the items eligible for sec 179 treatment.  Also, don't forget to write off the remaining cost of the old roof that was replaced, if that was separated out on the fixed asset schedule.

[michaelmars]

2 hours ago, jklcpa said:

You are correct.  A roof is specifically excluded from QIP but IS one of the items eligible for sec 179 treatment.  Also, don't forget to write off the remaining cost of the old roof that was replaced, if that was separated out on the fixed asset schedule.

An election and a 3115 had to be filed a few years ago inorder to do the "partial asset disposition"  PAD.   We did these for almost every real estate client.  [lots of work but good revenue source]