Friday, December 15, 2017

Continued Live blog of the bill's tax accounting provisions

1. Qualified Leasehold Improvement Property, Qualified Retail Property, and Qualified Restaurant Property are axed in favor of Qualified Improvement Property starting in 2018.

2. Electing Real Property Trades or Businesses form a new class mandatory ADS property starting in 2018.

3. Research and experimentation expenses now must be amortized over five years, unless they are for specified foreign research, in which case the period rises to fifteen years. This starts in 2022.

4. The development of new software is now defined as an R&E expense. This also starts in 2022.

5. The accrual method has been modified so that income cannot be delayed any later than when it is included for financial income reporting purposes. Rev Proc 2004-34 has been made into a statute. These rules apply starting in 2018.

6. Interest is now limited to the business interest income plus 30% of the adjusted taxable income of the taxpayer plus the floor plan finance interest of the taxpayer. Small taxpayers that meet the $25 million test are exempt from this limit.

7. The Section 199 DPAD is repealed.

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