On December 27th, 2020, the President signed into law a spending bill that included the Taxpayer Certainty and Disaster Tax Relief Act of 2020. This new law includes several relevant tax extenders and technical corrections.
1. Section 102 of the act permanently extended the Code section 179D deduction for energy efficient commercial property. For property placed in service post-December 31, 2020, the deduction amounts will now be indexed for inflation. The Secretarys of Treasury and Energy will also be able to affirm new, updated energy savings standards. These standards will be no newer than two years prior to the beginning of construction of the building.
2. Sections 146, 137, and 138 of the act provide a one-year extension of the Code section 45L, 3-year racehorses, and Indian reservation property.
3. Section 115 of the act provides a five-year extension of 7-year recovery period for motorsports complexes.
4. Section 2020 of the act provides a 30-year ADS recovery period for pre-2018 residential rental property with a section 163(j)(7)(B) election. This standardizes the recovery period for all residential rental property subject to the real property trade or business election for unlimited interest deductions. Without this change, pre-2018 residential rental property used a 4--yea recovery period. Since this is structured as a technical correction of the TCJA, I anticipate the Service will issue transitional guidance that allows taxpayers to treat this as a method change and file a Form 3115 OR allow an amended return.
5. Section 132 provides a two-year extension of various provisions of the section 48 energy credit.