Conforming to section 163(j) rules for fixed asset depreciation
A new feature, Bulk Edit, and two new depreciation methods, RH and RM, are available in Sage Fixed Assets-Depreciation 2019.1 and later to easily change the depreciation method and life for multiple assets.
The features were prompted by an election available under section 163(j), added by the Tax Cuts and Jobs Act of 2017 (TCJA) and available for real property trades or businesses and for farming businesses. Qualifying businesses can make an election for exemption from the interest expense deduction limitations imposed by 163(j), however, they must use the ADS rules for specified classes of property.
The provision applies to taxable years beginning after 2017, it is not limited to property placed in service in tax years beginning after 2017. Therefore, property placed in service in tax years prior to the election year, which is not fully depreciated, must be depreciated using ADS beginning in the year of the election. The change in use rules in Reg. §1.168(i)-4(d) apply in making this switch.
The Bulk Edit feature allows the depreciation method and the estimated life of multiple assets to be changed simultaneously. Bulk Edit is also useful for other purposes such as:
- Correction of an error in the assigned depreciation method or estimated life for multiple assets,
- Changes in accounting estimates under generally accepted accounting principles (GAAP), and
- Creation of an ADS book to comply with tax law changes, such as Section 250 (for more information, see the Sage City article “Using your Assets to Generate a Section 250 Deduction).”
See the attached PDF, How to change assets for 163(j) compliance, to learn how to use Bulk Edit and the two new remaining-value over remaining-life depreciation methods, RH and RM, to comply with the rules. You can contact support at 1-800-331-8514 if you have additional questions.