Bonus depreciation for leasehold improvement - residential rental

[mickey]

It seems like the CARES Act allows bonus depreciation for non-residential rental property.

I've been searching to see if bonus depreciation is also allowed for leasehold improvement in a residential

rental property?   A client made some improvement to a rental house and they want bonus depreciation.

I only see the allowance for non residential properties, i.e. they changed LSI to 15-year property.

Any advice would be appreciated.

Thank you very much.

[Terry53029]

Generally, machinery, equipment, computers, appliances and furniture will qualify for the 100% bonus deprecation, but it must have a class life of 20 years or less. If your client made capital improvements to the building that would be a class life of 27 1/2 years. I think that 100% expires at the end of 2022.

[mickey]

I think you are right.  

I wish I can show my clients an excerpt or something.  Tried to find the exception to the bonus rules but not having any luck.

Thank you

[Terry53029]

Try this link:

https://www.irs.gov/newsroom/new-rules-and-limitations-for-depreciation-and-expensing-under-the-tax-...

[mickey]

The issue is not whether bonus depreciation can be taken.  If the S Corp shows a loss due to the bonus depreciation, can the shareholder take this loss against his returns?  I thought the rule is you have to have basis.  

One individual owns 2 companies.  One company  (B) only  exists to rent the equipment to his other company (A) .  It has no other function.  Apparently his lawyer advised him to create a separate company for the purpose of managing the financing of the equipment and leasing it out to his other company A (which is a medical services company, offering orthopaedic services).

Can he net the loss from company B (generated from bonus depre) against income from his medical services company (A)?

[qbteachmt]

@mickey 

You posted an equipment question inside of a residential real estate topic. And, S Corps really should not hold real estate, either. Another And, this topic is from Oct 2022.

I suspect you would like specific input on the great info you provided as applicable to your conditions, the current regulations, etc.

Even though this is your own old topic, it is not applicable to your new question. You should start a new topic. Thanks.

[mickey]

I did start my own question.  Not sure how the old topic got mixed in here.