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1, 2026. Therefore, for taxable years beginning after December 31, 2021, and before January 1,
2024, ATI is computed with regard to deductions allowable for depreciation, amortization, or
depletion (i.e., earnings before interest and taxes (EBIT)). However, ATI may be computed as
EBITDA, if elected, for such taxable years. For taxable years beginning after December 31,
2023, and before January 1, 2026, ATI is computed as EBITDA. For taxable years beginning
after December 31, 2025, ATI is computed as EBIT.
Extension of 100 Percent Bonus Depreciation. —Qualified property acquired and placed in
service after September 27, 2017, and before January 1, 2023 (January 1, 2024, for longer
production period property and certain aircraft), as well as specified plants planted or grafted
after September 27, 2017, and before January 1, 2023, are eligible for 100-percent bonus
depreciation. The 100-percent allowance is phased down by 20 percent per calendar year for
qualified property acquired after September 27, 2017, and placed in service after December 31,
2022 (after December 31, 2023, for longer production period property and certain aircraft), as
well as for specified plants planted or grafted after December 31, 2022.
The provision extends 100-percent bonus depreciation for qualified property placed in service
after December 31, 2022, and before January 1, 2026 (January 1, 2027, for longer production
period property and certain aircraft) and for specified plants planted or grafted after December
31, 2022, and before January 1, 2026. The provision retains 20-percent bonus depreciation for
property placed in service after December 31, 2025, and before January 1, 2027 (after December
31, 2026, and before January 1, 2028, for longer production period property and certain aircraft),
as well as for specified plants planted or grafted after December 31, 2025, and before January 1,
2027.
Increase in Limitations on Expensing of Depreciable Business Assets. —Under Internal
Revenue Code (“IRC”) section 179, a taxpayer may elect to expense the cost of qualifying
property, rather than to recover such costs through tax depreciation deductions, subject to
limitation. Under current law, the maximum amount a taxpayer may expense is $1 million of the
cost of qualifying property placed in service for the taxable year. The $1 million amount is
reduced by the amount by which the cost of such property placed in service during the taxable
year exceeds $2.5 million. The $1 million and $2.5 million amounts are adjusted for inflation for
taxable years beginning after 2018, and were $1.16 million and $2.89 million in 2023,
respectively. In general, qualifying property is defined as depreciable tangible personal property,
off-the shelf computer software, and qualified real property that is purchased for use in the active
conduct of a trade or business.
The provision increases the maximum amount a taxpayer may expense to $1.29 million, reduced
by the amount by which the cost of qualifying property exceeds $3.22 million. The $1.29 million
and $3.22 million amounts are adjusted for inflation for taxable years beginning after 2024. The
proposal applies to property placed in service in taxable years beginning after December 31,
2023.
Part 3: Increasing Global Competitiveness
Subtitle A – United States-Taiwan Expedited Double-Tax Relief Act