Chicago Automobile Trade Association

IRS proposes guidance on 100% depreciation availability

September 20, 2019
The Internal Revenue Service on Sept. 13 released both final and proposed regulations on the 2017 Tax Cuts and Jobs Act’s bonus depreciation provisions.    
The proposed regulations address the availability of 100% bonus depreciation for dealers who also deduct floor plan financing interest.
Under the TCJA, a dealer’s ability to deduct floor plan financing interest is not subject to the law’s new limitation on interest deductibility. However, the trade-off for this exemption is the general unavailability of the law’s 100% bonus depreciation provisions.
In written and oral testimony to the IRS, the National Automobile Dealers Association and the accounting firm Crowe argued — with support from accounting firms Boyer Ritter and Moss Adams — that dealers who deduct floor plan financing interest but do not reach the 30 percent cap on interest deductibility should, similar to other taxpayers, qualify for 100% bonus depreciation.
The proposed regulation states that a dealer who has total business interest, including floor plan financing interest, which does not exceed the 30 percent of adjusted taxable income limit still is generally allowed to also claim 100% bonus depreciation. This calculation is made on an annual basis. Crowe has published a preliminary explanation of the regulation.
As many dealers elected to extend the deadline for their 2018 tax returns due to the uncertainty surrounding this provision (Sept. 15 was the extended deadline for pass-through entities), dealers are encouraged to discuss the proposed guidance with their tax advisors immediately.
For more information, contact Paul Dorsey, with NADA Regulatory, at


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