Mueller Prost Year-End Tax Planning

Year-End Tax Planning Webinar:

This page does not include all of the takeaways from the webinar. For full value, request access to the webinar recording below.

Major Topics:

Capital Expenditures ‐ Bonus Depreciation & §179

Criteria for bonus‐qualified assets

  • Property with recovery period of 20 years or less
  • Computer software
  • Water utility property
  • Qualified film, TV and theatrical production costs
  • Certain aircraft (not used in a transportation business)

Common disqualifiers

  • Building & its structural framework (39 year property)
  • Note: Elevators/escalators are considered “structural”
  • New expansions to an existing building
  • Qualified improvement property
  • Residential property (27.5 years)
  • Deposits or receipt of property, but not placed in service

Section 179

  • Annual tax write‐off Sec. 179 limit is $1,020,000 million for 2019
  • Taxable income limitation ‐ cannot produce a loss
  • Criteria for Section 179 assets
    • Tangible personal property: machinery, equipment, furniture,

computers, etc.

  • Computer software
  • Qualified improvement property
  • Roofs, HVAC, fire protection, alarm and security systems

Business Vhicles/Listed Autos

  • Annual depreciation caps for luxury (listed) passenger vehicles
    • 1st year in service ‐ $10,100
    • 2nd year in service ‐ $16,100
    • 3rd year in service ‐ $9,700
    • 4th year and beyond in service ‐ $5,760
  • Additional $8,000 first year depreciation for qualified listed property (eligible for bonus) extended through 12/31/2026
  • Autos, trucks and vans used more than 50% for business to qualify for bonus or Section 179

Fixed Asset/Depreciation Reminders

  • Consider cost segregation study to shorten lives on improvements to real property
  • Mid‐quarter convention applies if more than 40% of the assets are acquired in the 4th quarter
  • Heavy use vehicles with gross weight over 6,000 pounds are eligible for Section 179
  • SUVs limited to $25,500 of Section 179
  • Elect out of bonus depreciation based on class of assets
  • States may not follow on bonus depreciation or Section 179

Flow‐Through Deduction: §199A

Untangling Tax and Regulatory Reform

  • Only trade or business income gets the 20% break
  • Triple net leases to outside third parties do not normally get the §199A 20% tax break
  • But, triple net lease properties leased to controlled entities (think 50% or more common ownership) can get the break unless renting to a SSTB

Interest Expense Limitation ‐ §163(j)

There is a new limit!

  • 30% of Adjusted Taxable Income (ATI)
  • Plus business interest income
  • Plus floor plan interest expenses

What is interest expense?

  • Debt issuance costs
  • Loan commitment fees
  • Hedging costs

How do calculate ATI?

  • Taxable income plus:
    • Business interest expense
    • NOL
    • 199A
    • Depreciation, amortization, and depletion (gone in 2022)
    • Non-business income or loss


  • Any company with the prior 3 years average annual gross receipts under $26 million
  • Tax shelters (any entity that allocates more than 35% of tax losses to limited entrepreneurs, or someone that is not active in the business) don’t get this exception