In Revenue Procedure 2020-25, the IRS provides important procedural rules on qualified improvement property (QIP) to allow taxpayers to file Forms 3115 or, alternatively, amend tax returns to reflect the retroactive, technical amendment provisions of the CARES Act that allow 100% bonus depreciation for QIP. The guidance generally permits a taxpayer to file an amended return, administrative adjustment request (AAR), or a Form 3115 for its 2018, 2019 or 2020 tax year to:

• Change the depreciation of QIP placed in service after December 31, 2017
• Make a late election out of bonus depreciation, or revoke an election out of bonus depreciation
• Note: late elections and revocations are not limited to QIP
• Make a late election to use the alternative depreciation system (ADS)
• Note: withdrawal of an ADS election must be done via an amended return or AAR

Additionally, the guidance modifies Revenue Procedure 2019-43 to add two new automatic method changes:

• DCN 244, to change the depreciation of QIP placed in service after December 31, 2017
• DCN 245, to make a late election out of bonus depreciation or to use ADS, or to revoke an election out of bonus depreciation

A Tax Alert on this guidance is forthcoming.