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June 18, 2021

IRS issues guidance on changing method for depreciation for certain residential rental property and giving partnerships an alternative to filing AARs

The IRS has issued guidance (Revenue Procedure 2021-28) explaining how a taxpayer changes its method of computing depreciation to retroactively provide a 30-year recovery period under the IRC Section 168(g) alternative depreciation system for residential rental property placed in service before 2018 and held by an electing real property trade or business. Simultaneously released guidance (Revenue Procedure 2021-29) allows an eligible partnership to file an amended return on Form 1065 and furnish a corresponding Schedule K-1 to each of its partners rather than filing an administrative adjustment request (AAR). A Tax Alert is forthcoming.