Can bonus depreciation be claimed the next year after an asset is placed in service?

[Victor Omoniyi]

If I purchased and placed a property in service in 2023 and I have no need for the bonus depreciation on my 2023 taxes, can I claim bonus depreciation on the property for 2024 taxes? If yes, what would I need to do?

[Kory Reynolds]

I also disagree with Michael, due to some language in the annual revenue procedures that discusses what we can do with depreciation changes.  This falls under section 6.01 of that revenue procedures each year, the most recently applicable would be Rev Proc 2024-23, but the same language has been floating around in this annual Rev Proc for closing in on 10 years - note there are various caveats so this isn't a blanket statement on all changes related to depreciation expense changing in the second year.

Before this, the mindset has been that one was required to amend, given except for this language, per the IRS one has only adopted an accounting method if they have used that method for at least 2 years.  Thus if you have only filed 1 tax return, you haven't adopted a method yet, since it hasn't been two years - so your only option was to amend the first year. This rule still does apply for just about every other type of change in accounting method outside of changing from an impermissible depreciation method, to a permissible one - this carve out only applies to depreciation.   Even with this carve out available, it does plainly state that a taxpayer does still have the option to go back and amend the prior year return - so both answers can be correct.

I would have your CPA/EA review your situation and the related Revenue Procedure to verify you are under this section, which would allow filing of the 3115 instead of amending the prior year return.  There may be some carveouts related to moving from non depreciable property to depreciable property in certain circumstances that may not fall under this accounting method change, but it has been some time since I have had to deal with that piece.

(b) Taxpayer has not adopted a method of accounting for the item of property. If a taxpayer does not satisfy section 6.01(1)(a)(i) of this revenue procedure for an item of depreciable or amortizable property because this item of property is placed in service by the taxpayer in the taxable year immediately preceding the year of change (“1-year depreciable property”), the taxpayer may change from the impermissible method of determining depreciation to the permissible method of determining depreciation for the 1-year depreciable property by filing a Form 3115 for this change, provided the § 481(a) adjustment reported on the Form 3115 includes the amount of any adjustment that is attributable to all property (including the 1-year depreciable property) subject to the Form 3115. Alternatively, the taxpayer may change from the impermissible method of determining depreciation to the permissible method of determining depreciation for a 1-year depreciable property by filing an amended federal income tax return, or an administrative adjustment request under § 6227 (AAR), as applicable, for the property’s placed-in-service year prior to the date the taxpayer files its federal income tax return for the taxable year succeeding the placed-in-service year.