Depreciation bonus regulations are expected by September 9.

Depreciation bonus regulations are expected by September 9 | Norton Rose Fulbright

June 01, 2003 | By Keith Martin in Washington, DC
DEPRECIATION BONUS regulations are expected by September 9.

The United States is letting companies write off 30% to 50% of the cost of new plant and equipment immediately — but only for a limited time — in the hope that this will stimulate the economy. It is sometimes difficult to tell whether a bonus can be claimed on power projects that were under development before September 11, 2001 — the start of the period during which the bonus is supposed to encourage new investment. The Internal Revenue Service is at work on regulations to answer some of these questions.

The IRS will be barred by law from applying the regulations retroactively unless they are issued within 18 months after the depreciation bonus was enacted. That gives the agency until September 9 to act.

Draft regulations are circulating internally with the IRS and US Treasury Department for comment. The power industry met in mid-May with Treasury officials to talk through six issues that the industry has with the bonus.

Keith Martin