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Sections 70301 and 70434(g) of OBBBA (Pub. L. 119-21) made various changes to 168(k) and 181 which require guidance. Section 168(k), as amended, generally provides a permanent 100 percent additional first year depreciation deduction for qualified property acquired and placed in service after January 19, 2025, and specified plants planted or grafted after January 19, 2025, for which the taxpayer made an election under 168(k)(5). Section 70301 of OBBBA: (i) removed the requirement that qualified property is placed in service, or specified plants are planted or grafted, before January 1, 2027 (longer production property has different dates), (ii) removed certain acquisition rule requirements for certain property having longer production periods or certain aircraft; and (iii) allowed taxpayers to make a 168(k)(10) election to apply TCJA depreciation percentages instead of 100-percent additional first year depreciation for qualified property acquired and placed in service, or planted or grafted, in the 2025 taxable year.

REG-117053-25 will update the regulations under 168(k) to propose rules similar to 1.168(k)-2 for OBBBA property, including how to make elections under 168(k)(5) (election for certain specified plants), 168(k)(7) (election out of bonus depreciation for qualified sound recording productions), and 168(k)(10) (applying TCJA depreciation percentages instead of 100% bonus for taxable year 2025), and extending the component election in 1.168(k)-2(c) for OBBBA property (for certain larger self-constructed property. In addition, the regulations provide guidance on 181 (section 70434(g) of OBBBA) which included qualified sound recording productions as qualified property under 168(k).