SECTION 4. ROUND 4 — Internal Revenue Bulletin 2015-40

PROPERTY

.01 Definition of Round 4 Extension Property .

(1) In general . Under § 168(k)(4)(K)(iii), round 4 extension property means property that is eligible qualified property solely by reason of the extension of § 168(k)(2) by the TIPA. Pursuant to § 168(k)(4)(D), as amended by the TIPA, the term “eligible qualified property” means qualified property under § 168(k)(2), except that in applying § 168(k)(2), (1) “March 31, 2008” is substituted for “December 31, 2007” each place it appears in § 168(k)(2)(A) and § 168(k)(2)(E)(i) and (ii), (2) “April 1, 2008” is substituted for “January 1, 2008” in § 168(k)(2)(A)(iii)(I), and (3) only adjusted basis attributable to manufacture, construction, or production after March 31, 2008, and before January 1, 2010, and after December 31, 2010, and before January 1, 2015, is taken into account under § 168(k)(2)(B)(ii). However, the binding contract requirement in § 168(k)(2)(A)(iii)(I) does not apply for determining whether a passenger aircraft is eligible qualified property. Section 168(k)(4)(G)(iii). See section 3 of Rev. Proc. 2008–65, 2008–2 C.B. 1082 (as modified by section 7.01 of Rev. Proc. 2009–33, 2009–29 I.R.B. 150) and section 3.02 of Rev. Proc. 2009–33 for additional guidance on the definition of eligible qualified property that is not extension property for purposes of § 168(k)(4).

(2) Round 4 extension property de- fined . Round 4 extension property is eligible qualified property (as defined in § 168(k)(4)(D), as amended by the TIPA) that:

(a) Is acquired by the taxpayer after March 31, 2008, is placed in service by the taxpayer after December 31, 2013, and before January 1, 2015, and is not described in § 168(k)(2)(B) (long-production period property or transportation property) or § 168(k)(2)(C) (certain aircraft) that is placed in service by the taxpayer after December 31, 2013, and before January 1, 2015;

(b) Meets the requirements of § 168(k)(2)(B) (long production period property or transportation property), is acquired by the taxpayer after March 31, 2008, and is placed in service by the taxpayer after December 31, 2014, and before January 1, 2016; or

(c) Meets the requirements of § 168(k)(2)(C) (certain aircraft), is acquired by the taxpayer after March 31, 2008, and is placed in service by the taxpayer after December 31, 2014, and before January 1, 2016.

.02 Election Not to Apply § 168(k)(4) to Round 4 Extension Property .

(1) In general . If a corporate taxpayer has an election in effect under § 168(k)(4) for round 3 extension property (as defined in § 168(k)(4)(J)(iv)), the taxpayer may make an election not to apply § 168(k)(4) to round 4 extension property placed in service by the taxpayer in its first taxable year ending after December 31, 2013, and in any subsequent taxable year. Even if the taxpayer does not place in service any round 4 extension property in its first taxable year ending after December 31, 2013, the taxpayer must make the election not to apply § 168(k)(4) to round 4 extension property for that taxable year if the taxpayer wishes to apply such election to round 4 extension property placed in service in a subsequent taxable year. Failure to comply with all of the applicable requirements of section 4.02(2) of this revenue procedure will nullify a taxpayer’s attempted election not to apply § 168(k)(4) to round 4 extension property.

(2) Time and Manner for Making the Election Not to Apply § 168(k)(4) to Round 4 Extension Property .

(a) In general . A corporate taxpayer that timely files its federal income tax return for its first taxable year ending after December 31, 2013, makes the election not to apply § 168(k)(4) to round 4 exten

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(ii) Provides written notification, if notification has not previously been provided, to any partnership in which the taxpayer is a partner that the taxpayer is making the election not to apply § 168(k)(4) to round 4 extension property. This notification must be made to the applicable partnership(s) by December 4, 2015.

(i) In general . If any member of a controlled group of corporations (hereinafter such group is referred to as a “controlled group”) is treated as making the election not to apply § 168(k)(4) to round 4 extension property under section 4.02(2)(c)(ii) or (iii) of this revenue procedure, such election is binding on all other members of the controlled group. See section 4.03(1) of Rev. Proc. 2009–33.

(ii) All members of a controlled group constitute a single consolidated group . This section 4.02(2)(c)(ii) applies when all members of a controlled group are members of a consolidated group. If the common parent (within the meaning of § 1.1502–77(a)(1)(i)) of the consolidated group timely filed the original consolidated federal income tax return for its first taxable year ending after December 31, 2013, on or before December 4, 2015, all members of the consolidated group will be treated as making an election not to apply § 168(k)(4) to all round 4 extension property if the common parent complies with the procedures in section 4.02(2)(b) of this revenue procedure for all members of the consolidated group (for example, the written notification required in section 4.02(2)(b)(ii) of this revenue procedure is provided to all partnerships in which any member is a partner).

(iii) All members of a controlled group do not constitute a single consolidated group . This section 4.02(2)(c)(ii) applies when separate federal income tax returns are filed by some or all members of a controlled group. If a controlled group includes, but is not limited to, members of a consolidated group, the consolidated group is treated as a single member of the controlled group. If a member of the controlled group timely filed its original federal income tax return for its first taxable year ending after December 31, 2013, on or before December 4, 2015, such mem

ber will be treated as making the election not to apply § 168(k)(4) to all round 4 extension property if the member:

(A) Complies with the procedures in section 4.02(2)(b) of this revenue procedure; and

(B) Provides written notification, if notification has not previously been provided, to all other members of the controlled group that the election not to apply § 168(k)(4) to round 4 extension property will be made. This notification must be made to the other members by December 4, 2015.

.03 Section 168(k)(4) Round 4 Extension Property Election .

(1) In general . If a corporate taxpayer does not have an election in effect under § 168(k)(4) for round 3 extension property (as defined in § 168(k)(4)(J)(iv)), the taxpayer may make an election to apply § 168(k)(4) to round 4 extension property (§ 168(k)(4) round 4 extension property election). If the § 168(k)(4) round 4 extension property election is made, the election applies to all round 4 extension property placed in service by the taxpayer in its first taxable year ending after December 31, 2013, and in any subsequent taxable year. Even if the taxpayer does not place in service any round 4 extension property in its first taxable year ending after December 31, 2013, the taxpayer must make the § 168(k)(4) round 4 extension property election for that taxable year if the taxpayer wishes to apply the election to round 4 extension property placed in service in a subsequent taxable year. Failure to comply with all of the applicable requirements of section 4.03(2) of this revenue procedure will nullify a taxpayer’s attempted § 168(k)(4) round 4 extension property election.

(2) Time and Manner for Making the § 168(k)(4) Round 4 Extension Property Election .

(a) In general . A corporate taxpayer that timely files its federal income tax return for its first taxable year ending after December 31, 2013, makes the § 168(k)(4) round 4 extension property election by applying the election procedures in section 6.02, 6.03, or 6.04 of Rev. Proc. 2009–33, as applicable, or by meeting the deemed election requirements in section 4.03(b) or (c) of this revenue procedure, as applicable. If the taxpayer has

timely filed such federal income tax return and did not make the § 168(k)(4) round 4 extension property election but wants to do so, see section 6.06 of Rev. Proc. 2009–33 for how to make a late election. In applying section 6.02, 6.03, 6.04, or 6.06 of Rev. Proc. 2009–33, as applicable, the taxpayer should make the following substitutions:

(i) “round 4 extension property” is substituted for “extension property”;

(ii) “§ 168(k)(4) round 4 extension property election” is substituted for “§ 168(k)(4) extension property election”;

(iii) “December 31, 2013” is substituted for “December 31, 2008”;

(iii) “2014” is substituted for “2008”; (iv) In section 6.02(2)(a)(i), strike the language “(for example, Line 32g of the 2008 Form 1120)” and replace with the following: “(for example, Line 32 of the 2014 Form 1120)”;

(v) Strike the language in section 6.02(2)(a)(ii) and replace with the following: “Filing, with the Form 1120, the Form 8827, Credit for Prior Year Minimum Tax – Corporations, for the taxpayer’s first taxable year ending after December 31, 2013;”

(vi) Strike the word “Stimulus” in sections 6.02(2)(a)(iii) and 6.02(2)(b)(iii);

(vii) Strike the language in section 6.02(2)(b)(ii) and replace with the following: “Attaching to the Form 1120S for the taxpayer’s first taxable year ending after December 31, 2013, a statement indicating that the taxpayer is making the § 168(k)(4) round 4 extension property election and a statement showing the computation of the increase to the AMT credit limitation under § 53(c) resulting from making the § 168(k)(4) round 4 extension property election;”

(viii) In section 6.03, strike the language “If a corporate taxpayer did not make the § 168(k)(4) election for its first taxable year ending March 31, 2008, and the taxpayer” and replace with the following: “If a corporate taxpayer”;

(ix) In section 6.04(2)(c)(iv), strike the language “( excluding extensions)” and replace with the following: “( including extensions)”; and

(x) “December 31, 2014” is substituted for “December 31, 2009”.

(b) Deemed election for taxpayers that are not members of a controlled group . This section 4.03(2)(b) applies to a corporate

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taxpayer that is not a member of a controlled group (as defined in § 168(k)(4)(C)(iv) and in section 2.05 of Rev. Proc. 2009–16). If that taxpayer timely filed its original federal income tax return for its first taxable year ending after December 31, 2013, on or before December 4, 2015, the taxpayer will be treated as making the § 168(k)(4) round 4 extension property election if:

(i) In the case of a C corporation, the taxpayer claimed the refundable credit on the appropriate line of the original Form 1120, U.S. Corporation Income Tax Re- turn, for its first taxable year ending after December 31, 2013 (for example, Line 32 of the 2014 Form 1120);

(ii) In the case of a S corporation, the taxpayer made appropriate adjustments to the appropriate line of the original Form 1120S, U.S. Income Tax Return for an S Corporation, for the taxpayer’s first taxable year ending after December 31, 2013, to reflect the results described in section 6.05(3) of Rev. Proc. 2009–33 from making the § 168(k)(4) round 4 extension property election (for example, Line 22b of the 2014 Form 1120S). In applying section 6.05(3) of Rev. Proc. 2009–33, the taxpayer should substitute “§ 168(k)(4) round 4 extension property election” for “§ 168(k)(4) extension property election”;

(iii) The taxpayer filed, with the original Form 1120 or Form 1120S, as applicable, for the taxpayer’s first taxable year ending after December 31, 2013, the Form 4562 indicating that the taxpayer used the straight line method of depreciation under § 168(b)(3) and did not claim the additional first year depreciation deduction for all round 4 extension property placed in service during that taxable year; and

(iv) The taxpayer provides written notification, if notification has not previously been provided, to any partnership in which the taxpayer is a partner that the taxpayer is making the § 168(k)(4) round 4 extension property election. This notification must be made to the applicable partnership(s) by December 4, 2015.

(i) In general . If any member of a controlled group is treated as making the § 168(k)(4) round 4 extension property election under section 4.03(2)(c)(ii) or (iii) of this revenue procedure, such elec

tion is binding on all other members of the controlled group. See section 4.03(1) of Rev. Proc. 2009–33.

(ii) All members of a controlled group constitute a single consolidated group . This section 4.03(2)(c)(ii) applies when all members of a controlled group are members of a consolidated group. If the common parent (within the meaning of § 1.1502–77(a)(1)(i)) of the consolidated group timely filed the original consolidated federal income tax return for its first taxable year ending after December 31, 2013, on or before December 4, 2015, all members of the consolidated group will be treated as making the § 168(k)(4) round 4 extension property election if the common parent complies with the procedures in section 4.03(2)(b) of this revenue procedure for all members of the consolidated group (for example, the written notification required in section 4.03(2)(b)(iv) of this revenue procedure is provided to all partnerships in which any member is a partner).

(iii) All members of a controlled group do not constitute a single consolidated group . This section 4.03(2)(c)(iii) applies when separate federal income tax returns are filed by some or all members of a controlled group. If a controlled group includes, but is not limited to, members of a consolidated group, the consolidated group is treated as a single member of the controlled group. If a member of the controlled group timely filed its original federal income tax return for its first taxable year ending after December 31, 2013, on or before December 4, 2015, such member will be treated as making the § 168(k)(4) round 4 extension property election if the member:

(A) Complies with the procedures in section 4.03(2)(b) of this revenue procedure; and

(B) Provides written notification, if notification has not previously been provided, to all other members of the controlled group that the § 168(k)(4) round 4 extension property election will be made. This notification must be made to the other members by December 4, 2015.

SECTION 5. CARRYOVER OF 2010, 2011, 2012, OR 2013 DISALLOWED § 179 DEDUCTION FOR QUALIFIED REAL PROPERTY

.01 In General . A taxpayer that treated the amount of a 2010, 2011, 2012, or 2013

disallowed § 179 deduction for qualified real property as property placed in service on the first day of the taxpayer’s last taxable year beginning in 2013 may either (1) continue that treatment, or (2) if the period of limitations for assessment under § 6501(a) is open, amend its federal tax return for the last taxable year beginning in 2013 to carryover the 2010, 2011, 2012, or 2013 disallowed § 179 deduction to any taxable year beginning in 2014. However, if the taxpayer’s last taxable year beginning in 2013 is open under the period of limitations for assessment under § 6501(a) and an affected succeeding taxable year is closed under the period of limitations for assessment under § 6501(a), the taxpayer must continue to treat the amount of a 2010, 2011, 2012, or 2013 disallowed § 179 deduction as property placed in service on the first day of the taxpayer’s last taxable year beginning in 2013.

.02 Time and Manner of Filing Amended Federal Tax Return . The amended federal tax return for the taxpayer’s last taxable year beginning in 2013 must include any collateral adjustments to taxable income or the tax liability (for example, the amount of depreciation allowed or allowable in the last taxable year beginning in 2013 for the amount of the 2010, 2011, 2012, or 2013 disallowed § 179 deduction). Such collateral adjustments must also be made on amended federal tax returns for any affected succeeding taxable years. The amended returns for the taxpayer’s last taxable year beginning in 2013 and for any affected succeeding taxable years must be filed within the time prescribed by law for filing an amended return for such taxable years.