SECTION 3. QUALIFIED REAL — Internal Revenue Bulletin 2019-3

PROPERTY UNDER § 179

.01 Definition. (1) Taxable year beginning after 2017. For property placed in service by the taxpayer in any taxable year beginning after 2017, the following types of property are qualified real property that may be eligible as § 179 property under § 179(d)(1):

(a) Qualified improvement property, as described in § 168(e)(6), that is placed in service by the taxpayer. The definition of qualified improvement property in § 168(e)(6) is the same definition of that term in § 168(k)(3) as in effect on the day before the date of enactment of the TCJA. Accordingly, see section 4.02 of Rev. Proc. 2017–33 for further guidance on the definition of qualified improvement property; and

(b) An improvement to nonresidential real property, as defined in § 168(e)(2)(B), if the improvement:

(i) Is placed in service by the taxpayer after the date such nonresidential real property was first placed in service by any person;

(ii) Is § 1250 property; and (iii) Is: (A) A roof;

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(B) Heating, ventilation, and airconditioning property (HVAC). A central HVAC system includes all components that are in, on, or adjacent to the nonresidential real property. See § 1.48–1(e)(2);

(D) A security system. (2) Taxable year beginning in 2017 and ending in 2018. For property placed in service by the taxpayer in a taxable year beginning in 2017 and ending in 2018, qualified real property is qualified leasehold improvement property, qualified restaurant property, or qualified retail improvement property as described in § 179(f)(1) and (2) as in effect on the day before the date of enactment of the TCJA. Qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property are defined in § 168(e)(6), (e)(7), and (e)(8),

respectively, as in effect on the day before the date of the enactment of the TCJA.

.02 Election to Treat Qualified Real Property as § 179 Property. A taxpayer may elect to expense under § 179(a) the cost, or a portion of the cost, of qualified real property placed in service by the taxpayer during any taxable year beginning after 2017 by filing an original or amended Federal tax return for that taxable year in accordance with procedures similar to those in § 1.179–5(c)(2) and section 3.02 of Rev. Proc. 2017–33. If a taxpayer elects or elected to expense under § 179(a) a portion of the cost of qualified real property placed in service by the taxpayer during any taxable year beginning after 2017, the taxpayer is permitted to increase the portion of the cost of such property expensed under § 179(a) by filing an amended Federal tax return for that taxable year. Any such increase in the amount expensed under § 179 is not

Table—Alternative Depreciation System

deemed to be a revocation of the prior election for that taxable year.