In December, Congress passed the most sweeping tax reform legislation since 1986. Included in this legislation (P.L. 115-97) are two provisions that greatly incentivize the installation of fire sprinklers.
Cost Recover Section 13201 – Previously sprinkler systems in commercial structures were depreciated over a 39-year time horizon and residential structures over 27.5 years. Under the new law any sprinkler system installed after September 27, 2017 in either a commercial or residential structure until December 31, 2022 will be able to be fully expensed.
Small Business Section 179 Expensing – Previously qualified small businesses were allowed to fully expense purchases such as computers, equipment and light duty vehicles up to an annual cap of $500,000. Under the new law Congress has added fire protection as an eligible expenditure under section 179 of the tax code. Congress also increased the cap to $1 million as the amount that a small business can deduct in a single year.
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