60-day extension to elect out of bonus depreciation on 7-year and 15-year property

Plain-English summary

A partnership (an LLC taxed as a partnership) bought property it classified as 7-year and 15-year property and claimed the extra "bonus" first-year depreciation deduction under section 168(k) on its timely-filed return. Section 168(k)(7) lets a taxpayer instead elect not to take that bonus depreciation for a class of property, but the election must be made with the original return. The partnership's tax advisor did not realize that claiming bonus depreciation would hurt the partners' state income taxes, so no election out was made; the problem surfaced later while preparing a partner's state return. The partnership asked the IRS for relief under Treas. Reg. §§ 301.9100-1 and 301.9100-3 to make the election late. The IRS found the partnership acted reasonably and in good faith in relying on its advisor and granted 60 days from the date of the letter to make the election out, which it must do by filing an amended partnership return as an administrative adjustment request. The IRS expressed no opinion on whether the property actually qualified for bonus depreciation in the first place.

Ruling snapshot

• Question: Should the partnership get an extension of time to make a late election out of section 168(k) bonus depreciation?
• Outcome: Approved (60-day extension granted)
• Key authorities: IRC § 168(k)(7); Treas. Reg. §§ 1.168(k)-2(f), 301.9100-1, 301.9100-3; IRC § 6227 (administrative adjustment request)

Full text (IRS public release)

Internal Revenue Service Department of the Treasury
Washington, DC 20224

Number: 202552009 Third Party Communication: None
Release Date: 12/26/2025 Date of Communication: Not Applicable
Index Number: 168.00-00, 446.04-17
Person To Contact:
------------------------ ----------------------, ID No. -----------------
------------------------- Telephone Number:
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---------------------------- Refer Reply To:
------------------------------- CC:ITA:B07
PLR-108984-25
Date:
September 29, 2025

In re: ---------------------------------------

     Request for extension of time to make the election not to deduct additional first
     year depreciation under § 168(k)

                                                 Legend

      Taxpayer                 =       --------------------------------------------------------------------------
                                       -------------------------
      Advisor                  =       ------------------------------------------
      Taxable Year             =       ----------------------------------------------------------
      Date1                    =       -----------------------
      Date2                    =       ---------------------

Dear ----------------------:

   This letter responds to a letter dated April 21, 2025, and subsequent

correspondence, submitted by your representative on behalf of Taxpayer. In that letter,
Taxpayer requests an extension of time pursuant to §§ 301.9100-1 and 301.9100-3 of
the Procedure and Administration Regulations to make the election not to deduct the
additional first year depreciation deduction under § 168(k) of the Internal Revenue Code
(Code) for the 7-year and 15-year property placed in service by Taxpayer during
Taxable Year.

   The references in this letter to § 168(k) are treated as references to the statute

and regulations thereunder, as in effect for the respective dates the Taxpayer placed in
service the property at issue.

  This letter ruling is being issued electronically in accordance with section 7.02(5)

Rev. Proc. 2025-1, 2025-1 I.R.B. 1.
PLR-108984-25 2

                                      FACTS

   Taxpayer represents the facts are as follows:

  Taxpayer is a limited liability company, uses the cash method as its overall

accounting method, and operates on a calendar year basis. Taxpayer is treated as a
partnership for federal tax purposes and files a Form 1065, U.S. Return of Partnership
Income.

    During Taxable Year, Taxpayer placed in service property that it classified as 7-

year and 15-year property, and that Taxpayer represents is qualified property under
§ 168(k). On its timely-filed return for Taxable Year, Taxpayer deducted the additional
first year depreciation deduction under § 168(k) (the § 168(k) depreciation deduction)
for the 7-year and 15-year classes of property.

   Taxpayer engaged Advisor, a qualified tax professional, to prepare its federal

and state tax income tax returns for Taxable Year. Advisor was not aware of the
unfavorable state tax implications of claiming the § 168(k) depreciation deduction.
Therefore, Advisor did not advise Taxpayer to make the election to not take the § 168(k)
depreciation deduction. Taxpayer reviewed its federal income tax return prior to filing
but was also not aware that claiming the § 168(k) depreciation deduction could
negatively affect each partner's state income tax liabilities. During preparation of a
partner's state income tax return on Date1, Advisor discovered the unfavorable state
income tax implications of having claimed the § 168(k) depreciation deduction for
Taxable Year. On that same day, Advisor conveyed the discovery to Taxpayer. In
Date2, Taxpayer decided to submit this request for relief.

   Taxpayer represents it acted reasonably and in good faith because Taxpayer

reasonably relied on the expertise of Advisor, and that the granting of relief will not
prejudice the interests of the Government.

                             RULING REQUESTED

   Taxpayer requests relief under § 301.9100-1 and § 301.9100-3 for an extension

of time to make the election not to deduct the additional first year depreciation deduction
under § 168(k) for the 7-year and 15-year classes of property placed in service by
Taxpayer during the Taxable Year.

                                       LAW

   Section 168(k)(1) allows, for the taxable year in which qualified property is placed

in service, an additional first year depreciation deduction equal to the applicable
percentage of the adjusted basis of that qualified property.
PLR-108984-25 3

   Section 168(k)(6) provides the applicable percentage amounts. For qualified

property placed in service after December 31, 2022, and before January 1, 2024, the
applicable percent is 80 percent.

   Section 168(k)(7) provides that a taxpayer may elect not to deduct the § 168(k)

depreciation deduction for any class of property placed in service during the taxable
year. The term "class of property" is defined by § 1.168(k)-2(f)(1)(ii) of the Income Tax
Regulations as meaning, among other things, each class of property described in
§ 168(e) (for example, 5-year property). Section 1.168(k)-2(f)(1)(i) provides that if the
election is made, the election applies to all qualified property that is in the same class of
property and placed in service in the same taxable year, and no § 168(k) depreciation
deduction is allowable for the property placed in service during the taxable year in the
class of property, except as provided in § 1.743-1(j)(4)(i)(B)(1).

    Section 1.168(k)-2(f)(1)(iii)(A) provides that the election not to deduct additional

first year depreciation under § 168(k)(7) must be made by the due date (including
extensions) of the federal tax return for the taxable year in which the qualified property
is placed in service by the taxpayer.

   Section 1.168(k)-2(f)(1)(iii)(B) provides that this election must be made in the

manner prescribed on Form 4562, Depreciation and Amortization (Including Information
on Listed Property), and its instructions. The instructions to Form 4562 for Taxable
Year provide that the election not to deduct the additional first year depreciation under
§ 168(k)(7) is made by attaching a statement to the taxpayer's timely filed tax return
indicating that the taxpayer is electing not to deduct the additional first year depreciation
and the classes of property to which the election applies.

    Under § 301.9100-1(a), the Commissioner of Internal Revenue (the

Commissioner) has discretion to grant a reasonable extension of time under the rules
set forth in § 301.9100-2 and § 301.9100-3 to make a regulatory election.

   Section 301.9100-1(b) defines a regulatory election as one whose due date is

prescribed by a regulation published in the Federal Register, or a revenue ruling,
revenue procedure, notice or announcement published in the Internal Revenue Bulletin.
The due date for the election to not deduct additional first year depreciation is
prescribed by § 1.168(k)-2(f)(1)(iii), and is, therefore, a regulatory election.

    Sections 301.9100-1 thru 301.9100-3 provide the standards the Commissioner

will use to determine whether to grant an extension of time for making a regulatory
election. Section 301.9100-2 provides for automatic extensions of time for making
certain elections. Section 301.9100-3 provides rules for requesting extensions of time
for making regulatory elections that do not meet the standards of § 301.9100-2.

  Taxpayer's request must be analyzed under the requirements of § 301.9100-3

because the automatic extensions provided in § 301.9100-2 are not applicable.
PLR-108984-25 4

    Section 301.9100-3(a) provides that requests for relief under § 301.9100-3 will be

granted when the taxpayer provides evidence to establish to the satisfaction of the
Commissioner that the taxpayer acted reasonably and in good faith, and that the grant
of relief will not prejudice the interests of the Government.

                                   CONCLUSION

   Based solely on the facts and representations as submitted, we conclude that the

requirements of § 301.9100-1 and § 301.9100-3 are satisfied. Accordingly, Taxpayer is
granted an extension of 60 calendar days from the date of this letter ruling to make the
election under § 168(k)(7) not to deduct the additional first year depreciation for the 7-
year and 15-year classes of property placed in service in the Taxable Year. This
election must be made by Taxpayer filing an amended Form 1065 for Taxable Year,
with a statement attached stating that Taxpayer is making the election under § 168(k)(7)
not to deduct the additional first year depreciation for certain classes of property placed
in service during Taxable Year. This election must be made pursuant to a request for
an administrative adjustment (see § 6227) in a written statement filed with the
appropriate service center accompanying Form 1065-X, Amended Return or
Administrative Adjustment Request (AAR), or Form 8082, Notice of Inconsistent
Treatment or AAR, and for any related filings as instructed in Form 1065-X or Form
8082, as appropriate.

     A copy of this letter ruling should be attached to the relevant filings. A taxpayer

filing its return electronically may satisfy this requirement by attaching a statement to
their return that provides the date and control number of this letter ruling.

   Except as specifically set forth above, we express no opinion concerning the

federal tax consequences of the facts and representations above under any other
provisions of the Code (including other subsections of § 168). Specifically, no opinion is
expressed or implied on whether any item of depreciable property placed in service by
Taxpayer during Taxable Year is eligible for the § 168(k) depreciation deduction.

  The rulings contained in this letter are based upon information and

representations submitted by Taxpayer and accompanied by a penalty of perjury
statement executed by an appropriate party. While this office has not verified any of the
material submitted in support of the request for ruling, it is subject to verification on
examination.

   This letter ruling is applicable only to Taxpayer. Section 6110(k)(3) provides that

it may not be used or cited as precedent.

  In accordance with the power of attorney on file with this office, we are sending a

copy of this letter ruling to Taxpayer's authorized representatives. We are also sending
a copy to the appropriate IRS operating division official.
PLR-108984-25 5

                                                Sincerely,



                                                AMY S. WEI
                                                Senior Technician Reviewer, Branch 7
                                                Office of Associate Chief Counsel
                                                (Income Tax & Accounting)

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