The Coronavirus Aid, Relief, and Economic Security (CARES) Act is an economic relief package that was signed into law on March 27, 2020. Under the CARES Act, a change was made to the Internal Revenue Code to assign a 15-year recovery period to Qualified Improvement Property (QIP). Businesses can now treat QIP placed in service after December 31, 2017 as 15-year property, which makes it eligible for 100% bonus depreciation, allowing taxpayers to take a full deduction for the cost of eligible QIP in a single year.
QIP refers to qualifying improvements made by a taxpayer to an interior portion of an existing building that is nonresidential real property, such as healthcare facilities, manufacturing plants, office and light commercial buildings, and material handling facilities. Under the CARES Act, qualifying improvements made to the interior of these facilities would qualify for a full tax deduction.