12/29/2023 0 Comments Quip definitionPlanning tip: Improvements to residential rental property are not QIP. Of course, if the transferor claimed bonus depreciation on the QIP, its basis would be zero, so the transferee would have no basis in that QIP. Apparently, the transferee steps into the shoes of the transferor's remaining 15- year recovery period. However, because the transferee's basis in such QIP is based on the transferor's basis, it does not qualify for bonus depreciation. 721 transaction) any improvement that was previously made and placed in service by the transferor that is QIP is QIP in the transferee's hands (but only to the extent of the transferee's basis in the property that carried over from the transferor). 168(i)(7)(B) (such as when property is contributed to a partnership in a tax- free Sec. The preamble also states that if a transferee acquires nonresidential real property in a step- in- the- shoes transaction described in Sec. 9916) indicates that an improvement is made by the taxpayer if the taxpayer makes, manufactures, constructs, or produces the improvement or if the improvement is made, manufactured, constructed, or produced for the taxpayer by another person under a written contract. Observation: The preamble to the final bonus depreciation regulations issued in 2020 (T.D. The requirement that the improvement be made by the taxpayer means that taxpayers cannot acquire a building and treat any cost assigned to improvements made by a previous owner as QIP. However, expenditures attributable to the enlargement of the building, elevators or escalators, or the internal structural framework of the building are excluded (Sec. 1250 property made by the taxpayer to an interior portion of a nonresidential building placed in service after the date the building was placed in service. Qualified improvement property (QIP) is any improvement that is Sec.
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