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Audit Advisor Validations

Reviewing Assets for Tax Compliance

Software that may require 100% bonus on or after 1/20/2025

This Audit Advisor Identifies off-the-shelf software 3-year assets PIS after 1/19/2025 that may qualify for 100% bonus.

Issue

For qualifying off-the-shelf software placed in service on or after January 20, 2025, a 100% 168 Allowance, or first-year bonus, is generally required.

This review identifies assets that are not taking the bonus but appear to be eligible off-the-shelf software—specifically: assets with a property type of P or Q, depreciation method of SF, and an estimated life of 3 years.

However, there are circumstances where a 100% bonus is not applied, including:

  1. The company elects not to take the 100% bonus for 3-year classes.

  2. The property does not qualify for the bonus if it is:

    • primarily (50% or more) used outside the U.S., or

    • used 50% or more for non-business purposes.

Resolution

The system has identified assets that may require the 100% Allowance. Review the asset group created below to verify any qualifying assets.

For qualifying assets, select Depreciation > 168 Allowance Switch, enter the fiscal year end, and select Change qualifying assets to 100% allowance.

Group Created

AA-SF3_+168?-XXXX-mm/yy where XXXX stands for book name