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IRS Issues Interim Guidance On Bonus Depreciation

February 10, 2026 Phil L. Jelsma General

By Phil Jelsma

SAN DIEGO (February 10, 2026) – On January 14, 2026, the Internal Revenue Service (IRS) issued Notice 2026-11 (the “Notice”), providing interim guidance on the reinstatement of 100% bonus depreciation under the One Big Beautiful Bill Act (“OBBBA”).

Under OBBBA, bonus depreciation was reinstated for qualifying property acquired and placed in service after January 19, 2025. The Notice clarifies how taxpayers should determine whether property meets the applicable acquisition date requirements and outlines several important elections related to bonus depreciation.

The Notice confirms how taxpayers should rely on the existing acquisition date rules set forth in Section 168(k) Regulations, including rules governing properties acquired or constructed under a binding written contract.  The Notice also allows taxpayers to elect and treat certain components of constructed property as eligible for bonus depreciation – even if a larger construction property does not meet the acquisition date requirement.  However, it does not address “Qualified Production Property,” a new category of property entitled to bonus depreciation.

Additionally, the Notice provides guidance on elections available to taxpayers for property acquired after January 19, 2025.  Specifically, taxpayers may elect to claim a reduced additional first-year depreciation deduction – 40% (or 60% for certain property with longer production periods) – in lieu of full 100% bonus depreciation for property placed in service after January 19, 2026.

Sound Recording Production Equipment

The OBBBA also made changes to post depreciation by adding qualified recording production equipment as eligible property for bonus depreciation. 

To receive bonus depreciation:

  • The sound recording must be produced and recorded in the United States
  • Production must commence in a taxable year after July 4, 2025
  • The production is treated as acquired when principal recording begins
  • The property is considered placed in service upon its initial lease or broadcast

State Tax Considerations

California does not conform to the federal bonus depreciation rules. As a result, the reinstatement of 100% bonus depreciation under the OBBBA has no impact for California income tax purposes.

If you have question about this IRS ruling, please do not hesitate to contact us.

About Crosbie Gliner Schiffman Southard & Swanson LLP (CGS3)

CGS3 is a recognized leader among a new generation of commercial real estate law firms with practice areas covering the entire commercial real estate life cycle, including finance, acquisition/disposition, entity formation, tax, construction & development, land use, leasing, distressed asset workouts and dispute resolution.  Earning a reputation as one of California’s leading commercial real estate law firms, CGS3 recruits some of the state’s top real estate attorneys from both large corporate firms and senior in-house positions.  For more information, visit http://www.cgs3.com.

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