Rp 2009-33

applicable month rules of § 430(h)(2)(E).
In such a case, this table could also be
used for a valuation as of a date in June,
August, September, or October of 2009.

26 CFR 1.168(k)–1: Additional first year depreciation deduction.
(Also: §§ 38, 41, 52, 53, 168, 1502, 1563, 6211,
6401.)

Rev. Proc. 2009–33
SECTION 1. PURPOSE
This revenue procedure provides guidance under § 1201(b) of the American
Recovery and Reinvestment Tax Act of
2009, Div. B of Pub. L. No. 111–5,
123 Stat. 115 (February 17, 2009) (the
Act). Section 1201(b) of the Act amends
§ 168(k)(4) of the Internal Revenue Code
to allow corporations to elect not to claim
the 50-percent additional first year depreciation deduction provided by § 168(k)(1)
for certain property placed in service generally before January 1, 2010, and instead
to increase their business credit limitation
under § 38(c) and alternative minimum
tax (AMT) credit limitation under § 53(c).
Specifically, this revenue procedure provides guidance to corporations regarding
the property eligible for this election, the
time and manner for making the elections
provided by new § 168(k)(4)(H), and the
computation of the amount by which the
business credit limitation and AMT credit
limitation may be increased if the elections
provided by § 168(k)(4)(H) are or are not
made.
SECTION 2. BACKGROUND
.01 Prior to amendment by the Act,
§ 168(k)(1) allowed a 50-percent additional first year depreciation deduction
(Stimulus additional first year depreciation deduction) for certain new property
acquired by a taxpayer after 2007 and
placed in service before 2009 (before
2010 in the case of property described in
§ 168(k)(2)(B) or (C)). Section 1201(a)(1)
of the Act amends § 168(k)(2) by extending the placed in service date to before
2010 (before 2011 in the case of property
described in § 168(k)(2)(B) or (C)).
.02 Section 168(k)(4) allows a corporation to elect (the § 168(k)(4) election)

July 20, 2009

not to claim the Stimulus additional first
year depreciation deduction for eligible
qualified property and instead increase its
business credit limitation under § 38(c)
and the AMT credit limitation under
§ 53(c). With the exception of revised
dates, eligible qualified property for purposes of § 168(k)(4) is property eligible
for the Stimulus additional first year depreciation deduction. See section 3 of Rev.
Proc. 2008–65, 2008–44 I.R.B. 1082, for
additional guidance on the definition of
eligible qualified property for purposes of
§ 168(k)(4).
.03 With the extension of the Stimulus
additional first year depreciation deduction by § 1201(a)(1) of the Act, § 168(k)(4)
correspondingly is extended to apply to
eligible qualified property that is extension property (extension property). Section 1201(b)(1)(B) of the Act amended
§ 168(k)(4) by adding § 168(k)(4)(H) to
the Code. Section 168(k)(4)(H)(iii) defines “extension property” as property that
is eligible qualified property solely by reason of the extension of § 168(k)(2) by
the Act. This revenue procedure clarifies
which eligible qualified property is extension property and which is not extension
property (see section 3 of this revenue procedure).
.04 Under § 168(k)(4)(A), a § 168(k)(4)
election applies to a corporation’s first taxable year ending after March 31, 2008, and
to any subsequent taxable year. However,
under § 168(k)(4)(H)(i)(I), a corporation
that made the § 168(k)(4) election for its
first taxable year ending after March 31,
2008, may elect not to have the § 168(k)(4)
election apply to extension property. This
revenue procedure provides guidance regarding the time and manner for making
the election not to apply § 168(k)(4) to extension property (see section 4 of this revenue procedure).
.05 In general, the amount by which
the § 168(k)(4) election increases the business credit limitation under § 38(c) and
the AMT credit limitation under § 53(c)
is the bonus depreciation amount. See
§ 168(k)(4)(A)(iii). Except as provided
below, the bonus depreciation amount
generally is equal to 20 percent of the
excess of the aggregate amount of depreciation that would be allowable for
eligible qualified property if the Stimulus
additional first year depreciation deduction applied to all such property, over

150

the aggregate amount of depreciation that
would be allowable for all such property
if the Stimulus additional first year depreciation deduction did not apply. See
§ 168(k)(4)(C)(i). However, the bonus
depreciation amount for any taxable year
must not exceed the maximum increase
amount reduced by the sum of the bonus
depreciation amounts determined for all
prior taxable years. See § 168(k)(4)(C)(ii).
In general, the maximum increase amount
is equal to the lesser of $30 million or 6
percent of the sum of the unexpired and
unused pre-2006 business credit carryforwards allocable to the research credit and
AMT credit carryforwards to the current
taxable year. See § 168(k)(4)(C)(iii). For
any taxable year, the bonus depreciation
amount allocated to either the business
credit limitation or AMT credit limitation
must not exceed the amount of unexpired
and unused pre-2006 (1) business credit
carryforwards allocable to the research
credit or (2) AMT credit carryforwards,
less bonus depreciation amounts allocated
to each limitation, respectively, for all
prior taxable years. See § 168(k)(4)(E)(ii).
To the extent that the business credit or
AMT credit allowable to a taxpayer is
due to an increase in the business credit
limitation or AMT credit limitation that
results from the § 168(k)(4) election,
such amount(s) are treated as overpayments within the meaning of § 6401(b)
that are refundable to the taxpayer. See
§ 168(k)(4)(F). See section 5 of Rev. Proc.
2008–65 and sections 4, 5, and 6 of Rev.
Proc. 2009–16, 2009–6 I.R.B. 449, for
additional guidance regarding the computation of the bonus depreciation amount
and the allocation of the bonus depreciation amount between the business credit
and AMT credit limitations under §§ 38(c)
and 53(c), respectively.
.06 Section 168(k)(4)(H)(i)(II) provides that, if a corporation has made the
§ 168(k)(4) election and the corporation
does not make the election not to apply
§ 168(k)(4) to extension property, separate
bonus depreciation amounts, maximum
amounts, and maximum increase amounts
are computed for eligible qualified property that is not extension property and
for extension property. This revenue procedure provides guidance regarding the
computation of the bonus depreciation
amount for extension property (see section
5 of this revenue procedure).

2009–29 I.R.B.

.07 Section 168(k)(4)(H)(ii)(I) provides that, if a corporation did not make
the § 168(k)(4) election for its first taxable year ending after March 31, 2008,
the corporation may elect (the § 168(k)(4)
extension property election) not to claim
the Stimulus additional first year depreciation deduction for extension property
and instead increase its business credit
limitation under § 38(c) and the AMT
credit limitation under § 53(c). Section
168(k)(4)(H)(ii)(II) provides that, if a
corporation makes the § 168(k)(4) extension property election, such election
applies only to extension property. This
revenue procedure provides guidance regarding the time and manner for making
the § 168(k)(4) extension property election
(see section 6 of this revenue procedure).
.08 Section 3081(b) of the Housing
and Economic Recovery Act of 2008,
Pub. L. No. 110–289, 122 Stat. 2654
(July 30, 2008) (Housing Act), allows
an applicable partnership (as defined in
§ 3081(b)(4)(A) of the Housing Act)
to elect to be treated as having made a
deemed payment of income tax in a certain
amount.
If an applicable partnership
makes this election, the applicable
partnership determines the depreciation
deduction for any eligible qualified
property (as defined in § 3081(b)(4)(C)
of the Housing Act and in section 3 of
Rev. Proc. 2008–65) placed in service
by the partnership during the taxable year
by using the straight line method and by
not claiming the Stimulus additional first
year depreciation deduction, and reduces
the amount of its research credit for the
taxable year by the amount of the deemed
payment for the taxable year. The election
to apply § 3081(b) of the Housing Act
(the § 3081(b) Housing Act election) must
be made for the applicable partnership’s
first taxable year ending after March 31,
2008, and applies to any taxable year
during which eligible qualified property
is placed in service by the applicable
partnership. The Act does not extend or
amend the § 3081(b) Housing Act election.
Therefore, if an applicable partnership
made the § 3081(b) Housing Act election
for its first taxable year ending after
March 31, 2008, this election continues to
apply only to eligible qualified property
as defined in section 3 of Rev. Proc.
2008–65 (as modified by section 7.01 of
this revenue procedure). An applicable

2009–29 I.R.B.

partnership may not make an election to
apply § 3081(b) of the Housing Act to
extension property.
.09 Section 1201(a)(3)(A)(iii) of the
Act amends § 168(k)(4)(D) by adding a
new clause (ii) which provides that, for
purposes of applying § 168(k)(2) to determine whether depreciable property is
eligible qualified property for purposes
of § 168(k)(4), “April 1, 2008” shall
be substituted for “January 1, 2008” in
§ 168(k)(2)(A)(iii)(I). This amendment
relates to the qualification of property acquired by a taxpayer pursuant to a written
binding contract as eligible qualified property for purposes of § 168(k)(4). Section
3.02(2) of Rev. Proc. 2008–65 is modified
to reflect this amendment (see section 7 of
this revenue procedure).
.10 Section 168(k)(4)(E)(iv) defines the
term “AMT credit increase amount” as
meaning the portion of the minimum tax
credit under § 53(b) for the first taxable
year ending after March 31, 2008, determined by taking into account only the adjusted minimum tax for taxable years beginning before January 1, 2006. This revenue procedure modifies section 5.06 of
Rev. Proc. 2008–65 to clarify that “adjusted minimum tax” means “adjusted net
minimum tax” (see section 7 of this revenue procedure).
.11 Section 3.02(1)(a)(ii) of Rev. Proc.
2009–16 provides that, if a taxpayer’s
first taxable year ending after March 31,
2008, ends before December 31, 2008,
the taxpayer must file an amended federal
income tax return on or before the due date
(without regard to extensions) of the taxpayer’s original federal income tax return
for the succeeding taxable year in order
to claim the refundable credit resulting
from a § 168(k)(4) election. Some taxpayers have expressed concern about how
to comply with this requirement when a
taxpayer’s succeeding taxable year is a
short taxable year. This revenue procedure
modifies section 3.02(1)(a)(ii) of Rev.
Proc. 2009–16 to address this concern
(see section 8 of this revenue procedure).
SECTION 3. EXTENSION PROPERTY
AND ELIGIBLE QUALIFIED
PROPERTY THAT IS NOT EXTENSION
PROPERTY
.01
In
General.
Under
§ 168(k)(4)(H)(iii), extension property

151

means property that is eligible qualified
property solely by reason of the extension
of § 168(k)(2) by the Act. Pursuant
to § 168(k)(4)(D), as amended by the
Act, the term “eligible qualified property” means qualified property under
§ 168(k)(2), except that in applying
§ 168(k)(2), (1) “March 31, 2008” is
substituted for “December 31, 2007” each
place it appears in § 168(k)(2)(A) and
§ 168(k)(2)(E)(i) and (ii), (2) “April 1,
2008” is substituted for “January 1, 2008”
in § 168(k)(2)(A)(iii)(I), and (3) only
adjusted basis attributable to manufacture,
construction or production after March 31,
2008, and before January 1, 2010, is taken
into account under § 168(k)(2)(B)(ii).
However, the binding contract requirement in § 168(k)(2)(A)(iii)(I) does not
apply for determining whether a passenger
aircraft is eligible qualified property. Section 168(k)(4)(G)(iii). For the definition
of eligible qualified property prior to the
amendment by the Act, see section 3 of
Rev. Proc. 2008–65 (as modified by
section 7.01 of this revenue procedure).
.02 Eligible Qualified Property That Is
Not Extension Property. Eligible qualified
property (as defined in § 168(k)(4)(D), as
amended by the Act) is not extension property if:
(1) The eligible qualified property is
acquired by the taxpayer after March 31,
2008, and placed in service by the taxpayer
before January 1, 2009;
(2) The eligible qualified property
meets the requirements of § 168(k)(2)(B)
(long production period property or transportation property), is acquired by the
taxpayer after March 31, 2008, and is
placed in service by the taxpayer before
January 1, 2010; or
(3) The eligible qualified property
meets the requirements of § 168(k)(2)(C)
(certain aircraft), is acquired by the taxpayer after March 31, 2008, and is placed
in service by the taxpayer before January
1, 2010.
.03 Extension Property. Extension
property is eligible qualified property (as
defined in § 168(k)(4)(D), as amended by
the Act) that:
(1) Is acquired by the taxpayer after
March 31, 2008, is placed in service by the
taxpayer after December 31, 2008, and before January 1, 2010, and is not described
in section 3.02(2) or (3) of this revenue
procedure;

July 20, 2009

(2) Meets the requirements of
§ 168(k)(2)(B) (long production period
property or transportation property), is
acquired by the taxpayer after March 31,
2008, and is placed in service by the taxpayer after December 31, 2009, and before
January 1, 2011; or
(3) Meets the requirements of
§ 168(k)(2)(C) (certain aircraft), is acquired by the taxpayer after March 31,
2008, and is placed in service by the taxpayer after December 31, 2009, and before
January 1, 2011.
SECTION 4. ELECTION NOT TO
APPLY § 168(k)(4) TO EXTENSION
PROPERTY
.01 In General. If a corporate taxpayer
has made the § 168(k)(4) election as provided in section 3 of Rev. Proc. 2009–16
(as modified by section 8 of this revenue
procedure) for its first taxable year ending after March 31, 2008, the taxpayer may
make an election not to apply § 168(k)(4)
to extension property placed in service by
the taxpayer in its first taxable year ending after December 31, 2008, and in any
subsequent taxable year. The taxpayer’s
§ 168(k)(4) election continues to apply to
eligible qualified property that is not extension property. Even if the taxpayer does
not place in service any extension property
in its first taxable year ending after December 31, 2008, the taxpayer must make the
election not to apply § 168(k)(4) to extension property for that taxable year if the
taxpayer wishes to apply such election to
extension property placed in service in a
subsequent taxable year. Failure to comply
with all of the requirements of section 4.02
of this revenue procedure or, if applicable,
section 4.03 of this revenue procedure, will
nullify a taxpayer’s attempted election not
to apply § 168(k)(4) to extension property.
.02 Time and Manner for Making the
Election Not to Apply § 168(k)(4) to Extension Property.
(1) Time for making election. Except
as provided in section 4.04 of this revenue
procedure, a corporate taxpayer must make
the election not to apply § 168(k)(4) to extension property by the due date (including extensions) of the federal income tax
return for the taxpayer’s first taxable year
ending after December 31, 2008. If the
taxpayer has filed such federal income tax
return and did not make the election not

July 20, 2009

to apply § 168(k)(4) to extension property
but wants to do so, see section 4.04 of this
revenue procedure for how to make a late
election.
(2) Manner of making election. Except
as provided in section 4.03 of this revenue
procedure, a corporate taxpayer makes the
election not to apply § 168(k)(4) to extension property by:
(a) Attaching a statement to the taxpayer’s timely-filed federal income tax return for its first taxable year ending after December 31, 2008, indicating that the
taxpayer is making the election not to apply § 168(k)(4) to extension property; and
(b) Providing written notification to any
partnership in which the taxpayer is a partner that the taxpayer is making the election
not to apply § 168(k)(4) to extension property. This notification must be made on or
before the due date (including extensions)
of the taxpayer’s federal income tax return
for its first taxable year ending after December 31, 2008. If the taxpayer makes
a late election not to apply § 168(k)(4) to
extension property in accordance with section 4.04 of this revenue procedure, the notification to the partnership must be made
no later than the date the taxpayer files its
federal income tax return containing the
late election.
.03 Controlled Groups.
(1) In general. The Act does not modify
the rules under § 168(k)(4)(C)(iv) for treating members of a controlled group of corporations (as defined in § 168(k)(4)(C)(iv)
and in section 2.05 of Rev. Proc. 2009–16)
as one taxpayer for purposes of § 168(k)(4)
(hereinafter such group of corporations
is referred to as a “controlled group”).
Therefore, if any member of a controlled
group makes the election not to apply
§ 168(k)(4) to extension property, such
election is binding on all other members of
the controlled group. For purposes of this
section 4.03, the rules provided in section
3.05(1) of Rev. Proc. 2009–16 (relating
to the determination of the members of a
controlled group) and section 3.05(2)(d)
of Rev. Proc. 2009–16 (relating to the
effect of a § 168(k)(4) election to members
entering and leaving a controlled group)
apply.
(2) Time and manner of making the
election not to apply § 168(k)(4) to extension property.
(a) All members of a controlled group
constitute a single consolidated group.

152

If all members of a controlled group are
members of an affiliated group of corporations that file a consolidated return
(hereinafter, a “consolidated group”), the
common parent (within the meaning of
§ 1.1502–77(a)(1)(i) of the Income Tax
Regulations) of the consolidated group
makes the election not to apply § 168(k)(4)
to extension property on behalf of all
members of the consolidated group. The
common parent makes this election within
the time and in the manner provided in
section 4.02 of this revenue procedure.
(b) All members of a controlled group
do not constitute a single consolidated
group. This section 4.03(2)(b) applies
when separate federal income tax returns
are filed by some or all members of a
controlled group. If a controlled group
includes, but is not limited to, members
of a consolidated group, the consolidated
group is treated as a single member of
the controlled group. For purposes of
this section 4.03(2)(b), the election not to
apply § 168(k)(4) to extension property
of a consolidated group that is a member of a controlled group is made by the
common parent (within the meaning of
§ 1.1502–77(a)(1)(i)) on behalf of the
consolidated group. A member of the
controlled group makes the election not
to apply § 168(k)(4) to extension property
by:
(i) Following the procedures in section
4.02 of this revenue procedure; and
(ii) Notifying all other members of the
controlled group that the election not to apply § 168(k)(4) to extension property will
be made. This notification must be made
before the due date (excluding extensions)
of the electing member’s federal income
tax return for its first taxable year ending
after December 31, 2008. If the electing
member makes a late election not to apply § 168(k)(4) to extension property in
accordance with section 4.04 of this revenue procedure, the electing member must
notify the other members no later than the
date the electing member files its federal
income tax return containing the late election.
.04 Limited Relief for Late Elections.
(1) Automatic 6-month extension. Pursuant to § 301.9100–2(b) of the Procedure
and Administration Regulations, an automatic extension of 6 months from the due
date of the federal income tax return (excluding extensions) for the taxpayer’s first

2009–29 I.R.B.

taxable year ending after December 31,
2008, is granted to make the election not
to apply § 168(k)(4) to extension property,
provided the taxpayer timely filed the taxpayer’s federal income tax return for the
taxpayer’s first taxable year ending after
December 31, 2008, and the taxpayer satisfies the requirements in § 301.9100–2(c)
and (d).
(2) Other extensions. A taxpayer that
fails to make the election not to apply
§ 168(k)(4) to extension property for the
taxpayer’s first taxable year ending after
December 31, 2008, as provided in section
4.02, 4.03, or 4.04(1) of this revenue procedure but wants to do so must file a request for an extension of time to make the
election under the rules in § 301.9100–3.
SECTION 5. BONUS DEPRECIATION
AMOUNT FOR EXTENSION
PROPERTY
.01
In
General.
Under
§ 168(k)(4)(H)(i)(II), if a taxpayer has
made the § 168(k)(4) election for its first
taxable year ending after March 31, 2008,
and does not make the election not to
apply § 168(k)(4) to extension property,
separate bonus depreciation amounts,
maximum amounts, and maximum increase amounts are computed and applied
to eligible qualified property that is not
extension property and to extension property. Such a taxpayer computes its bonus
depreciation amount for eligible qualified
property that is not extension property in
the manner described in section 5 of Rev.
Proc. 2008–65 (as modified by section
7.02 of this revenue procedure).
.02 Computation of Extension Property
Bonus Depreciation Amount.
(1) In general. Except as provided in
section 5.02(2) of this revenue procedure,
a taxpayer described in section 5.01 of
this revenue procedure computes its bonus
depreciation amount for extension property (extension property bonus depreciation amount) in the manner described in
section 5 of Rev. Proc. 2008–65 (as modified by section 7.02 of this revenue procedure), with the following additional modifications:
(a) Bonus depreciation amount.
The bonus depreciation amount under
§ 168(k)(4)(C)(i) is computed only with
regard to extension property; and

2009–29 I.R.B.

(b) Maximum amount. The maximum
amount under § 168(k)(4)(C)(ii) equals the
maximum increase amount (as computed
under section 5.04 of Rev. Proc. 2008–65)
less the sum of the extension property
bonus depreciation amounts determined
under § 168(k)(4)(C) for all preceding
years. Therefore, a taxpayer described in
section 5.01 of this revenue procedure may
claim a maximum of $30 million of refundable credits relating to its § 168(k)(4)
election applicable to eligible qualified
property that is not extension property, and
a maximum of $30 million of refundable
credits relating to its § 168(k)(4) election
applicable to extension property.
(2) Controlled groups. If a taxpayer described in section 5.01 of this revenue procedure is a member of a controlled group
(as determined under section 3.05(1) of
Rev. Proc. 2009–16), the taxpayer must
compute the controlled group’s bonus depreciation amount for extension property
(group extension property bonus depreciation amount). The group extension property bonus depreciation amount is computed in the same manner as described in
section 4.02(2) or 4.02(3)(b)(ii) of Rev.
Proc. 2009–16, as applicable, but taking
into account the modifications described in
section 5.02(1) of this revenue procedure.
.03 Allocation of Extension Property
Bonus Depreciation Amount.
(1) In general. A taxpayer described
in section 5.01 of this revenue procedure
allocates its extension property bonus deprecation amount (computed under section
5.02 of this revenue procedure) between
the business credit limitation under § 38(c)
and the AMT credit limitation under
§ 53(c) in the same manner as provided in
section 4 of Rev. Proc. 2009–16. Therefore, an allocation under this section 5.03
is reported with the taxpayer’s timely filed
original federal income tax return for the
taxable year.
(2) Controlled groups. The group
extension property bonus depreciation
amount (computed under section 5.02(2)
of this revenue procedure) that is allocable to a member of a controlled group (as
determined under section 3.05(1) of Rev.
Proc. 2009–16) is determined by arriving
at each member’s proportionate share of
the group extension property bonus depreciation amount, unless all members of the
group agree to an alternative allocation
under section 4.02(3)(c) of Rev. Proc.

153

2009–16. Each member’s proportionate
share of the group extension property
bonus depreciation amount is determined
in accordance with the method described
in section 4.02(2) or 4.02(3)(b)(iii) of Rev.
Proc. 2009–16, as applicable. In lieu of
the method described in section 4.02(3)(b)
of Rev. Proc. 2009–16, the controlled
group may allocate the group extension
property bonus depreciation amount pursuant to an allocation agreement (which
may differ from the allocation agreement
applicable to eligible qualified property
that is not extension property) described in
section 4.02(3)(c) of Rev. Proc. 2009–16.
.04 Examples.
(1) Example 1. On August 1, 2008, B, a corporation with a taxable year ending on December 31st,
purchases and places in service property described in
both § 168(k)(2)(A) and (k)(4)(D) (Property X). In
addition, on September 1, 2008, B begins production of property described in both § 168(k)(2)(B)(i)
and (k)(4)(D) (Property Y). On March 15, 2009, B
files its original federal income tax return for the taxable year ending December 31, 2008, and makes the
§ 168(k)(4) election in accordance with section 3.04
of Rev. Proc. 2009–16.
On August 1, 2009, B purchases and places in service property described in both § 168(k)(2)(A) and
(k)(4)(D) (Property Z). On October 1, 2009, B completes production of Property Y and places Property
Y in service. On March 15, 2010, B files its original
federal income tax return for the taxable year ending
December 31, 2009, and does not make the election
not to apply § 168(k)(4) to extension property.
(a) For B’s taxable year ending December 31,
2008, Property X is eligible qualified property under
§ 168(k)(4)(D) and (k)(2)(A) and, as a result of B’s
§ 168(k)(4) election, is taken into account in computing the bonus depreciation amount for this taxable
year.
(b) For B’s taxable year ending December 31,
2009, Property Y is eligible qualified property that
is not extension property under § 168(k)(4)(D),
(k)(4)(H), and (k)(2)(B) and, as a result of B’s
§ 168(k)(4) election, is taken into account in computing the bonus depreciation amount for this taxable
year. Further, under § 168(k)(4)(H)(iii), Property
Z is extension property that is taken into account
in computing the separate extension property bonus
depreciation amount for this taxable year.
(2) Example 2. The facts are the same as in Example 1. Assume that (1) Property X costs $50 million and is 5-year property under § 168(e), (2) the
progress expenditures (within the meaning of section
5.02(5) of Rev. Proc. 2008–65 (as modified by section 7.02 of this revenue procedure)) as of October
1, 2009, with respect to Property Y are $100 million
and that Property Y is 5-year property under § 168(e),
and (3) Property Z costs $50 million and is 5-year
property under § 168(e). Further assume that B depreciates its 5-year property using the optional depreciation table that corresponds to the general depreciation system, the 200-percent declining balance
method, a 5-year recovery period, and the half-year
convention. For each of Property X and Property Z,

July 20, 2009

the difference between the aggregate amount of depreciation that would be allowable for the property if
the Stimulus additional first year depreciation deduction applied over the aggregate amount of depreciation that would be allowable for the property if the
Stimulus additional first year depreciation deduction
did not apply is $20 million. That amount for Property Y is $40 million. As of December 31, 2008, B
has $300 million of unexpired and unused pre-2006
research and AMT credit carryforwards.
(a) Under section 5 of Rev. Proc. 2008–65 (as
modified by section 7.02 of this revenue procedure),
B’s bonus depreciation amount for its taxable year
ending December 31, 2008, is 20 percent of $20 million, or $4 million (Property X). Because $4 million is
less than (i) $30 million and (ii) 6 percent of B’s unexpired and unused pre-2006 research and AMT credit
carryforwards (.06 X $300 million, or $18 million),
B is not limited by the maximum increase amount.
Therefore, B claims $4 million of refundable credits
for its taxable year ending December 31, 2008.
(b) Under section 5 of Rev. Proc. 2008–65 (as
modified by section 7.02 of this revenue procedure),
B’s bonus depreciation amount for its taxable year
ending December 31, 2009, is 20 percent of $40 million, or $8 million (Property Y). Under section 5.04 of
Rev. Proc. 2008–65, B’s maximum increase amount
is $18 million (the lesser of (i) $30 million and (ii)
6 percent of B’s unexpired and unused pre-2006 research and AMT credit carryforwards (.06 X $300
million, or $18 million)). Under section 5.03 of Rev.
Proc. 2008–65, B’s maximum amount is $14 million
($18 million less the $4 million of bonus depreciation amounts determined for eligible qualified property that is not extension property for B’s taxable year
ending December 31, 2008). Therefore, because $8
million is less than $14 million, B may claim $8 million of refundable credits attributable to eligible qualified property that is not extension property for its taxable year ending December 31, 2009.
(c) Under section 5.02(1)(a) of this revenue
procedure, B’s extension property bonus depreciation amount is 20 percent of $20 million, or $4
million (Property Z). Under section 5.04 of Rev.
Proc. 2008–65, B’s maximum increase amount is
$18 million (the lesser of (i) $30 million and (ii)
6 percent of B’s unexpired and unused pre-2006
research and AMT credit carryforwards (.06 X $300
million, or $18 million)). Under section 5.02(1)(b)
of this revenue procedure, B’s maximum amount is
$18 million. Therefore, because $4 million is less
than $18 million, B may claim $4 million of refundable credits attributable to extension property for its
taxable year ending December 31, 2009.

SECTION 6. § 168(k)(4) EXTENSION
PROPERTY ELECTION
.01 In General. If a corporate taxpayer did not make the § 168(k)(4) election for its first taxable year ending after
March 31, 2008, the taxpayer may make
the § 168(k)(4) extension property election. If the § 168(k)(4) extension property
election is made, the election applies to
all extension property placed in service by
the taxpayer in the taxpayer’s first taxable

July 20, 2009

year ending after December 31, 2008, and
in any subsequent taxable year. Even if
the taxpayer does not place in service any
extension property in its first taxable year
ending after December 31, 2008, the taxpayer must make the § 168(k)(4) extension
property election for that taxable year if the
taxpayer wishes to apply the election to extension property placed in service in a subsequent taxable year. Sections 6.02, 6.03,
and 6.04 of this revenue procedure provide the time and manner for making the
§ 168(k)(4) extension property election.
Failure to comply with all of the requirements of section 6.02, 6.03, or 6.04 of this
revenue procedure, as applicable, will nullify a taxpayer’s attempted § 168(k)(4) extension property election. Section 6.05 of
this revenue procedure provides the effects
of making the § 168(k)(4) extension property election and section 6.06 of this revenue procedure provides the procedures
for making a late § 168(k)(4) extension
property election.
.02 Time and Manner for Making the
§ 168(k)(4) Extension Property Election.
(1) Time for making election. Except
as provided in section 6.06 of this revenue
procedure, a corporate taxpayer must make
the § 168(k)(4) extension property election
by the due date (including extensions) of
the federal income tax return for the taxpayer’s first taxable year ending after December 31, 2008. If the taxpayer has filed
such federal income tax return and did not
make the § 168(k)(4) extension property
election but wants to do so, see section
6.06 of this revenue procedure for how to
make a late election.
(2) Manner of making election. Except
as provided in sections 6.03 and 6.04 of
this revenue procedure:
(a) C corporations. A C corporation
makes the § 168(k)(4) extension property
election by:
(i) Claiming the refundable credit on the
appropriate line of the Form 1120, U.S.
Corporation Income Tax Return, for the
taxpayer’s first taxable year ending after
December 31, 2008 (for example, Line 32g
of the 2008 Form 1120);
(ii) Filing, with the Form 1120, the
Form 3800, General Business Credit, or
Form 8827, Credit for Prior Year Minimum Tax—Corporations, or both, as
applicable, for the taxpayer’s first taxable
year ending after December 31, 2008;

154

(iii) Filing, with the Form 1120, the
Form 4562, Depreciation and Amortization (Including Information on Listed
Property), for the taxpayer’s first taxable
year ending after December 31, 2008, indicating that the taxpayer used the straight
line method and did not claim the Stimulus
additional first year depreciation deduction for all extension property; and
(iv) Providing written notification to
any partnership in which the taxpayer is
a partner that the taxpayer is making the
§ 168(k)(4) extension property election.
This notification must be made on or before the due date (including extensions) of
the taxpayer’s federal income tax return
for its first taxable year ending after December 31, 2008. If the taxpayer makes a
late § 168(k)(4) extension property election in accordance with section 6.06 of this
revenue procedure, the notification to the
partnership must be made no later than the
date the taxpayer files its federal income
tax return containing the late election.
(b) S corporations. An S corporation
makes the § 168(k)(4) extension property
election by:
(i) Making appropriate adjustments to
the appropriate line of the Form 1120S,
U.S. Income Tax Return for an S Corporation, for the taxpayer’s first taxable year
ending after December 31, 2008, to reflect
the results described in section 6.05(3) of
this revenue procedure from making the
§ 168(k)(4) extension property election
(for example, Line 22b of the 2008 Form
1120S);
(ii) Attaching to the Form 1120S for
the taxpayer’s first taxable year ending
after December 31, 2008, a statement indicating that the taxpayer is making the
§ 168(k)(4) extension property election
and a statement showing the computation
of the increases to the business credit and
AMT credit limitations under, respectively, §§ 38(c) and 53(c) resulting from
making the § 168(k)(4) extension property
election;
(iii) Filing, with the Form 1120S, the
Form 4562 for the taxpayer’s first taxable
year ending after December 31, 2008, indicating that the taxpayer used the straight
line method and did not claim the Stimulus additional first year depreciation deduction for all extension property; and
(iv) Providing written notification to
any partnership in which the taxpayer is
a partner that the taxpayer is making the

2009–29 I.R.B.

§ 168(k)(4) extension property election.
This notification must be made on or before the due date (including extensions) of
the taxpayer’s federal income tax return
for its first taxable year ending after December 31, 2008. If the taxpayer makes a
late § 168(k)(4) extension property election in accordance with section 6.06 of this
revenue procedure, the notification to the
partnership must be made no later than the
date the taxpayer files its federal income
tax return containing the late election.
.03 No Extension Property Placed In
Service During First Taxable Year Ending After December 31, 2008. If a corporate taxpayer did not make the § 168(k)(4)
election for its first taxable year ending
after March 31, 2008, and the taxpayer
does not place in service any extension
property during the taxpayer’s first taxable
year ending after December 31, 2008, the
taxpayer makes the § 168(k)(4) extension
property election by attaching a statement
to its timely-filed original federal income
tax return for its first taxable year ending
after December 31, 2008, indicating that
the taxpayer is making the § 168(k)(4) extension property election and by following
the procedures in section 6.02(2)(a)(iv) of
this revenue procedure.
.04 Controlled Groups.
(1) Determination of Controlled Group
Members. This section 6.04(1) provides
rules for the determination of membership
in a controlled group (as defined in section
2.05 of Rev. Proc. 2009–16) for purposes
of the § 168(k)(4) extension property election.
(a) First taxable year ending after December 31, 2008. For the first taxable
year ending after December 31, 2008,
§ 168(k)(4)(C)(iv) is applied to determine the members of a controlled group
(as defined in section 2.05 of Rev. Proc.
2009–16) on December 31, 2009, and all
such members on that date are treated as
a controlled group and as one taxpayer.
However, if the first taxable year ending
after December 31, 2008, ends on the same
date for all members of a controlled group
(as defined in section 2.05 of Rev. Proc.
2009–16), all members on such ending
date are treated as a controlled group and
as one taxpayer for purposes of applying
§ 168(k)(4) and this revenue procedure for
the first taxable year ending after December 31, 2008.

2009–29 I.R.B.

(b) Subsequent taxable years. For any
taxable year subsequent to a taxpayer’s
first taxable year ending after December
31, 2008, § 168(k)(4)(C)(iv) is applied
to determine the members of a controlled
group (as defined in section 2.05 of Rev.
Proc. 2009–16) on December 31. However, if a taxable year subsequent to the
first taxable year ending after December
31, 2008, ends on the same date for all
members of a controlled group (as defined
in section 2.05 of Rev. Proc. 2009–16), all
members on such ending date are treated
as a controlled group and as one taxpayer
for purposes of applying § 168(k)(4) and
this revenue procedure for that subsequent
taxable year.
(2) Time and manner of making the
§ 168(k)(4) extension property election.
(a) In general. If any member of a
controlled group (as determined under
section 6.04(1)(a) of this revenue procedure) makes the § 168(k)(4) extension
property election, such election is binding
on all other members of the controlled
group for the members’ first taxable year
ending after December 31, 2008. If in
a subsequent taxable year, a controlled
group determined under section 6.04(1)(b)
of this revenue procedure (the second controlled group) includes 2 or more members
of a controlled group determined under
6.04(1)(a) of this revenue procedure (the
first controlled group), all members of
the second controlled group that were
members of the first controlled group are
deemed to have made (or not made, as the
case may be) the § 168(k)(4) extension
property election of the first controlled
group. For purposes of this section 6.04,
the rules provided in section 3.05(2)(d) of
Rev. Proc. 2009–16 (relating to the effect of a § 168(k)(4) election to members
entering and leaving a controlled group)
apply. Accordingly, whether members of
the second controlled group that were not
members of the first controlled group are
bound by a § 168(k)(4) extension property
election made by the first controlled group
(or bound by the first controlled group’s
lack of a § 168(k)(4) extension property
election) is determined under the rules of
section 3.05(2)(d) of Rev. Proc. 2009–16.
(b) All members of a controlled group
constitute a single consolidated group.
If all members of a controlled group are
members of a consolidated group, the
common parent (within the meaning of

155

§ 1.1502–77(a)(1)(i)) of the consolidated
group makes the § 168(k)(4) extension
property election on behalf of all members
of the consolidated group. The common
parent makes this election within the time
and in the manner provided in section
6.02 or 6.03 of this revenue procedure, as
applicable.
(c) All members of a controlled group
do not constitute a single consolidated
group. This section 6.04(2)(c) applies
when separate federal income tax returns
are filed by some or all members of a
controlled group. If a controlled group
includes, but is not limited to, members
of a consolidated group, the consolidated
group is treated as a single member of the
controlled group. For purposes of this section 6.04(2)(c), the § 168(k)(4) extension
property election of a consolidated group
that is a member of a controlled group
is made by the common parent (within
the meaning of § 1.1502–77(a)(1)(i))
on behalf of the consolidated group. A
member of a controlled group makes the
§ 168(k)(4) extension property election
by:
(i) Following the procedures in section
6.02 or 6.03 of this revenue procedure, as
applicable;
(ii) Attaching to the member’s federal
income tax return a statement describing
the computation of the group extension
property bonus depreciation amount (as
provided in section 6.05(2) of this revenue
procedure);
(iii) Attaching to the member’s federal income tax return Schedule O (Form
1120) and indicating in column (f) of Part
IV that the controlled group has made the
§ 168(k)(4) extension property election
and the portion of the group extension
property bonus depreciation amount allocated to the member (as provided in
section 5.03(2) of this revenue procedure);
and
(iv) Notifying all other members of
the controlled group that the § 168(k)(4)
extension property election will be made.
This notification must be made before
the due date (excluding extensions) of the
electing member’s federal income tax return for the first taxable year ending after
December 31, 2008.
.05 Effects of Making § 168(k)(4) Extension Property Election.
(1) In general. If a taxpayer makes the
§ 168(k)(4) extension property election,

July 20, 2009

the taxpayer’s extension property bonus
depreciation amount is computed in the
manner described in section 5.02 of this
revenue procedure, and the taxpayer’s allocation of the extension property bonus
depreciation amount between the business
credit limitation and AMT credit limitation
under §§ 38(c) and 53(c), respectively, is
made in the manner described in section
5.03 of this revenue procedure. If the taxpayer makes a late § 168(k)(4) extension
property election in accordance with section 6.06 of this revenue procedure, the allocation under section 5.03 of this revenue
procedure is reported with the taxpayer’s
federal income tax return containing the
late election.
(2) Controlled groups. If a member of
a controlled group (as determined under
section 6.04(1) of this revenue procedure)
makes the § 168(k)(4) extension property
election, the group extension property
bonus depreciation amount is computed in
the manner described in section 5.02(2) of
this revenue procedure and each member’s
proportionate share of the group extension property bonus depreciation amount
is determined in the manner described in
section 5.03(2) of this revenue procedure.
(3) S corporations. An S corporation
is allowed to make the § 168(k)(4) extension property election in the time and manner described in section 6.02 or 6.03 of this
revenue procedure, as applicable. The effects of the § 168(k)(4) extension property
election on an electing S corporation and
its shareholders are the same as those described in section 6.01 and section 6.02 of
Rev. Proc. 2009–16 (relating to the effects
of the § 168(k)(4) election on an electing
S corporation and its shareholders).
(4) Partnerships with corporate partners that make the § 168(k)(4) extension
property election. If a corporation makes
the § 168(k)(4) extension property election
and is a partner in a partnership (electing corporate partner), the partnership
must provide the electing corporate partner with sufficient information to apply
§ 168(k)(4)(G)(ii) in determining its distributive share of partnership items under
§ 702 relating to any extension property placed in service by the partnership
during the taxable year. This information must be provided in the time and
manner required under § 6031(b) and
§ 1.6031(b)–1T(a)(3)(ii) and (b). If the
partnership has filed its federal tax return

July 20, 2009

for its first taxable year ending after December 31, 2008, on or before July 20,
2009, and did not provide the electing corporate partner with sufficient information
to apply § 168(k)(4)(G)(ii) with respect to
extension property, the partnership must
provide such information to the electing
corporate partner by the later of October
20, 2009, or 90 calendar days after receiving the corporate partner’s notification as
required by section 6.02 of this revenue
procedure. The determination of the electing corporate partner’s distributive share
of items relating to extension property is
made in the manner described in section
5.01(2) of Rev. Proc. 2009–16.
.06 Limited Relief for Late § 168(k)(4)
Extension Property Election.
(1) Automatic 6-Month Extension. Pursuant to § 301.9100–2(b), an automatic extension of 6 months from the due date of
the federal income tax return (excluding
extensions) for the taxpayer’s first taxable
year ending after December 31, 2008, is
granted to make the § 168(k)(4) extension
property election, provided the taxpayer
timely filed the taxpayer’s federal income
tax return for the taxpayer’s first taxable
year ending after December 31, 2008, and
the taxpayer satisfies the requirements in
§ 301.9100–2(c) and (d).
(2) Other Extensions. A taxpayer that
fails to make the § 168(k)(4) extension
property election for the taxpayer’s first
taxable year ending after December 31,
2008, as provided in section 6.02, 6.03,
6.04, or 6.06(1) of this revenue procedure
but wants to do so must file a request for
an extension of time to make the election
under the rules in § 301.9100–3.
SECTION 7. MODIFICATION OF REV.
PROC. 2008–65
To reflect the statutory changes made
to § 168(k)(4)(D) by §§ 1201(a)(3) and
1201(b)(1)(A) of the Act and to clarify the
definition of AMT credit increase amount
in § 168(k)(4)(E)(iv):
.01 Section 3.02(2) of Rev. Proc.
2008–65 is modified to read as follows:
(2) The property (a) is acquired by the
taxpayer after March 31, 2008, and before January 1, 2009, but only if no written binding contract for the acquisition was
in effect before April 1, 2008, or (b) is acquired by the taxpayer pursuant to a written binding contract which was entered

156

into after March 31, 2008, and before January 1, 2009. Section 168(k)(4)(D)(ii) and
(k)(2)(A)(iii). However, see section 3.03
of this revenue procedure for an exception
to this rule;
.02 Section 5.02(5) of Rev. Proc.
2008–65 is modified to read as follows:
(5) With respect to long production period property, only the adjusted basis of
such property attributable to manufacture,
construction, or production after March
31, 2008, and before January 1, 2010, is
taken into account in determining the aggregate depreciation amounts under sections 5.01(1) and (2) of this revenue procedure. Section 168(k)(4)(D)(iii). The
amounts of adjusted basis of the property
attributable to manufacture, construction,
or production after March 31, 2008, and
before January 1, 2010, are referred to
as “progress expenditures.” For purposes
of determining progress expenditures under this section 5.02(5), rules similar to
the rules in section 4.02(1)(b) of Notice
2007–36, 2007–1 C.B. 1000, 1001 (relating to progress expenditures for GO Zone
extension real property), apply.
.03 Section 5.06 of Rev. Proc. 2008–65
is modified to read as follows:
.06 AMT Credit Increase Amount. The
AMT credit increase amount means the
portion of the minimum tax credit under
§ 53(b) for the first taxable year ending after March 31, 2008, determined
by taking into account only the adjusted
net minimum tax for taxable years beginning before January 1, 2006. See
§ 168(k)(4)(E)(iv). For purposes of this
section 5.06, minimum tax credits shall be
treated as allowed on a first-in, first-out
basis. Section 168(k)(4)(E)(iv).
SECTION 8. MODIFICATION OF REV.
PROC. 2009–16
To address how a taxpayer whose first
taxable year ending after March 31, 2008,
ends before December 31, 2008, makes a
§ 168(k)(4) election when the taxpayer’s
succeeding taxable year is a short taxable
year:
.01 Section 3.02(1)(a)(ii) of Rev. Proc.
2009–16 is modified to read as follows:
(ii) Except as provided in section
3.03(3) of this revenue procedure, by filing an amended federal income tax return
for such taxable year in the manner described in section 3.02(2) of this revenue

2009–29 I.R.B.

procedure on or before the due date (without regard to extensions) of the taxpayer’s
federal income tax return for the succeeding taxable year; and
.02 Section 3.03 of Rev. Proc. 2009–16
is modified by adding paragraph (3) to read
as follows:
(3) If, under section 3.02(1)(a)(ii) of
this revenue procedure, a taxpayer is required to file an amended federal income
tax return for its first taxable year ending
after March 31, 2008, and the taxpayer’s
succeeding taxable year is a short period
(within the meaning of § 443(a)), then the
taxpayer files the amended federal income
tax return for its first taxable year ending
after March 31, 2008, in the manner described in section 3.02(2) of this revenue
procedure on or before the earlier of:
(a) 30 calendar days after the due date
(with regard to extensions) of the taxpayer’s federal income tax return for its
first taxable year ending after March 31,
2008; or
(b) 180 calendar days after the due date
(without regard to extensions) of the taxpayer’s federal income tax return for the
succeeding taxable year.
SECTION 9. EFFECT ON OTHER
DOCUMENTS
.01 Sections 3.02(2), 5.02(5), and 5.06
of Rev. Proc. 2008–65 are modified and,
as modified, are superseded.

2009–29 I.R.B.

.02 Section 3.02(1)(a)(ii) of Rev. Proc.
2009–16 is modified and, as modified, is
superseded.
.03 Section 3.03 of Rev. Proc. 2009–16
is modified as provided in section 8.02 of
this revenue procedure.
SECTION 10. PAPERWORK
REDUCTION ACT
The collections of information contained in this revenue procedure have
been reviewed and approved by the Office
of Management and Budget in accordance with the Paperwork Reduction Act
(44 U.S.C. 3507) under control number
1545-2133. An agency may not conduct
or sponsor, and a person is not required to
respond to, a collection of information unless the collection of information displays
a valid OMB control number.
The collections of information in this
revenue procedure are in sections 4, 5,
and 6. This information is necessary and
will be used to determine whether the taxpayer is eligible to make the election not
to apply § 168(k)(4) to extension property and the § 168(k)(4) extension property election, and the amount by which
the § 168(k)(4) extension property election
increases the taxpayer’s applicable credit
limitations. The collections of information
are required for the taxpayer to make the
election not to apply § 168(k)(4) to extension property and the § 168(k)(4) exten-

157

sion property election. The likely respondents are the following: business and other
for-profit institutions.
The estimated total annual reporting
and/or recordkeeping burden is 2,700
hours.
The estimated annual burden per respondent/recordkeeper varies from 0.25
hours to 1 hour, depending on individual
circumstances, with an estimated average
of 0.5 hours. The estimated number of respondents is 5,400. The estimated annual
frequency of responses is on occasion.
SECTION 11. EFFECTIVE DATE
This revenue procedure is effective
June 30, 2009.
SECTION 12. DRAFTING
INFORMATION
The principal author of this revenue
procedure is Jeffrey T. Rodrick of the Office of Associate Chief Counsel (Income
Tax & Accounting). For further information regarding this revenue procedure,
contact Mr. Rodrick at (202) 622–4930
(not a toll-free call).

July 20, 2009