Report · September 2026
The new manufacturing write-off: why who owns your building now matters
The short answer
A new production building can now be written off in the year it opens. But the deduction belongs to the owner, and a leased building counts only when the owner and the operating company meet the IRS's related-party rules. An operating company that owns its plant can qualify, and so can certain commonly controlled real estate entities. An unrelated developer generally cannot claim the deduction based on its tenant's manufacturing.
That can move the own-versus-lease math by millions of dollars up front, and by less once you account for timing and recapture. It does not settle the decision. Your ability to use the deduction, cash, borrowing capacity, a ten-year recapture exposure, exit plans and your state's tax treatment still matter.
Current rules · last checked September 22, 2026
- The rule: a special depreciation allowance for "qualified production property," section 168(n) of the Internal Revenue Code, added by the 2025 federal tax law.1
- Current guidance: IRS Notice 2026-16, released February 20, 2026 and published in Internal Revenue Bulletin 2026-11. It is interim guidance. Proposed regulations have been announced but, as of the date above, not issued.123
- Construction must begin before January 1, 2029. The building must be placed in service before January 1, 2031.1
- Of the seven Southeast states reviewed here, Alabama is the only one that currently follows the federal deduction. See the state table below.
What the numbers say
The rule
For qualifying property you elect to treat under the rule, the depreciation deduction in the year the building is placed in service includes an allowance equal to 100 percent of its adjusted basis.1 Without the election, a nonresidential building is recovered in equal pieces over 39 years.1 Land is not depreciable and never enters the calculation.18
| Requirement | What the guidance says | Source |
|---|---|---|
| Kind of property | Nonresidential real property depreciated under the regular system, in the United States or a U.S. territory | Notice 2026-161 |
| Use | Used by the taxpayer as an integral part of a qualified production activity: manufacturing, agricultural or chemical production, or refining that substantially transforms inputs into a new tangible product | Notice 2026-161 |
| Original use | First use starts with the taxpayer, with a narrow exception for certain used buildings | Notice 2026-161 |
| Construction start | After January 19, 2025 and before January 1, 2029 | Notice 2026-161 |
| Placed in service | After July 4, 2025 and before January 1, 2031 | Notice 2026-161 |
| Election | A statement with the return for the year placed in service, naming the property and the amount designated | Notice 2026-161 |
Manufacturing means a material change in form or function. Packaging, repackaging, labeling and minor assembly do not count.1 A contract manufacturer can qualify without owning the product it makes.1
Which parts of a plant count
Not the whole building, necessarily. The statute excludes space used for offices, administrative services, lodging, parking, sales, research, software development or engineering, and other functions unrelated to production.1 The notice adds finished-goods storage to the excluded list. Receiving docks and raw-material storage count if they sit in the same building or integrated facility as the production, and so do quality testing and oversight done where the product is made.1
There is a de minimis rule. If 95 percent or more of the building's physical space qualifies when it is placed in service, you may elect to treat the whole building as qualifying.1 The IRS's own example measures this by square footage: a 200,000 square foot factory with 6,000 square feet of office and 4,000 of other nonqualifying space passes at exactly 95 percent.1
Below 95 percent, you split the cost. Any reasonable method works: square footage, cost segregation data, architectural or engineering plans, process diagrams, construction invoices. Employee headcount does not.1 Buildings on the same or adjoining land that operate as one integrated facility may be treated as a single unit for this test, so a separate raw-materials warehouse next to the plant can ride along.1 You may also designate less than the full qualifying cost, which limits what is exposed to recapture later.1
Who can claim it
This is the part that changes the real estate decision.
The statute says that when the taxpayer is a lessor, use by the tenant does not count as the landlord's use.1 The landlord owns the building and holds its tax basis. The tenant runs the production. Neither one, standing alone, has both.
The notice carves out two exceptions:1
- Consolidated groups. When one member of a federal consolidated group of corporations leases a building to another member, the group is treated as a single taxpayer, and the landlord member looks through to the tenant member's production.
- Commonly controlled pass-throughs. When a partnership, S corporation or individual leases a building to a "commonly controlled person," the landlord is not treated as a lessor and looks through to the tenant's production. Common control generally means the same person or group owns 50 percent or more of both the landlord and the tenant, counting family and entity attribution. The test must be met for a majority of the year the building is placed in service, including its last day.
A C corporation landlord outside a consolidated group has no listed exception. An unrelated developer has none either.
Recapture
Two separate rules apply.
Change in use. If, within the ten calendar years after the building goes into service, it stops being used in qualifying production and is put to another productive use, the owner is treated as having disposed of it. The deduction comes back as ordinary income in that year.1 The IRS's example: $10 million designated, a full change in use in year six, $10 million of ordinary income.1 A partial change recaptures in proportion.1 Moving from one qualifying production activity to another is not a change. Neither is a building sitting temporarily idle while you retool a line.1
For the related-party exceptions, the trigger is broader. If the tenant stops producing in the building, or the common control ends, the landlord has a change in use. In a consolidated group, the same happens if either company leaves the group.1
Sale. The statute lists qualified production property as section 1245 property.4 On a taxable sale, gain is ordinary income to the extent of the depreciation taken, capped at the gain itself. Gain above that is taxed as it otherwise would be.46 This rule has no ten-year window. It applies whenever you sell.
One more: a building placed in service and disposed of in the same tax year gets no allowance at all.1
The election
The election is a statement attached to the return for the year the building goes into service, filed by the due date including extensions. It names the property and the dollar amount you designate.1 It can be revoked only with IRS consent, in extraordinary circumstances, and the notice says hindsight does not qualify.1 Making it also counts as electing out of regular bonus depreciation for that property.1
Two ways to lose it before you start
Property depreciated under the alternative depreciation system cannot qualify.116 Two financing and tax choices put a building on that system:
- Tax-exempt bond financing. Tax-exempt bond financed property, including property financed with small-issue industrial development bonds, is depreciated under the alternative system.16
- A real estate interest election. A real property business that elects out of the business interest limit must depreciate its nonresidential buildings under the alternative system.16 That election is generally irrevocable. The IRS gave limited relief in 2026 for withdrawing elections in the year they were made.15
If your family real estate company made that election years ago for other properties, ask whether it reaches a new plant before you title the plant there.
States
State treatment · last checked September 22, 2026
| State | Follows the federal deduction? | Basis |
|---|---|---|
| Alabama | Yes, for individual and corporate income tax | Revenue department analysis7 |
| Georgia | No. HB 1199 treats section 168(n) "as if [it] were not in effect" | Enacted law8 |
| Tennessee | No, for excise tax. The department says the provision is not applicable | Revenue department notice9 |
| Florida | No. Add it back and depreciate normally | 2026 law, per practitioner summary10 |
| North Carolina | No, under an existing statute keyed to the section number | Practitioner summary11 |
| Mississippi | No, unless the legislature acts. The state adopts named federal provisions as of 2021 | Revenue department notice12 |
| South Carolina | No. State law lists section 168(n) among the federal sections it does not adopt | State code13 |
Michigan and Delaware (for S corporations and partnerships) have also decoupled.14 State positions change every session. Check yours the year you place the building in service.
Across the region, then, this is a federal deduction with one state exception. A Georgia or Tennessee plant gets it on the federal return and depreciates the same building over decades on the state return. Two sets of books for one building is a small cost. Assuming the state benefit that isn't there is a larger one.
What decides it
The rule decides who is eligible, not whether it pays
The rule sorts the three ownership structures cleanly.
Structure 1: the operating company owns the building. This is the plain case. The owner and the producer are the same taxpayer. If the building qualifies, the deduction is available.
Structure 2: an owner-controlled real estate company owns it and leases it to the operating company. Many Southeast family manufacturers already hold real estate this way, for liability, estate planning or lender reasons. The notice keeps that structure viable if the pieces line up:
- The real estate company is a partnership (most multi-member LLCs), an S corporation or an individual, and the operating company meets the 50 percent common-control test with it. Or both are corporations in the same consolidated return.
- The control holds for the majority of the placed-in-service year, including its last day.
- The control keeps holding for ten years, and so does the production.
Where it breaks: a real estate company taxed as a C corporation outside a consolidated group; an ownership split where the operating company has brought in outside equity and the common owners fall below 50 percent; and any plan to sell the operating company inside ten years while keeping the real estate. That last one is a recapture event. The buyer is not commonly controlled, so the landlord has a change in use, and the deduction comes back as ordinary income.1
Structure 2 raises one more question the notice does not answer: whether the owners can use the deduction. The loss lands in the real estate company and flows to its owners. Rental activity is generally passive under the tax code, and passive losses generally offset only passive income.17 Whether a self-rental to your own operating company can be grouped with that business, and whether the excess business loss limit caps what you can use in one year,17 are questions for your tax adviser before you title the building. A deduction you cannot use for five years is worth noticeably less than one you use now. The worked example below shows how much.
Structure 3: an outside developer owns it under a build-to-suit lease. The developer is an unrelated lessor. It cannot count your production as its own use, and you do not own the building. The building generally loses the deduction in this structure.1
That does not end the analysis for structure 3. A build-to-suit lease still does what it always did. It keeps $13 million of your capital in the business, leaves your borrowing capacity for equipment and working capital, and hands construction risk to someone who builds for a living. Under current lease accounting the lease still shows up on your balance sheet, so ask your lender how its covenants treat it.
One question for your adviser: the notice lets an unrelated buyer claim the allowance on a used building that nobody used for qualifying production between January 1, 2021 and May 12, 2025, if bought before January 1, 2029.1 Whether a tenant that exercises a purchase option has already "used" the building turns on the depreciable-interest rules the notice borrows.5 Treat it as a question, not a plan.
A sale-leaseback runs the other way. The buyer is an unrelated landlord and cannot claim the deduction. If you placed the building in service and sold it in the same tax year, you get nothing either.1 Sell it in a later year and you have a taxable sale of section 1245 property, which turns the earlier deduction into ordinary income.4 If your financing plan for a new plant includes a sale-leaseback, ask your adviser to run both versions before you elect.
The worked example
A hypothetical manufacturer, organized as an S corporation or partnership, so the deduction flows to its owners' individual returns. Every number below is a round assumption, not a forecast.
| Assumption | Value |
|---|---|
| Building cost | $12,000,000 |
| Land | $1,000,000 (not depreciable) |
| Qualifying space | 90% of floor area. Administrative offices, an R&D lab, engineering space and finished-goods storage are the other 10%. For simplicity, cost is allocated by square footage: $10.8M qualifying, $1.2M not |
| Owners' federal rate on ordinary income | 30% (assumed effective rate) |
| Federal rate on straight-line depreciation recovered at sale | 25% |
| Timing | Paid for at the start of year one. Placed in service in July of year one. Sold in December of year fifteen |
| Depreciation without the election | 39-year straight line, mid-month convention |
| Developer lease | Starts July of year one at $1,000,000 a year, triple net, rising 2% a year from year two |
| Sale price | $13M in year fifteen (land and building at cost, no appreciation) |
| Discount rate | 8% |
| Financing | All equity, so the tax effect is not tangled with loan terms |
| State tax | Excluded, shown separately |
A C corporation pays a flat 21 percent federal rate and has no separate rate for recovered depreciation. If that is you, substitute your own rates; the shape of the answer holds.
Year one
| Own, no election | Own, election made | Developer lease | |
|---|---|---|---|
| Federal deduction, year one | $0.14M (five and a half months) | $10.81M | $0.50M (six months' rent) |
| Federal tax effect, year one | saves $0.04M | saves $3.24M | rent costs $0.35M after tax |
The election moves about $3.2 million of tax savings into year one. That is the number that will circulate. It is also the least useful number in this report.
Fifteen years, present value at 8%
| Own, no election | Own, election made | Developer lease | |
|---|---|---|---|
| Net present cost of occupancy, tax effects included | $8.51M | $6.88M | $6.27M |
| Tax on the year-15 sale | $1.11M | $3.35M | none |
Three things happen between year one and year fifteen.
First, most of the deduction is timing. Without the election you would have deducted the building anyway, just over 39 years. The election pulls those deductions forward. Over 15 years, that is worth about $1.6 million in present value, roughly half the year-one headline.
Second, the sale takes some of it back. With the election, $10.8 million of the gain is ordinary income. Without it, the gain is smaller and taxed at the lower rate for recovered straight-line depreciation. The sale tax roughly triples, from $1.11 million to $3.35 million.
Third, ownership with the election lands closer to the lease, not ahead of it. At these assumptions the election closes most of a $2.2 million gap between owning and leasing. The lease is still about $600,000 cheaper.
What moves the answer (present cost over 15 years)
| Change one assumption | Own, no election | Own, election made | Developer lease |
|---|---|---|---|
| Base case | $8.51M | $6.88M | $6.27M |
| Building sells for $10M in year 15 | $9.22M | $7.55M | $6.27M |
| Building sells for $16M in year 15 | $7.75M | $6.13M | $6.27M |
| Discount rate 6% | $7.19M | $5.83M | $7.20M |
| Discount rate 10% | $9.50M | $7.68M | $5.51M |
The election is worth $1.4 million to $1.8 million across these cases. What decides own versus lease is what the building is worth when you leave and what your capital costs you while you stay. That was true before 2025. The election shifts the line. It does not remove it.
If you cannot use the deduction right away. If the deduction creates a loss you use evenly over three years instead of one, the election's present value falls from $1.62 million to $1.41 million. Over five years, $1.21 million. For a C corporation, a net operating loss carries forward indefinitely but can offset only 80 percent of taxable income in later years, and generally cannot be carried back.17 For pass-through owners, the passive and excess business loss rules decide the pace. Ask your adviser to model your actual tax position, not a 30 percent rate applied to the full cost.
Design is part of the tax decision. In this example, 10 percent of the building doesn't qualify. If the office and finished-goods storage moved to a separate building, or shrank enough to bring the plant to 95 percent qualifying space, the whole $12 million could be treated as qualifying.1 That is another $1.2 million of year-one deduction, worth $360,000 at the assumed rate, before the same timing and recapture haircuts. Whether a second building costs more than that is an architecture question, not a tax one. It is worth asking before the drawings are done, not after.
State effect. In a state that follows the federal deduction, the election adds a state benefit. At an assumed 5 percent state rate, that is about $540,000 in year one on the qualifying $10.8 million, subject to the same timing and recapture logic. In Georgia, Tennessee, Florida, North Carolina, Mississippi and South Carolina, as of the date above, it adds nothing.
The capital and timing picture
Every structure above assumes you have a choice. Many owners don't, and the deduction doesn't create one.
- Cash. Owning ties up the equity in the building. The deduction returns part of it in tax savings, but not before the building is placed in service. Lower estimated payments can bring some of the cash forward; much of it usually arrives with the return, well after most of the construction money has gone out.
- Debt capacity. A construction loan on a $12 million plant uses borrowing capacity your equipment, inventory and receivables lines may need. A lease uses it differently, depending on your lender's covenants and how the lease is accounted for.
- Flexibility. A lease has an end date. Owning has a ten-year recapture exposure if qualifying production stops, and ordinary-income recapture on any taxable sale.
- Exit plans. If a sale of the company is likely in the next decade, structure 2 has a specific problem, described above, and structure 1 folds the building's recapture into the deal price.
How we would approach it
If you run a business:
- Start with your tax position, not the building. Before you compare structures, have your CPA answer one question: if we deducted $10 million in the year the plant opens, how much of it would we use that year, and at what rate? The answer sets the value of everything else.
- Decide the ownership entity before construction starts. The common-control test is measured in the placed-in-service year, and the construction-start date belongs to whoever builds. Retitling later can create a disposition. Get the entity, its tax classification and any prior elections checked early.
- Draw the plant with the 95 percent line in view. Office, labs, engineering and finished goods are the variables. Your architect and cost segregation adviser should see the same plan at the same time.
- Lock in the construction start and document it. Keep the evidence of the first physical work or the first costs incurred with the project file, not in someone's inbox.
- Model the exit before you elect. Run a sale of the company in year five and year twelve, with and without the election, and a sale-leaseback if one is in your financing plan.
- Then compare against a lease honestly. A developer lease no longer competes against 39-year depreciation. It competes against the election. At some sites and some prices, it still wins.
If you own land: If you hold industrial land near a manufacturing corridor, the rule changes who your likely buyer or partner is. A manufacturer that wants the deduction needs to own the building, or own it through a commonly controlled entity. That favors a land sale or a ground arrangement over a developer build-to-suit, for buyers who can use the deduction. Be careful on the ground lease point, though. If the manufacturer owns the building on land it leases from you, the building can still qualify, but ask your own adviser how the land lease and any reversion are treated before you offer one. The construction deadline also gives shovel-ready land a time value. A site that can start physical work in 2027 is worth more to this buyer than one that needs two years of entitlements.
If you finance projects:
- Lenders. Expect more borrowers to request owner-occupied construction loans and fewer build-to-suit tenancies over the next two years. The deduction improves the borrower's after-tax cash flow after the building is in service, not during construction. Underwrite the loan on operations, and treat the tax benefit as a paydown source only once it is realized. Ask whether the borrower's real estate entity has a business interest election in place, and whether any tax-exempt bond piece of the capital stack would disqualify the building.
- Family offices and equity partners. An investor coming into a manufacturer can trip the related-party tests. If your investment takes the common owners below 50 percent inside ten years, and the building sits in a separate real estate company, you may be buying a recapture event. Diligence the real estate structure along with the operating company.
- Developers. The rule narrows the build-to-suit market for manufacturers that have taxable income and cash. It leaves the rest: companies without the income to use the deduction, companies that need their capital for equipment and working capital, and companies that value flexibility over tax timing.
What if we're wrong?
- If sales grow 25%: Growth usually means more taxable income, which makes the deduction easier to use and more valuable. It may also mean expansion, which is a second building with its own construction-start date. An addition placed in service before 2031 is its own unit of property and can qualify on its own, or ride along as part of an integrated facility.1 The risk is outgrowing the building and moving production out of it within ten years. Moving production to another qualifying activity in the same building is not a change in use. Moving it to a new plant and turning this one into a warehouse is.1
- If sales stay flat: Flat sales with steady margins change little. Flat sales with thinner margins mean less taxable income, a slower-used deduction and a lower value. In the worked example, stretching the deduction over five years cut its value by about a quarter.
- If the key customer leaves: This is the case that hurts. The notice says temporary idleness is not a change in use, but it defines temporary as a finite period with the expectation of resuming production soon.1 If you lease the building to someone else or convert it to distribution, that is a change in use, and inside ten years the deduction comes back as ordinary income in the same year your revenue fell. In the example, a full change in use in year six costs $3.24 million in tax that year, and the election's remaining value over 15 years drops to about $760,000. A company with concentrated customers should weigh that before electing, and should remember that it can designate less than the full qualifying amount.1
- If you need to sell in five years: Under structure 1, an asset sale turns the building's gain into ordinary income up to the deduction taken. In the example, the sale tax rises from $0.34 million to $3.27 million, and the election is still worth about $720,000 in present value, because the deduction came four years earlier. A stock sale does not dispose of the building, but the building's low tax basis may affect pricing, and a deemed asset sale election brings the recapture back. Under structure 2, selling the operating company while keeping the real estate ends common control and triggers change-in-use recapture if it happens inside ten years.1 Your adviser should model the sale you are actually likely to make.
- If the guidance changes: Notice 2026-16 is interim. Proposed regulations are expected to follow it, and taxpayers may rely on it until they issue, but only if they follow all of it.1 The areas most likely to move are the definitions of manufacturing and substantial transformation, the basis allocation methods, and the related-party details. The statutory dates and the lessor rule are in the statute and would take an act of Congress to change. State positions are the most likely to move, in either direction.
What does waiting cost?
Two deadlines, and they work differently.
| Date | What it means | Can it slip? |
|---|---|---|
| January 1, 2029 | Construction must have begun before this date1 | No, absent new legislation |
| January 1, 2031 | The building must be placed in service before this date1 | Only for a building in a federally declared disaster area during 2030, which gets an automatic one-year extension1 |
As of this report, about 27 months remain before the construction-start deadline.
What counts as starting. The notice uses the rules from regular bonus depreciation.1 Construction begins when physical work of a significant nature begins. Alternatively, under a safe harbor, it begins when you have paid or incurred more than 10 percent of the building's total cost. Land and preliminary work such as planning, design, securing financing, exploration and research do not count toward that 10 percent.5 On a $12 million building, that means more than $1.2 million of actual construction cost paid or incurred before January 1, 2029. When a cost is "incurred" follows tax accounting rules, and a deposit is not necessarily a cost incurred. Ask your adviser before you count one.
How long the steps take. These are the planning ranges we use on Southeast industrial projects for a plant of this size: site selection and due diligence, three to six months; design through construction documents, four to eight months; local permits and approvals, two to six months, longer with rezoning, wetlands or a new utility extension; construction, ten to eighteen months. They are planning ranges, not industry averages, and the steps overlap in practice. Stacked end to end, a project that has not picked a site by early 2027 is already tight for a physical start before 2029. The safe harbor can help a project that is funded but slow to permit, because it counts construction costs paid or incurred, not ground broken. It does not help one that has not signed a contract.
The placed-in-service date is less of a squeeze for a building that starts on time. A building that starts in late 2028 has two years to finish. Utility service and equipment lead times are the usual reasons a finished shell is not yet "in service."
Dates to track: January 1, 2029, the construction-start deadline. January 1, 2031, the placed-in-service deadline. Publication of proposed section 168(n) regulations, not yet issued as of September 22, 2026. The 2027 state legislative sessions, for conformity changes in your state. The due date, with extensions, of your return for the year the building goes into service: the election is made there, and cannot be revisited with hindsight.1
The cost of waiting is not gradual. A project that starts construction on December 31, 2028 gets the full deduction. One that starts January 1, 2029 gets 39-year depreciation, and in the example that difference is worth about $1.6 million.
Data limitations
- Interim guidance. Every rule here beyond the statute rests on Notice 2026-16, which proposed regulations will replace. We found no proposed regulations as of September 22, 2026.
- The worked example is hypothetical. It uses one assumed pass-through owner rate, allocates cost by floor area, uses all-equity financing, no appreciation in the base case, no cost segregation of shorter-lived components and no state tax in the main tables. Real results depend on entity type, brackets, loss limits, debt and the building's value at exit.
- Loss limitations are flagged, not analyzed. Passive activity, grouping, excess business loss and net operating loss rules can change the value of the deduction substantially. We name them as questions for your adviser.
- State positions. Alabama, Georgia, Tennessee, South Carolina and Mississippi rest on state law or state agency guidance. Florida and North Carolina rest on a major accounting firm's summaries of 2026 legislation. Any of these can change in the next session.
- Redchip readings. Two points are our reading of how the rules fit together: that selling the operating company while keeping the real estate ends common control, and that a tenant's later purchase might qualify under the used-property rule. Both are marked as questions for your adviser.
- Timelines. The design, permit and construction durations are planning ranges we use on Southeast industrial projects, not a survey.
Revision history
| Date | Version | Change |
|---|---|---|
| September 22, 2026 | 1.0 | First published. |
Sources and disclosure
- Internal Revenue Service, Notice 2026-16: Interim Guidance on Special Depreciation Allowance for Qualified Production Property, February 20, 2026. Primary. Link · Checked September 22, 2026.
- Internal Revenue Service, Internal Revenue Bulletin 2026-11 (Notice 2026-16 at page 685), March 9, 2026. Primary. Link · Checked September 22, 2026.
- Internal Revenue Service, Treasury, IRS issue guidance on special depreciation allowance for qualified production property (IR-2026-25), February 20, 2026. Primary. Link · Checked September 22, 2026.
- U.S. Code, 26 U.S.C. § 1245, Gain from dispositions of certain depreciable property, including § 1245(a)(3)(G), current. Primary. Link · Checked September 22, 2026.
- Code of Federal Regulations, 26 C.F.R. § 1.168(k)-2(b)(5)(iv), beginning of construction, with parallel text at § 1.168(k)-1(b)(4)(iii), current. Primary. Link · Parallel text · Checked September 22, 2026.
- Internal Revenue Service, Publication 544: Sales and Other Dispositions of Assets, 2025 edition. Primary. Link · Checked September 22, 2026.
- Alabama Department of Revenue, The One, Big, Beautiful Bill Act: Analysis and Tax Provisions, Executive Summary, October 31, 2025, updated November 10, 2025. Primary. Link · Checked September 22, 2026.
- Georgia General Assembly, HB 1199, as signed March 20, 2026. Primary. Link · Checked September 22, 2026.
- Tennessee Department of Revenue, Notice 25-36: Federal Bonus Depreciation Conformity, December 2025. Primary. Link · Checked September 22, 2026.
- Grant Thornton, Florida resets federal conformity date, decouples from OBBBA provisions, August 3, 2026. Secondary. Link · Checked September 22, 2026.
- Grant Thornton, North Carolina decouples from some OBBBA provisions, August 3, 2026. Secondary. Link · Checked September 22, 2026.
- Mississippi Department of Revenue, Depreciation Notice, October 20, 2023. Primary. Link · Checked September 22, 2026.
- South Carolina Legislature, S.C. Code § 12-6-50(4), Internal Revenue Code sections not adopted, current. Primary. Link · Checked September 22, 2026. A pending bill, H.5167, would update the state's conformity date without changing this exclusion.
- Tax Foundation, 2026 State Tax Changes Taking Effect January 1st, January 6, 2026. Secondary. Link · Checked September 22, 2026.
- Internal Revenue Service, Internal Revenue Bulletin 2026-15 (Rev. Proc. 2026-17), 2026. Primary. Link · Checked September 22, 2026.
- U.S. Code, 26 U.S.C. § 168(g)(1)(C), (g)(1)(F), (g)(8) and (n), alternative depreciation system and qualified production property, current. Primary. Link · Checked September 22, 2026.
- U.S. Code, 26 U.S.C. §§ 172, 461(l) and 469, net operating losses, excess business losses and passive activity losses, current. Primary. § 469 · § 172 · § 461 · Checked September 22, 2026.
- BDO USA, IRS Provides Clarity on Bonus Depreciation for Qualified Production Property, March 16, 2026. Secondary. Link · Checked September 22, 2026.
How Redchip researches and verifies: Method. Disclosure: Dan, who wrote this report, is a partner in Vanguard Industrial Partners, which develops build-to-suit industrial facilities in the Southeast. The conclusion of this report cuts against developer build-to-suit leases for manufacturers that have the taxable income and cash to use the deduction. We say so plainly because it matters to how you read it. Redchip Ventures LLC also provides advisory services as Arkvera Grove Partners. Paid work never changes a conclusion in a Redchip report.
This is general information, not advice about a specific company, property, or transaction. It is not tax advice: talk to your tax adviser before you make an election, choose an ownership structure or sign a lease. See the disclaimer.