IRS guidance · 2008
Notice 2008-25 (GO Zone Bonus Recapture)
Notice 2008-25, 2008-9 I.R.B.
IRS notice
Audio summary
A short audio walkthrough of this rule: what it says and why it matters for your study.
What it holds
This notice explains the recapture rules for the 50% bonus deduction available for Gulf Opportunity Zone property under Section 1400N(d). It specifies when a recapture event occurs. That happens when GO Zone property is disposed of or stops being used in the GO Zone.
Why it matters for your study: If you took the GO Zone bonus deduction and later disposed of or moved qualified property, this notice controls how much you recapture and when. The recapture methodology runs parallel to the rules under Section 168(k), so it is relevant to any GO Zone study reviewed on audit.
Where this comes from
After Hurricanes Katrina, Rita, and Wilma in 2005, Congress created the Gulf Opportunity Zone to encourage investment in the affected areas. Section 1400N(d) of the tax code allowed a 50% bonus deduction on qualified GO Zone property placed in service in certain years.
Notice 2008-25 provides the IRS guidance on what happens when a taxpayer later disposes of that property or stops using it in the GO Zone. Without this notice, it was not entirely clear how the recapture calculation worked. The notice fills that gap.
What it says
When GO Zone property is disposed of or ceases to qualify, the taxpayer must recapture the excess deduction. The recapture amount is the difference between the accelerated GO Zone deduction and the deduction the taxpayer would have taken without it. The methodology mirrors the approach used for Section 168(k) recapture.
The notice is peripheral to most cost segregation work. It applies only to property in the designated GO Zone areas that claimed the special Section 1400N(d) deduction.
What it does not mean
This notice is narrow. It covers only the Gulf Opportunity Zone bonus under Section 1400N(d). It does not change the general bonus depreciation rules under Section 168(k) or affect properties outside the GO Zone.
If you claimed standard bonus depreciation on property in the GO Zone, the ordinary Section 168(k) recapture rules apply, not this notice. A licensed tax professional can help you figure out which set of rules governs your situation.
Primary source
Read the official text for yourself, or share it with your advisor.
- Category
- Bonus depreciation & expensing
- Applies to
- All property types
- Status
- Vetted
This page explains a tax authority in plain words. It is not tax advice for your situation. The way this authority applies to your property is reviewed by a licensed tax professional. Citation is provided so you or your advisor can read the primary source.