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On Friday, December 18th 2015, the "Protecting Americans from Tax Hikes (PATH) Act was signed into law by President Obama. This law makes billions of dollars in incentives and cost reduction programs available to Startup Companies. The PATH Act instituted the most sweeping tax code changes in 33 years. As a part of the PATH Act congress made a notable change to the definition of qualifying property for bonus depreciation purposes. As well as extended bonus depreciation through 2019 (2020 for specific longer-lived and transportation properties). A gradual reduction was also introduced through that takes bonus depreciation from 50% in 2015 through 2017, to 40% in 2018, and to 30% in 2019 with its expiration in 2019. As it relates to improvements placed in service starting in 2016: Congress created "qualified improvement property", a class of nonresidential real property eligible for bonus depreciation irrespective of its recovery period. This classification does not cover all nonresidential real property and must be determined on a per property basis. For property placed in service after 2015: Qualified Improvement Property is defined in Sec. 168(k)(3) as improvements to the interior of any nonresidential real property placed in service after the date the building was first placed in service. Qualified improvement property does not include expenditures to enlarge a building, for an elevator or escalator or for the internal structural framework of the building. Additionally, qualified leasehold improvement property must be placed in service after the original building was placed in service. This change is in contrast to the previous requirement that an improvement be placed in service at least three years after the building was originally placed in service. For the years of 2016 - 2019, taxpayers will need to consider bonus depreciation eligibility and depreciation recovery period classification as a two step process as listed below: Step 1 - Determine IF the assets are depreciated over 39 years as nonresidential real property or over 15 years as qualified leasehold improvements, qualified restaurant, or qualified retail improvement property. Step 2 - Determine if the real property improvement assets are eligible for bonus depreciation as qualified improvement property. The expanded definition of bonus depreciation applicable to qualifying improvement property allows taxpayers to claim bonus depreciation starting in 2016 where bonus depreciation was previously limited to qualified leasehold improvements requiring the building to be at least 3 years old and the improvements to be made subject to a lease. The expanded definition of qualifying property allows bonus depreciation where not previously available for 39-year nonresidential real property, as long as the property was placed in service after the building was originally placed in service; it is original-use property; it is placed in service in the applicable time frame; and it is not an expansion, elevator or escalator, or improvement made to the internal structural framework.