The IRS issues new guidance allowing taxpayers to withdraw elections for excepted trades or businesses under Section 163(j)(7), make late bonus depreciation opt-outs, and revoke or make CFC group elections without the standard 60-month restriction for specified periods beginning after 31 December 2024, while also permitting eligible partnerships to file amended returns for tax years 2022 through 2024.
The US Internal Revenue Service (IRS) issued Revenue Procedure 2026-17, which provides guidance on withdrawing elections for excepted trades or businesses under §163(j)(7) and making late elections to opt out of bonus depreciation under §168(k)(7). It became effective on 18 March 2026.
Rev. Proc. 2026-17
Purpose
01 Withdrawal of a § 163(j) election. This revenue procedure provides guidance under § 163(j)1 regarding the withdrawal of an election under § 163(j)(7)(B) and § 1.163(j)-9 to be an electing real property trade or business, an election under § 163(j)(7)(C) and § 1.163(j)-9 to be an electing farming business, and an election under § 1.163(j)-1(b)(15)(iii) to be an excepted regulated utility trade or business, for purposes of the business interest deduction limitation under § 163(j). This revenue procedure allows certain taxpayers to withdraw such an election for the taxable year in which the election was made. This revenue procedure also allows a taxpayer that withdraws one of these elections to make a late election not to deduct the additional first-year depreciation for certain property.
02 Revoking or making a CFC group election. In addition, this revenue procedure provides guidance under § 1.163(j)-7(e) allowing a taxpayer to revoke or make a controlled foreign corporation (CFC) group election without regard to the 60-month limitation under § 1.163(j)-7(e)(5)(ii) for the first specified period of a specified group beginning after 31 December 2024. .
03 Amended partnership returns. This revenue procedure allows eligible partnerships to file amended partnership returns for taxable years beginning in 2022, 2023, and 2024 using a Form 1065, U.S. Return of Partnership Income (Form 1065), with the “Amended Return” box checked, and to issue an amended Schedule K-1, Partner’s Share of Income, Deductions, Credits, etc. (Schedule K-1), to each of its partners. Eligible partnerships subject to the rules of subchapter C of chapter 63 of the Code (BBA partnerships) may file an administrative adjustment request under § 6227 (AAR). BBA partnerships satisfying the requirements of section 7 of this revenue procedure may opt to file an amended Form 1065 and furnish amended Schedules K-1 instead of filing an AAR.
