Component Elections: Taking Cost Segregation to the Next Level

In January of this year, the IRS issued Notice 2026-11, confirming that taxpayers may continue to rely on the existing bonus framework established by the TCJA — with a date swap.  While 9/27/2017 was the crucial date for the TJCA, the key OB3 date is 1/19/2025.

The Notice also confirmed the continued availability of component elections under Sec. 1.168(k)-2(c). Component elections take cost segregation to a new level of specificity, carving out certain assets that were constructed well after substantial construction began on the property as a whole.