Note: Daikin does not offer tax advice. The following information is provided for discussion purposes only. You should consult your own tax expert regarding the details of CARES Act and its applicability to you and your business.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act was passed by Congress with overwhelming, bipartisan support and signed into law on March 27, 2020. Sections of the Act are applicable to specific commercial HVAC installations.

Changes to the tax code in the 2020 CARES Act means that HVAC* improvements made to existing commercial buildings may qualify for 15-year cost recovery or Bonus Depreciation (recoverable in the tax year it was placed into service).

*HVAC systems are defined as qualified real property in Section 179(e)(2)(B) of the Internal Revenue Code.

These tax code changes apply retroactively to activity commencing on January 01, 2018.

Improvements must meet the definition of Qualified Improvement Property found at IRS Section 168(e)(6). Further, improvements must be undertaken by the taxpayer and installed to an existing building.

Customers of independent HVAC dealers may be eligible to take advantage of these very recent changes
to the tax law.

Additional information regarding the CARES Act can be found at the following websites.

• IRS Guidance released: https://www.irs.gov/pub/irs-drop/rp-20-25.pdf
• https://taxnews.ey.com/news/2020-1061-irs-and-treasury-release-favorable-broad-proceduralguidance-for-implementing-cares-act-provisions-on-qualified-improvement-property-  andcertain-elections
• https://www.bdo.com/insights/tax/cost-segregation/cares-act-fixes-the-retail-glitch-to-makequalifie

• https://www.kbkg.com/tax-insight/kbkg-tax-insight-qualified-improvement-property-qip-technical-correction-in-cares-act