文档介绍：Chapter 10
Depreciation, Cost Recovery, Depletion and Amortization
Learning Objectives
Classify property and calculate depreciation under the pre-ACRS rules
Classify property and calculate cost recovery under the ACRS rules
Classify property and calculate cost recovery under the MACRS rules
Learning Objectives
Calculate amortization for intangible assets and understand the difference between amortizable and non-amortizable assets
Apply cost and percentage methods and understand the treatment of intangible drilling costs
Introduction
Allows taxpayers to deduct a reasonable allowance for the exhaustion, wear and tear, and obsolescence.
Taxpayers must use specific depreciation methods depending on when an asset is placed into service.
Depreciation and Cost Recovery
Property placed into service prior to 1981
Property placed into after December 30, 1980 and before January 1, 1987
Property placed into service after December 31, 1986
Common Rules of All Systems
No depreciation may be claimed on land or other assets that have an indefinite life (works of art).
Depreciation is permitted in the year the asset is placed into service
Consistency is required, no matter which system is used
Types of Property
Tangible Property
Intangible Property
Real Property
Personal Property vs. Personal-Use Property
Depreciation Methods
1986 and later years
MACRS
Personal property
Use 3, 5, 7, 10, 15, 20 year useful life
200% declining balance with a conversion to straight-line
Half-year convention(no matter when asset is placed into service, the first year can only take a half years depreciation)
Mid-Quarter convention is used when the aggregate basis of all personal property placed into service during the last three months of the year exceed 40%
No salvage value
Depreciation Methods
Real Property
Residential rental property: years
Nonresidential rental property: 39 years
Depreciation is calculated using the straight-line method
Mid-month convention –year of acquisition