《税收概述》（英文版） Chapter 10 Depreciation, Cost Recovery, Depletion and Amortization

Chapter 10 Depreciation, Cost Recovery, Depletion and Amortization

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 • 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

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

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

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

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

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 200declining 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 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: 27.5 years Nonresidential rental property: 39 years Depreciation is calculated using the straight-line method Mid-month convention -year of acquisition and year of disposition Straight-line or Alternate Depreciation System (ADS)

Depreciation Methods • Real Property – Residential rental property: 27.5 years – Nonresidential rental property: 39 years – Depreciation is calculated using the straight-line method – Mid-month convention –year of acquisition and year of disposition – Straight-line or Alternate Depreciation System(ADS)

Section 179 Expensing Election May elect to expense up to $24,000in2001 Placed into service during the year Not applicable to real estate, only @沪6 applicable personal property

Section 179 Expensing Election • May elect to expense up to $24,000 in 2001 Placed into service during the year • Not applicable to real estate, only applicable personal property