Text Notes Ch 9 - Capital Recover Depreciation, Amortization, and Depletion

Text Notes Ch 9 - Capital Recover Depreciation, Amortization, and Depletion

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Prop used in trade or bus or held for production of income that is subject to exhaustion, wear, tear or obsolescence a. Prop w/ definite life b. Dual purpose prop - only bus portion subject to dep c. Property subject to depreciation includes: 1. Prop owned or used by taxpayer or related aprty prior to 1987 i. Autp, if standard mileage rate was previously used ii. Certain other prop iii. May NOT be used for: a. Cost recovered over statuary "recovery periods" - example 3, 5, 7, 10, 15, 20, 27.5 or 39 years b. Salvage val ignored c. Recovery period - appropriate period depends on class of property - chart included i. Method - depends on appropriate recover per & election made by taxpayer ii. 1/2 yr applies to personal prop - 1/2 year dep in year of acquisition & dispo 1) Mid-month - applies to buildings, 1/2 dep in month of acquisition & dipso plus full month for add months of use 2) Of applies it replaces 1/2 year convention for all personal prop placed in service during year a) All personal prop treated as being placed in service in the middle of the quarter it was actually placed in service - problem 9-28 b)
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