Special election instead of the regular macrs

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Special Election Instead of the regular MACRS deduction, taxpayers may irrevocably elect to apply the alternative MACRS system to any class of property for any tax year and depreciate assets using the straight-line method or the 150 percent declining method of depreciation.
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87 Instructor’s Manual © 2009 CCH. All Rights Reserved. Chapter 6 ¶6825 Code Sec. 179 Election to Expense Certain Depreciable Assets Taxpayers are allowed to treat a limited amount of expenditures for business property as a current deduction (expense) for tax purposes rather than a capital expenditure subject to depreciation. Code Sec. 179. For 2009, the amount of capital expenditures eligible for immediate deduction by a taxpayer is $133,000. The maximum deduction is reduced, dollar for dollar, for acquisitions of depreciable property in excess of $530,000 during the tax year. ¶6855 Property Converted From Personal To Business Use When property is converted from personal to business use, Reg. §1.167(g)-1 provides that the tax basis of the asset for tax purposes will be equal to the lesser of the fair market value of the property at the date of conversion to business (or investment) use or its adjusted tax basis at the date of conversion. This will be the taxpayer’s tax basis for purposes of computing depreciation expense and gain or loss from a subsequent sale of the asset. The asset will be treated as having fi rst been placed in service in the year of conversion to business-use property and the appropriate convention will apply under MACRS (mid-year, mid-quarter, or mid-month). Because Code Sec. 179 applies to property “purchased” by the taxpayer from an unrelated seller during the taxable year for use in a trade or business, Code Sec. 179 will not be applicable. Code Sec. 179(d)(1) and (2). ¶6865 Amortization Intangible assets having limited useful lives subject to reasonable estimation can be amortized (depreciated) over an appropriate useful life. Section 197 intangible assets can be amortized over a 15-year period. Intangible Assets A section 197 intangible includes goodwill, going concern value, licenses or permits granted by a governmental agency, covenants not to compete, franchises, trademarks, trade names, patents, and copyrights. Other Allowable Amortization Deductions In some instances, amortization deductions are allowed for capital expenditures which are more favorable to a taxpayer than the normal depreciation allowances applicable to the property. For example, taxpayers may elect to amortize the cost of pollution control facilities over a 60-month period. Code Sec. 169. ¶6875 Research and Experimental Expenditures Research and experimental expenditures connected with a trade or business can be treated as a current deduction for tax purposes or, if elected by the taxpayer, be deferred and amortized over a period of not less than 60 months starting in the period when bene fi ts from the R&E are fi rst realized.
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