Federal Depreciation Handbook

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The Federal Depreciation Handbook from Thomson Reuters provides expert guidance on tax depreciation and other cost recovery issues to help tax practitioners make tax-efficient decisions and elections when an asset is placed in service. The Handbook also explains how to structure business property transactions to optimize federal income tax results when performing general tax planning or transactional consulting services.

The Federal Depreciation Handbook is an all-in-one resource for quick reference and in-depth coverage of depreciation and other cost recovery tax issues. It features detailed tax compliance guidance and is updated annually for legislative, regulatory, judicial, and administrative changes in the tax law, rules, and forms.

The Handbook provides the accurate answers you need quickly with:

• Guidance addressing frequently encountered and often challenging depreciation and cost recovery issues.
• Numerous quick-reference tables and charts providing easy access to key information, including easy-to-read depreciation tables for MACRS (with or without bonus depreciation), ADS, AMT, and ACRS.
• Real-life examples that illustrate how the tax rules apply and how to report depreciation-related items on a tax return.
• A Developments Summary section that summarizes significant tax law changes.
• References to relevant Internal Revenue Code sections, IRS regulations and rulings, as well as court cases.
• Coverage of property dispositions, including tricky tax rules for installment sales, like-kind exchanges, and depreciation recapture.
• Guidance on applying the “tangible property regulations,” which specify the allowable tax treatment of costs to acquire, repair, or improve tangible property.

• Federal Depreciation Handbook
  • Chapter 1 Depreciation Basics
    • When Depreciation Begins
    • When Depreciation Ends
    • Who Is Entitled to the Depreciation Deduction?
    • Leased Property
    • Basis for Depreciation When a Business is Acquired
    • Reporting—Form 4562
  • Chapter 2 Depreciable Property
    • What Property Can Be Depreciated?
    • Lease vs. Purchase
    • Depreciable Basis
    • Tangible Property Regulations
    • Property Acquired By Purchase
    • Currently Deductible Repairs
    • Capitalized Improvements
    • Materials and Supplies
    • Rotable, Temporary, And Standby Emergency Spare Parts
    • Inherited Property
    • Property Acquired as a Gift
    • Property Acquired in Tax-Free Transactions
  • Chapter 3 MACRS Summary
    • General Depreciation System (GDS)
    • Alternative Depreciation System (ADS)
    • Assigning the Recovery Period
    • Conventions
    • Computing Depreciation
    • Placed In and Taken Out of Service
    • Alternative Minimum Tax (AMT) Depreciation
    • Farm Property
    • Short Tax Years
    • Special (Bonus) Depreciation
    • Qualified Disaster Assistance Property
    • General Asset Accounts
    • Changes in an Asset’s Use
    • Depreciable Property and Cost Recovery Tax Info Sheet (2020)
  • Chapter 4 MACRS in Depth
    • Applicable Conventions
    • Three-Year MACRS Recovery Property
    • Five-Year MACRS Recovery Property
    • Seven-Year MACRS Recovery Property
    • 10-Year MACRS Recovery Property
    • 15-Year MACRS Recovery Property
    • 20-Year MACRS Recovery Property
    • CARES Act Qualified Improvement Property Fix
    • Real Property
    • Ineligible MACRS Property
    • General Asset Accounts and Multiple Asset Accounts
  • Chapter 5 Bonus Depreciation in Depth
    • General Rules and Effective Dates
    • Qualified Property for Section 168(k) Bonus Depreciation
    • Original Use Test for Section 168(k) Bonus Depreciation
    • Timely Acquisition Test for Section 168(k) Bonus Depreciation
    • Placed-in-Service Test for Section 168(k) Bonus Depreciation
    • Election Not to Claim Bonus Depreciation
    • Bonus Depreciation for New York (NY) Liberty Zone Property
    • Bonus Depreciation for Qualified Gulf Opportunity (GO) Zone Property
    • Bonus Depreciation for Qualified Recovery Assistance Property Located in the Kansas Disaster Area
    • Bonus Depreciation for Qualified Disaster Assistance Property
    • Bonus Depreciation for Biofuel Plant Property
    • Bonus Depreciation for Qualified Reuse and Recycling Property
  • Chapter 6 MACRS Depreciation Tables
  • Chapter 7 Section 179 Expensing
    • Increased Limits for Targeted Areas
    • Business Taxable Income Limit
    • Pass-Through Entities
    • Qualifying Property
    • Making the Section 179 Election
    • Section 179 Recapture
  • Chapter 8 Vehicles and Listed Property
    • Special Rules for Listed Property
    • Business Use Requirement for Listed Property
    • Lessee’s Income Inclusion Amount—Listed Property Other Than Autos
    • Limits on Vehicle Depreciation
    • Special (Bonus) Depreciation and the Section 280F Limit
    • Section 179 Expensing Rules
    • Standard Mileage Rates vs. Actual Costs
    • Leased Vehicles
    • Alternative Motor Vehicle Credit
    • Credits for Plug-In Vehicles
  • Chapter 9 Real Property
    • What Is Real Property?
    • Farm Buildings
    • Business Use of Home
    • Converting a Residence to Rental Property
    • Effect of Rental or Business Use on Sale of Residence
    • Land Improvements
    • Energy Efficient Commercial Building Deduction
    • Nonbusiness Energy Property Credit
    • Leasehold Improvements
    • Finding Personal Property Included in a Building’s Cost (Cost Segregation)
    • Structural Component vs. Personal Property
    • IRS View of Cost Segregation Studies
  • Chapter 10 Sales and Dispositions
    • Disposing of Business Assets (Section 1231 Transactions)
    • Depreciation Recapture
    • Section 1245 Depreciation Recapture
    • Section 1250 Depreciation Recapture
    • Other Recapture Events
    • Sales of Depreciable Real Property
    • Installment Sales
    • Borrower’s Property Is Foreclosed or Repossessed
    • Foreclosing on Seller-Financed Real Estate
    • 3.8% Net Investment Income Tax (NIIT)
    • Qualified Opportunity Funds
  • Chapter 11 Exchanging Property
    • Like-Kind Exchanges
    • Held for Business or Investment Use
    • What Is Like-Kind Property?
    • Recognizing Gain on an Exchange
    • Basis and Holding Period of Property Received
    • Depreciating Property After a Like-Kind Exchange
    • Exchanging Property Subject to Debt
    • Deferred Exchanges
    • Qualified Intermediaries
    • Involuntary Conversions
    • Condemned Real Estate
  • Chapter 12 Correcting Depreciation Errors
    • Depreciation as an Accounting Method
    • Requesting an Accounting Method Change
    • Example—Change in Accounting Method
  • Chapter 13 Intangible Assets
    • Amortizable Intangibles
    • Depreciable Intangibles
    • Section 197 Intangibles
    • Amortizing Section 197 Assets
    • Disposing of Section 197 Assets
    • Intangible Drilling Costs
    • Business Start-Up Costs
    • Organizational Costs
    • Reforestation Costs
    • Research and Experimental Expenditures
    • Income Forecast Method
  • Chapter 14 Other Depreciation Methods and Depletion
    • Accelerated Cost Recovery System (ACRS)
    • Alternate ACRS (Modified Straight-Line) Method
    • ACRS Deductions in Short Tax Years
    • Other Depreciation Methods
    • Assets Placed in Service Before 1981
    • ACRS Tables
    • Introduction to Depletion
    • Depletion
    • Oil and Gas
    • Direct Working Interest Owner
    • Royalty Interest Owner
    • Other Key Tax Considerations
  • Chapter 15 ACRS in Depth
    • Accelerated Cost Recovery System (ACRS)
    • Property Depreciated Under ACRS
    • How to Calculate the ACRS Deduction
    • Classes of Recovery Property
    • Alternate ACRS Method
    • Conventions
    • ACRS Deduction in a Short Tax Year
    • Dispositions of Property
  • Chapter 16 Pre-1981 Rules—in General
    • Useful-Life Depreciation Methods
    • Multiple Asset Account Useful-Life Depreciation
  • Chapter 17 Pre-1981 Rules—Class Life Asset Depreciation Range (ADR) System
    • The ADR Election
    • Basis of a Vintage Account
    • Property Eligible for the ADR Election
    • Classification of Property Under the ADR System
    • ADR Depreciation Methods
    • First-Year Averaging Conventions
    • Depreciation Period
    • Salvage Value
    • Retirements of ADR Property
    • Tax Consequences of Ordinary Retirements of ADR Property
    • Tax Consequences of Extraordinary Retirements of ADR Property
    • Retirement of Last Asset in a Section 1245 Vintage Account
    • Optional Treatment of Salvage Value
  • Chapter 18 Selected IRS Materials
    • Rev. Proc. 87-56 (Class Lives and Recovery Periods)
    • Tables of Class Lives and Recovery Periods
  • Chapter 19 Selected Regulations
    • Code Section 162 Selected Regulations For Business Expenses
    • Code Section 167 Selected Regulations for Depreciation
    • Former Code Section 168 Selected Proposed Regulations for ACRS Property
    • Code Section 168 Selected Regulations for MACRS Property
    • Code Section 179 Selected Regulations for Expensing
    • Code Section 263 Selected Regulations for Capital Expenditures
    • Code Section 1502 Regulation for Additional First Year Depreciation for Consolidated Group Members