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First-Year Expensing and Additional Depreciation (Portfolio 532)

Be a trusted advisor to your clients with Bloomberg BNA Tax Portfolios. This portfolio is a basic reference tool for determining the first-year expensing and additional depreciation deductions available for selected properties.

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DESCRIPTION

First-Year Expensing and Additional Depreciation is a basic reference tool for determining the first-year expensing and additional depreciation deductions available for selected properties.

Specifically, this Portfolio examines the computation of each of these deductions. It also explains the limitations that apply, and describes the conditions that must be satisfied for property to fall within one or more of the provisions. It also covers effective dates, effects on basis, and special rules applicable to each deduction. 

 


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AUTHORS

Bloomberg BNA Portfolios are written by leading tax professionals who set the standard as leaders in their fields. The First-Year Expensing and Additional Depreciation portfolio was authored by the following attorney.  

 

JAMES EDWARD MAULE

James Edward Maule, B.S., obtained his J.D. from Villanova University and an LL.M. (Taxation) from George Washington University. He was a lecturer at Villanova University’s Graduate Tax Program and Tax Forum CLE Programs and lecturer for the Philadelphia Bar Association Tax Section. He is a member of the U.S. Income Advisory Board, Tax Management Inc. and former attorney-advisor for the United States Tax Court under Judge Herbert L. Chabot.

 

Credentials /

 

James Edward Maule, B.S.: University of Pennsylvania (1973); J.D., Villanova University (1976); LL.M. (Taxation), George Washington University (1979); lecturer, Villanova University Graduate Tax Program and Tax Forum CLE Programs; lecturer, Philadelphia Bar Association Tax Section; member, U.S. Income Advisory Board, Tax Management Inc.; former attorney-advisor, United States Tax Court, Judge Herbert L. Chabot; former attorney-advisor, Chief Counsel to the Internal Revenue Service; former Editorial Advisory Board member and Columnist, Journal of Limited Liability Companies; former lecturer, ALI-ABA; former lecturer, Tax Management, Inc. & Continuing Legal Education Satellite Network; former lecturer, Pennsylvania Bar Institute; former lecturer, Georgetown University Law Center Institute on State and Local Taxation; former lecturer, The Dickinson School of Law CLE Programs; member, American Bar Association, Section of Taxation, Committee on S Corporations (Consultant and former Chair, Subcommittee on Subchapter S and State Law; former Chair, Subcommittee on Comparison of Partnerships and S Corporations); member, American Bar Association, Section of Taxation, Committee on Teaching Taxation (Chair, Subcommittee on Manuscripts and Unpublished Teaching Materials; member, Subcommittee on Important Developments); member, American Bar Association, Section of Taxation, Tax Practice Management Committee; member, American Bar Association, Section of Taxation, Formation of Tax Policy Committee; member, American Bar Association, Section of Taxation, Committee on Tax Structure and Simplification; former Chair, American Bar Association, Section of Taxation, Phaseout Tax Elimination Project; former member, American Bar Association, Section of Taxation, Task Force on Pass-Through Entities; former member, American Bar Association, Section of Taxation, Task Force on Legislative Recommendation No. 86-1; former member, Philadelphia Bar Association Tax Section; author and owner, TaxJEM Inc., publisher of computer assisted legal instruction programs; owner, JEMBook Publishing Company, publisher of law and genealogy books; author of numerous books, monographs, and book chapters; contributor to various tax periodicals.

 


TABLE OF CONTENTS

Detailed Analysis

I. Introduction

A. Overview

B. Legislative Background

II. Section 179 Expensing

A. Overview

1. In General

2. Mixed-Use Property

3. Collateral Effects

B. Dollar Limitations

1. Property Cost Limitation

a. In General

b. Spouses

(1) Joint Returns

(2) Separate Returns

c. Partnerships and S Corporations

d. Members of Controlled Groups

e. Sport Utility Vehicles

f. Enterprise Zone and Renewal Community Businesses

(1) In General

(2) Enterprise Zone Business

(a) In General

(b) Qualified Business Entity

(c) Qualified Proprietorship

(d) Qualified Business

(e) Empowerment Zones and Renewal Communities

(i) In General

(ii) Conditions for Designation

(iii) Eligibility Criteria

(f) Renewal Communities

(i) In General

(ii) Designation Procedures

(iii) Period Designation Effective

(iv) Area and Eligibility Requirements

(v) Required State and Local Commitments

(vi) Treatment of Governments

(g) Tainted Assets

(3) Qualified Zone Property

(4) Renewal Community Business

g. Special Rules for Qualified New York Liberty Zone Property

(1) In General

(2) Qualified NYLZ Property

(a) In General

(b) Special Rules

(c) Eligible Real Property

(d) Exceptions

(i) In General

(ii) Election to Forego Benefit

(iii) Qualified New York Liberty Zone Leasehold Improvement Property

h. Special Rules for Qualified Gulf Opportunity Zone Property

(1) In General

(2) Qualified GOZone Property

(a) In General

(b) Special Rules

(c) Exceptions

i. Special Rules for Qualified Disaster Assistance Property

(1) In General

(2) Qualified § 179 Disaster Assistance Property

(a) In General

(b) Special Rules

(c) Exceptions

j. Special Rules for Kansas Disaster Area Property

(1) In General

(2) Qualified RA Property

(a) In General

(b) Special Rules

(c) Exceptions

2. Taxable Income Limitation

a. In General

b. Taxable Income

c. Active Conduct of Trade or Business

(1) Trade or Business

(2) Active Conduct

d. Partnerships and Partners

e. S Corporations and S Corporation Shareholders

f. Corporations That Are Not S Corporations

g. Spouses

(1) Joint Returns

(2) Separate Returns

h. Coordination with Other Taxable Income Limitations

i. Carryover of Disallowed Deductions

(1) In General

(2) Computation of Carryforward Deduction

(3) Recordkeeping

(4) Sale or Other Disposition

(5) Special Rules for Partnerships and S Corporations

(6) Special Rules for Partners and S Corporation Shareholders

3. Listed Property Limitations

C. Section 179 Property

1. In General

a. Basic Definition

b. Ineligible Property

2. Purchase

3. Partnerships and S Corporations

D. Recapture

1. In General

2. Computation of Recapture

a. In General

b. Impact on Subsequent Years

c. Impact on Adjusted Basis

3. Used Predominantly in a Trade or Business

E. Exclusions

F. Election

1. In General

2. Revocation

III. Additional First-Year Depreciation

A. Qualified Property Additional First-Year Depreciation

1. In General

2. Qualified Property

a. In General

b. Thirty-Percent Qualified Property

(1) In General

(2) Long Production Period Property

(3) Specified Aircraft

(4) Exceptions

(5) Special Rules

c. Fifty-Percent Qualified Property

(1) In General

(2) Exceptions

(3) Special Rules

d. 2008â€"2009 Qualified Property

(1) In General

(2) Long Production Period Property

(3) Specified Aircraft

(4) Exceptions

(5) Elections to Forego 2008â€"2009 Additional First-Year Depreciation

(a) In General

(b) Election to Forego Additional First-Year Depreciation

(c) Election to Accelerate the AMT and Research Credits in Lieu of Additional First-Year Depreciation

(d) Coordination of Elections for 2008-2009 Qualified Property

(e) 2009-2010 Eligible Qualified Property

(6) Special Rules

e. Original Use

f. Acquisition

(1) In General

(2) Binding Contract

(3) Self-Constructed Property

g. Placed in Service

3. Specified Percentage

4. Property Placed In Service and Disposed of In Same Year

5. Redetermination of Basis

6. Like-Kind Exchanges and Involuntary Conversions

a. In General

b. Property Acquired and Placed in Service Before Disposition of Replaced Property

7. Changes in Use

8. Coordination with Other Provisions

B. Biofuel Plant Property Additional First-Year Depreciation

1. In General

2. Qualified Cellulosic Biofuel Plant Property

a. In General

b. Exceptions

c. Special Rules

C. Reuse and Recycling Property Additional First-Year Depreciation

1. In General

2. Qualified Reuse and Recycling Property

a. In General

b. Reuse and Recycling Property

c. Exceptions

d. Special Rule

D. Disaster Assistance Property Additional First-Year Depreciation

1. In General

2. Qualified Disaster Assistance Property

a. In General

b. Special Rules

c. Exceptions

E. NYLZ Property Additional First-Year Depreciation

F. GOZone Property Additional First-Year Depreciation

G. Kansas Disaster Area Property Additional First-Year Depreciation


WORKING PAPERS

Working Papers

Table of Worksheets

Worksheet 1 Tax Reform Act of 1986

Worksheet 2 Technical and Miscellaneous Revenue Act of 1988

Worksheet 3 Elections Using Form 4562, Depreciation and Amortization

Bibliography

OFFICIAL

Statutes:

Public Laws:

United States Code:

Regulations:

Legislative History:

Treasury Rulings and Procedures:

Cases:

UNOFFICIAL

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