First-Year Expensing And Additional Depreciation, written by James E. Maule, professor of Law at Villanova University School of Law, is a reference tool for determining the first-year expensing and additional depreciation deductions available for selected properties. Generally, investment in depreciable properties is recovered over a period of time extending beyond the year of investment. However, under §179 taxpayers are permitted to deduct a limited amount of investment in the year of investment. Similar provisions exist in §168(k) for investment in qualified property, in §168(l) for investment in qualified second generation biofuel plant property, in §168(m) for investment in qualified reuse and recycling property, in §168(n) for investment in qualified disaster assistance property, in §1400L(b) for investment in qualified New York Liberty Zone property, in §1400N(d) for investment in qualified Gulf Opportunity Zone property, and in §15345(a) of the Food, Conservation, and Energy Act of 2008 for investment in qualified Recovery Assistance property.

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. 

First-Year Expensing And Additional Depreciation allows you to benefit from:

• Hundreds of hours of original research on specific tax planning topics from leading practitioners in this area.
• Invaluable practice documents including tables, charts and lists.
• Plain-English guidance from world-class experts.
• Real-world and in-depth analysis that lets you explore various options.
• Time-saving access to relevant sections of tax laws, regulations, court cases, IRS documents and more.
• Alternative approaches to both common and unique tax scenarios.

This Portfolio is part of the U.S. Income Portfolios Library, a comprehensive series that includes more than 200 Portfolios, which covers every federal tax topic with expert, in-depth analysis, and offer commentary on a wide range of federal taxation topics, including Compensation Planning, Deductions and Credits, Partnerships and Corporations, Special Pass-Through Entities, Corporate Reorganizations, Real Estate, Procedure and Administration, and more. 

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

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

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Statutes:

Public Laws:

United States Code:

Regulations:

Legislative History:

Treasury Rulings and Procedures:

Cases:

UNOFFICIAL

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