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139) Furthermore, the repair regulations significantly expand the definition of disposition for MACRS property to include the retirement of a structural component of a building.
Total Basis Eligible for MACRS Depreciation $260,000
Intangible property may not be depreciated under MACRS, but it may be amortized in certain situations.
Under the second election, taxpayers should be permitted to (1) deduct the full ceiling amount for the year and (2) automatically treat all de minimis property exceeding the ceiling amount for the year as a single mass asset and depreciate that amount using a three-year MACRS life.
One example would be if a company acquires $100k of 5-year property, which is going to be depreciated using the MACRS percentages under the Half-Year method.
The equipment will be depreciated under the MACRS 7-year class.
and was depreciated using the standard MACRS statutory rates.
The equipment is MACRS property with 5-year class life and half year convention applies.
31, 2013, the following would have yielded AMT tax adjustments had G not met the exemption for 2013: Excess MACRS depreciation over AMT depreciation--$4,000; adjustment for income on long-term contracts recognized on completed-contract method rather than percentage-of-completion method--$15,000.
The result: reclassification of 13 percent of the facility's total cost from a 39-year to a 5-year Modified Accelerated Cost Recovery System (MACRS); 6 percent was reclassified to a 15-year MACRS property; and a net tax benefit of $201,260 in the first year was achieved, followed by a net tax benefit over the first six years that exceeded $2.
MACRS seven year depreciation was used; a 37% marginal, blended federal and state income tax rate was used.