(22) The
alternative depreciation system extends residential real property's recovery period to 30 years and non-residential real property to 40 years.
Assets that are subject to either the general depreciation system of IRC Section 168(a) or the
alternative depreciation system of IRC Section 168(g) may be grouped in one or more general asset accounts.
"In addition, the proposal would create a significant barrier to economic growth by discouraging many small businesses from expanding." Baucus's draft also includes the repeal of the current MACRS (Modified Accelerated Cost Recovery System) and
Alternative Depreciation System (ADS) rules.
Property that is required to be depreciated under MACRS-ADS (
Alternative Depreciation System) is not eligible for bonus depreciation.
The recapture amount is the difference between the section 179 amount deducted and the amount of deprecation that would have been allowed under the
Alternative Depreciation System (ADS) for the years when the business use exceeded 50%.
168(g), which relates to the
alternative depreciation system (Sec.
The alternative would permit taxpayers to determine the TBV of all tangible property subject to a section 168 depreciation deduction by using the straight-line method conventions, as well as the recovery periods of the
alternative depreciation system under section 168(g)(2).
* Straight-line depreciation over a five-year period [nine years for property depreciated under the
alternative depreciation system (ADS)] for qualified leasehold improvement property acquired after September 10, 2001
Assets included in Class 57.0 have a five-year recovery period for regular tax purposes under the general depreciation system (GDS) and a nine-year recovery period under the
alternative depreciation system (ADS).
Under the corporate alternative minimum tax regime that was enacted in 1986, depreciation on property placed in service after 1986 must be computed by using the class lives prescribed by the
alternative depreciation system of section 168(g) and either (1) the straight-line method in the case of property subject to the straight-line method under the regular tax, or (2) the 150-percent declining balance method in the case of other property.
Regular tax depreciation may be computed using either of two systems, the General Depreciation System (GDS) or the
Alternative Depreciation System (ADS), both of which are part of MACRS.(5)
Property placed in service in tax years beginning after 1989 is depreciated using the
alternative depreciation system of Internal Revenue Code section 168(g).
