(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
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
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
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).