As a general rule, each section of the mixed-use project operated as a rental or business (such as a hotel) operation is assigned a cost recovery period
for purposes of claiming depreciation deductions based on the character of the mixed-use property component.
Under the modified accelerated cost recovery system (MACRS), depreciable nonresidential real property placed into service after May 12, 1993, is generally subject to a 39year cost recovery period
, using the straight-line method and midmonth convention [IRC section 168(c)].
The agreement allows amending the pricing scheme every five years, with no cost recovery period
for the foreign partner.
ATRA retroactively extends for two years, through 2013, a short seven-year cost recovery period
for motorsports entertainment complexes under Sec.
While the upfront investment was considerable, solar technology has advanced to the point where the life expectancy of the solar system far exceeds the expected cost recovery period
on the project.
Remaining in the legislative grave (resurrection is possible when Congress returns from its summer recess in September) with the R&D tax credit extension were other business tax enhancements, such as a provision that would have allowed corporations to receive a refund of a portion of their AMT credits if they invest during 2010 in capital equipment for use in the United States and another giving retailers a one-year extension (through 2010) of the special 15-year cost recovery period
for certain leasehold improvements, restaurant buildings and improvements, and retail improvements.
Additionally, the measure would extend for one year, through 2010: the special 15-year cost recovery period
for certain leasehold improvements, restaurant buildings and retail improvements; active financing exception, from Subpart F of the tax code; five-year depreciation for farming business machinery and equipment that are used in a farming business; and new markets tax credit (NMTC) by permitting a maximum annual amount of qualified equity investments of $5 million.
15-year cost recovery--A temporary depreciation schedule shortens to 15 years the cost recovery period
for some improvements to retail property.
EPA said recovery periods and interest rates vary by industry, but typically one-time capital costs are amortized over a 10-year cost recovery period
at a rate of 7%.
Their efforts resulted in two major victories for the commercial real estate industry--the extension of the commercial buildings energy-efficient tax credit and an extension of the 15-year cost recovery period
for leasehold improvements.
Another issue of concern focuses on the cost recovery period
for "leasehold improvements" to non-residential real property (which, under current law, is 39 years).
Extending the capital cost recovery period
by nearly another 50% to 10 years would clearly be the wrong policy to adopt at a critical point in the industry's recovery from the economic downturn we have just endured.