As a result, taxpayers will have to track the difference in the depreciable basis
for state and federal purposes, as well as requesting guidance on how to treat a federal income recognition event as an unrecognized income event for California purposes.
The election permits the owner to recognize a loss equal to the adjusted depreciable basis
of the disposed portion of the building.
Since a trade-in is treated as an exchange, any gain or loss is absorbed into the replacement vehicle's depreciable basis
, thereby avoiding any current taxable gain or reportable loss.
Applying the MPGE 20% safe harbor to qualified films: Under existing regulations, a film may be treated as a qualified film produced by the taxpayer if (1) at least 50% of the total compensation for services paid by the taxpayer is compensation for services performed in the United States and (2) the direct labor and overhead of the taxpayer to produce the film account for at least 20% of the taxpayer's cost of goods sold or unadjusted depreciable basis
of the film (i.e., the taxpayer can satisfy the 20% labor and overhead safe harbor in Regs.
The final regulations made two clarifications of the 2013 proposed rules: 1) how to determine the unadjusted depreciable basis
of a disposed asset in a general or multiple asset account or a disposed portion of an asset, and 2) how to make certain elections on the disposition of assets included in a general asset account when the demolition of structures (IRC section 280B) applies.
Should businesses not file the applications and undergo an audit, they risk losing their deduction for the remaining depreciable basis
that should have already been taken to date.
The new regulations permit Mary to deduct the adjusted depreciable basis
of the old roof.
The regulations define "remaining adjusted depreciable basis
" as the unadjusted depreciable basis
of qualified property reduced by the amount of bonus depreciation allowed or allowable.
If property is used in an individual's trade or business as well as in a personal or tax-exempt activity during a taxable year, the depreciable basis
is determined by multiplying the unadjusted basis, as figured above, by the percentage of time the property was used in the trade or business.
This allowance is an additional deduction of 50 percent of the property's depreciable basis
after any Section 179 deduction and before figuring a regular depreciation deduction.
If A acquired Building Two under this scenario, it would have a depreciable basis
of $7 million rather than $2 million.
The allowance is an additional deduction of 30% of the property's depreciable basis
. This means you can deduct $15,000 for a $45,000 piece of equipment, then depreciate the remaining $30,000 as you normally would.