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Amended Tax Return 2012

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Amended Tax Return 2012

Amended tax return 2012 Index A Additional Medicare Tax, Reminders, Additional Medicare Tax withholding. Amended tax return 2012 Adjustments, Reporting Adjustments to Form 941-SS, 944-SS, 944, or 943 Agricultural labor, Deposits. Amended tax return 2012 Aliens, nonresidents, Deposits. Amended tax return 2012 Assistance (see Tax help) C Calendar, Calendar Comments on publication, Comments and suggestions. Amended tax return 2012 Common-law employee, Employee status under common law. Amended tax return 2012 Corrected wage and tax statement, Correcting Forms W-2AS, W-2CM, W-2GU, W-2VI, and Form W-3SS. Amended tax return 2012 Crew leaders, Farm Crew Leaders Current period adjustments, Current Period Adjustments D Deposit How to deposit, How To Deposit Penalties, Deposit Penalties Period, Deposit Period Requirements, 8. Amended tax return 2012 Depositing Taxes Rules $100,000 next-day deposit, $100,000 Next-Day Deposit Rule Accuracy of deposits, Accuracy of Deposits Rule Schedules Monthly, Monthly Deposit Schedule Semiweekly, Semiweekly Deposit Schedule When to deposit, When To Deposit E Electronic deposits, Electronic deposit requirement. Amended tax return 2012 Electronic filing and payment, Reminders Employee, 2. Amended tax return 2012 Who Are Employees? Employer identification number (EIN), 1. Amended tax return 2012 Employer Identification Number (EIN) F Family employees, Deposits. Amended tax return 2012 Farm crew leaders, Farm Crew Leaders Farmworkers, 6. Amended tax return 2012 Social Security and Medicare Taxes for Farmworkers, Employers of farmworkers. Amended tax return 2012 Federal employees, Deposits. Amended tax return 2012 Fishing, Deposits. Amended tax return 2012 Form, Calendar, Lookback period for employers of nonfarm workers. Amended tax return 2012 4070, 5. Amended tax return 2012 Tips 4070A, 5. Amended tax return 2012 Tips 8274, Deposits. Amended tax return 2012 940, Calendar 941-SS, Calendar, Current Period Adjustments 941-X, Adjustments to lookback period taxes. Amended tax return 2012 943, Calendar 943-X, Adjustments to lookback period taxes. Amended tax return 2012 944-X, Adjustments to lookback period taxes. Amended tax return 2012 Schedule H (Form 1040), Household employers reporting social security and Medicare taxes. Amended tax return 2012 SS-4, 1. Amended tax return 2012 Employer Identification Number (EIN) SS-5, Reminders, Employee's social security card. Amended tax return 2012 SS-8, IRS help. Amended tax return 2012 W-2c, Employee's social security card. Amended tax return 2012 , Correcting Forms W-2AS, W-2CM, W-2GU, W-2VI, and Form W-3SS. Amended tax return 2012 Fringe benefits, Fringe Benefits, Deposits. Amended tax return 2012 FUTA tax, 11. Amended tax return 2012 Federal Unemployment (FUTA) Tax—U. Amended tax return 2012 S. Amended tax return 2012 Virgin Islands Employers Only G Government employees, nonfederal, Deposits. Amended tax return 2012 Group-term life insurance, Deposits. Amended tax return 2012 H Help (see Tax help) Hiring new employees, Reminders Homeworkers, Deposits. Amended tax return 2012 Hospital interns, Deposits. Amended tax return 2012 Household employers, Household employers reporting social security and Medicare taxes. Amended tax return 2012 Household workers, Household employers reporting social security and Medicare taxes. Amended tax return 2012 , Deposits. Amended tax return 2012 How to deposit, How To Deposit I Insurance agents, Deposits. Amended tax return 2012 IRS help (employee v. Amended tax return 2012 subcontractor), IRS help. Amended tax return 2012 L Lookback period Farmworkers, Lookback period for employers of farmworkers. Amended tax return 2012 Nonfarm workers, Lookback period for employers of nonfarm workers. Amended tax return 2012 M Meals and lodging, Deposits. Amended tax return 2012 Ministers, Deposits. Amended tax return 2012 Monthly deposit schedule, Monthly Deposit Schedule Moving expenses, Deposits. Amended tax return 2012 N Newspaper delivery, Deposits. Amended tax return 2012 Noncash payments, Deposits. Amended tax return 2012 Nonprofit organizations, Deposits. Amended tax return 2012 P Partners, Deposits. Amended tax return 2012 Penalties, Deposit Penalties Pension plans, Deposits. Amended tax return 2012 Prior period adjustments, Prior Period Adjustments Private delivery services, Reminders Publications (see Tax help) R Recordkeeping, Reminders Religious orders, Deposits. Amended tax return 2012 Retirement and pension plans, Deposits. Amended tax return 2012 S Salespersons, Deposits. Amended tax return 2012 Scholarships and fellowships, Deposits. Amended tax return 2012 Semiweekly deposit schedule, Semiweekly Deposit Schedule Severance pay, Deposits. Amended tax return 2012 Sick pay, Sick pay. Amended tax return 2012 , Sick pay payments. Amended tax return 2012 , Deposits. Amended tax return 2012 Social security number (SSN), 3. Amended tax return 2012 Employee's Social Security Number (SSN) Statutory employee, Statutory employees. Amended tax return 2012 Statutory nonemployee, Statutory nonemployees. Amended tax return 2012 Students, Deposits. Amended tax return 2012 Suggestions for publication, Comments and suggestions. Amended tax return 2012 Supplemental unemployment compensation benefits, Deposits. Amended tax return 2012 T Tax help, How To Get Tax Help Tax Help, Tax help. Amended tax return 2012 Taxes paid by employer, Employee's portion of taxes paid by employer. Amended tax return 2012 Tips, 5. Amended tax return 2012 Tips, Deposits. Amended tax return 2012 Travel and business expenses, Travel and business expenses. Amended tax return 2012 Trust fund recovery penalty, Trust fund recovery penalty. Amended tax return 2012 W Wage and Tax Statement, 10. Amended tax return 2012 Wage and Tax Statements Prev  Up     Home   More Online Publications
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The Amended Tax Return 2012

Amended tax return 2012 Accelerated Cost Recovery System (ACRS) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: ACRS Defined What Can and Cannot Be Depreciated Under ACRSRecovery Property Nonrecovery Property How To Figure the DeductionUnadjusted Basis Classes of Recovery Property Recovery Periods Alternate ACRS Method (Modified Straight Line Method) ACRS Deduction in Short Tax Year DispositionsEarly dispositions of ACRS property other than 15-, 18-, or 19-year real property. Amended tax return 2012 Dispositions — mass asset accounts. Amended tax return 2012 Early dispositions — 15-year real property. Amended tax return 2012 Early dispositions — 18- and 19-year real property. Amended tax return 2012 Depreciation Recapture Topics - This chapter discusses: The definition of ACRS What can and cannot be depreciated under ACRS How to figure the deduction Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization The Accelerated Cost Recovery System (ACRS) applies to property first used before 1987. Amended tax return 2012 It is the name given to tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. Amended tax return 2012 These rules are mandatory and generally apply to tangible property placed in service after 1980 and before 1987. Amended tax return 2012 If you placed property in service during this period, you must continue to figure your depreciation under ACRS. Amended tax return 2012 If you used listed property placed in service after June 18, 1984, less than 50% for business in 1995, see Predominant Use Test in chapter 3. Amended tax return 2012 Listed property includes cars, other means of transportation, and certain computers. Amended tax return 2012 Any additions or improvements placed in service after 1986, including any components of a building (such as plumbing, wiring, storm windows, etc. Amended tax return 2012 ), are depreciated using MACRS, discussed in chapter 3 of Publication 946. Amended tax return 2012 It does not matter that the underlying property is depreciated under ACRS or one of the other methods. Amended tax return 2012 ACRS Defined ACRS consists of accelerated depreciation methods and an alternate ACRS method that could have been elected. Amended tax return 2012 The alternate ACRS method used a recovery percentage based on a modified straight line method. Amended tax return 2012 The law prescribes fixed percentages to be uses for each class of property. Amended tax return 2012 Property depreciable under ACRS is called recovery property. Amended tax return 2012 The recovery class of property determines the recovery period. Amended tax return 2012 Generally, the class life of property places it in a 3-year, 5-year, 10-year, 15-year, 18-year, or 19-year recovery class. Amended tax return 2012 Under ACRS, the prescribed percentages are used to recover the unadjusted basis of recovery property. Amended tax return 2012 To figure a depreciation deduction, you multiply the prescribed percentage for the recovery class by the unadjusted basis of the recovery property. Amended tax return 2012 You must continue to figure your depreciation under ACRS for property placed in service after 1980 and before 1987. Amended tax return 2012 For property you placed in service after 1986, you must use MACRS, discussed in chapter 3 of Publication 946. Amended tax return 2012 What Can and Cannot Be Depreciated Under ACRS ACRS applies to most depreciable tangible property placed in service after 1980 and before 1987. Amended tax return 2012 It includes new or used and real or personal property. Amended tax return 2012 The property must be for use in a trade or business or for the production of income. Amended tax return 2012 Property you acquired before 1981 or after 1986 is not ACRS recovery property. Amended tax return 2012 For information on depreciating property acquired before 1981, see chapter 2. Amended tax return 2012 For information on depreciating property acquired after 1986, see chapter 3 of Publication 946. Amended tax return 2012 Recovery Property Recovery property under ACRS is tangible depreciable property placed in service after 1980 and before 1987. Amended tax return 2012 It generally includes new or used property that you acquired after 1980 and before 1987 for use in your trade or business or for the production of income. Amended tax return 2012 Nonrecovery Property You cannot use ACRS for property you placed in service before 1981 or after 1986. Amended tax return 2012 Nonrecovery property also includes: Intangible property, Property you elected to exclude from ACRS that is properly depreciated under a method of depreciation that is not based on a term of years, Certain public utility property, and Certain property acquired and excluded from ACRS because of the antichurning rules. Amended tax return 2012 Intangible property. Amended tax return 2012   Intangible property is not depreciated under ACRS. Amended tax return 2012 Property depreciated under methods not expressed in a term of years. Amended tax return 2012   Certain property depreciated under a method not expressed in a term of years is not depreciated under ACRS. Amended tax return 2012 This included any property: If you made an irrevocable election to exclude such property, and In the first year that you could have claimed depreciation, you properly used the unit-of-production method or any method of depreciation not expressed in a term of years (not including the retirement-replacement-betterment method). Amended tax return 2012 Public utility property. Amended tax return 2012   Public utility property for which the taxpayer does not use a normalization method of accounting is excluded from ACRS and is subject to depreciation under a special rule. Amended tax return 2012 Additions or improvements to ACRS property after 1986. Amended tax return 2012   Any additions or improvements placed in service after 1986, including any components of a building (plumbing, wiring, storm windows, etc. Amended tax return 2012 ) are depreciated using MACRS, discussed in chapter 3 of Publication 946. Amended tax return 2012 It does not matter that the underlying property is depreciated under ACRS or one of the other methods. Amended tax return 2012 How To Figure the Deduction After you determine that your property can be depreciated under ACRS, you are ready to figure your deduction. Amended tax return 2012 Because the conventions are built into the percentage table rates, you only need to know the following: The unadjusted basis of your recovery property, The classes of recovery property, The recovery periods, and Whether to use the prescribed percentages based on accelerated methods or percentages based on using the alternate ACRS method. Amended tax return 2012 Unadjusted Basis To figure your ACRS deduction, you multiply the unadjusted basis in your recovery property by its applicable percentage for the year. Amended tax return 2012 Unadjusted basis is the same amount you would use to figure gain on a sale, but it is figured without taking into account any depreciation taken in earlier years. Amended tax return 2012 However, reduce your original basis by the amount of amortization taken on the property and by any section 179 deduction claimed as discussed in chapter 2 of Publication 946. Amended tax return 2012 If you buy property, your unadjusted basis is usually its cost minus any amortized amount and minus any section 179 deduction elected. Amended tax return 2012 If you acquire property in some other way, such as by inheriting it, getting it as a gift, or building it yourself, you figure your unadjusted basis under other rules. Amended tax return 2012 See Publication 551. Amended tax return 2012 Classes of Recovery Property All recovery property under ACRS is in one of the following classes. Amended tax return 2012 The class for your property was determined when you began to depreciate it. Amended tax return 2012 3-Year Property 3-year property includes automobiles, light-duty trucks (actual unloaded weight less than 13,000 pounds), and tractor units for use over-the-road. Amended tax return 2012 Race horses over 2 years old when placed in service are 3-year property. Amended tax return 2012 Any other horses over 12 years old when you placed them in service are also included in the 3-year property class. Amended tax return 2012 The ACRS percentages for 3-year recovery property are: Recovery Period Percentage 1st year 25% 2nd year 38% 3rd year 37% If you used the percentages above to depreciate your 3-year recovery property, your property, except for certain passenger automobiles, is fully depreciated. Amended tax return 2012 You cannot claim depreciation for this property after 1988. Amended tax return 2012 5-Year Property 5-year property includes computers, copiers, and equipment, such as office furniture and fixtures. Amended tax return 2012 It also includes single purpose agricultural or horticultural structures and petroleum storage facilities (other than buildings and their structural components). Amended tax return 2012 The ACRS percentages for 5-year recovery property are: Recovery period Percentage 1st year 15% 2nd year 22% 3rd through 5th year 21% If you used the percentages above to depreciate your 5-year recovery property, it is fully depreciated. Amended tax return 2012 You cannot claim depreciation for this property after 1990. Amended tax return 2012 10-Year Property 10-year property includes certain real property such as theme-park structures and certain public utility property. Amended tax return 2012 Manufactured homes (including mobile homes) and railroad tank cars are also 10-year property. Amended tax return 2012 You do not treat a building, and its structural components, as 10-year property by reason of a change in use after you placed the property in service. Amended tax return 2012 For example, a building (15-year real property) that was placed in service in 1981 and was converted to a theme-park structure in 1986 remains 15-year real property. Amended tax return 2012 The ACRS percentages for 10-year recovery property are: Recovery Period Percentage 1st year 8% 2nd year 14% 3rd year 12% 4th through 6th year 10% 7th through 10th year 9% If you used the percentages above, you cannot claim depreciation for this property after 1995. Amended tax return 2012 Example. Amended tax return 2012 On April 21, 1986, you bought and placed in service a new mobile home for $26,000 to be used as rental property. Amended tax return 2012 You paid $10,000 cash and signed a note for $16,000 giving you an unadjusted basis of $26,000. Amended tax return 2012 On June 8, 1986, you bought and placed in service a used mobile home for use as rental property at a total cost of $11,500. Amended tax return 2012 The total unadjusted basis of your 10-year recovery property placed in service in 1986 was $37,500 ($26,000 + $11,500). Amended tax return 2012 Your ACRS deduction was $3,000 (8% × $37,500). Amended tax return 2012 In 1987, your ACRS deduction was $5,250 (14% × $37,500). Amended tax return 2012 In 1988, your ACRS deduction was $4,500 (12% × $37,500). Amended tax return 2012 In 1989, 1990, and 1991, your ACRS deduction was $3,750 (10% × $37,500). Amended tax return 2012 In 1992, 1993, 1994, and 1995 your deduction for each year is $3,375 (9% × $37,500). Amended tax return 2012 15-Year Real Property 15-year real property is real property that is recovery property placed in service before March 16, 1984. Amended tax return 2012 It includes all real property, such as buildings, other than that designated as 5-year or 10-year property. Amended tax return 2012 Unlike the 3-, 5-, or 10-year classes of property, the percentages for 15-year real property depend on when you placed the property in service during your tax year. Amended tax return 2012 You could group 15-year real property by month and year placed in service. Amended tax return 2012 In Table 1, at the end of this publication in the Appendix, find the month in your tax year that you placed the property in service in your trade or business or for the production of income. Amended tax return 2012 You use the percentages listed under that month for each year of the recovery period to determine your depreciation deduction each year. Amended tax return 2012 Example. Amended tax return 2012 On March 5, 1984, you placed an apartment building in service in your business. Amended tax return 2012 It is 15-year real property. Amended tax return 2012 After subtracting the value of the land, your unadjusted basis in the building is $250,000. Amended tax return 2012 You use the calendar year as your tax year. Amended tax return 2012 March is the third month of your tax year. Amended tax return 2012 Your ACRS deduction for 1984 was $25,000 (10% × $250,000). Amended tax return 2012 For 1985, the percentage for the third month of the second year of the recovery period is 11%. Amended tax return 2012 Your deduction was $27,500 (11% × $250,000). Amended tax return 2012 For the third, fourth, and fifth years of the recovery period (1986, 1987, and 1988), the percentages are 9%, 8%, and 7%. Amended tax return 2012 For 1989 through 1992, the percentage for the third month is 6%. Amended tax return 2012 Your deduction each year is $15,000 (6% × $250,000). Amended tax return 2012 For 1993, 1994, and 1995, the percentage for the third month is 5%. Amended tax return 2012 Your depreciation deduction is $12,500 (5% × $250,000) for 1993, 1994, and 1995. Amended tax return 2012 Low-Income Housing Low-income housing that was assigned a 15-year recovery period under ACRS includes the following types of property: Federally assisted housing projects where the mortgage is insured under section 221(d)(3) or 236 of the National Housing Act, or housing financed or assisted by direct loan or tax abatement under similar provisions of state or local laws. Amended tax return 2012 Low-income rental housing for which a depreciation deduction for rehabilitation expenditures is allowed. Amended tax return 2012 Low-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under the provisions of state or local laws that authorize similar subsidies for low-income families. Amended tax return 2012 Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. Amended tax return 2012 The ACRS percentages for low-income housing real property, like the regular 15-year real property percentages, depend on when you placed the property in service. Amended tax return 2012 Find the month in your tax year in Table 2 or 3 at the end of this publication in the Appendix that you first placed the property in service as rental housing. Amended tax return 2012 Use the percentages listed under that month for each year of the recovery period. Amended tax return 2012 Table 2 shows percentages for low-income housing placed in service before May 9, 1985. Amended tax return 2012 Table 3 shows percentages for low-income housing placed in service after May 8, 1985, and before 1987. Amended tax return 2012 Example. Amended tax return 2012 In May 1986, you acquired and placed in service a house that qualified as low-income rental housing under item 3) of the above listing. Amended tax return 2012 You use the calendar year as your tax year. Amended tax return 2012 You use Table C–3 because the property was placed in service after May 8, 1985. Amended tax return 2012 Your unadjusted basis for the property, not including the land, was $59,000. Amended tax return 2012 Your deduction for 1986 through 2001 is shown in the following table. Amended tax return 2012 Year Rate Deduction 1986 8. Amended tax return 2012 9% $5,251 1987 12. Amended tax return 2012 1% 7,139 1988 10. Amended tax return 2012 5% 6,195 1989 9. Amended tax return 2012 1% 5,369 1990 7. Amended tax return 2012 9% 4,661 1991 6. Amended tax return 2012 9% 4,071 1992 5. Amended tax return 2012 9% 3,481 1993 5. Amended tax return 2012 2% 3,068 1994 4. Amended tax return 2012 6% 2,714 1995 4. Amended tax return 2012 6% 2,714 1996 4. Amended tax return 2012 6% 2,714 1997 4. Amended tax return 2012 6% 2,714 1998 4. Amended tax return 2012 6% 2,714 1999 4. Amended tax return 2012 5% 2,655 2000 4. Amended tax return 2012 5% 2,655 2001 1. Amended tax return 2012 5% 885 18-Year Real Property 18-year real property is real property that is recovery property placed in service after March 15, 1984, and before May 9, 1985. Amended tax return 2012 It includes real property, such as buildings, other than that designated as 5-year, 10-year, 15-year real property, or low-income housing. Amended tax return 2012 The ACRS percentages for 18-year real property depend on when you placed the property in service in your trade or business or for the production of income during your tax year. Amended tax return 2012 There are also tables for 18-year real property in the Appendix. Amended tax return 2012 Table 4 shows the percentages for 18-year real property you placed in service after June 22, 1984, and before May 9, 1985. Amended tax return 2012 Table 5 is for 18-year real property placed in service after March 15, 1984, and before June 23, 1984. Amended tax return 2012 Find the month in your tax year that you placed the property in service in a trade or business or for the production of income. Amended tax return 2012 Use the percentages listed under that month for each year of the recovery period. Amended tax return 2012 Example. Amended tax return 2012 On April 28, 1985, you bought and placed in service a rental house. Amended tax return 2012 The house, not including the land, cost $95,000. Amended tax return 2012 This is your unadjusted basis for the house. Amended tax return 2012 You use the calendar year as your tax year. Amended tax return 2012 Because the house was placed in service after June 22, 1984, and before May 9, 1985, it is 18-year real property. Amended tax return 2012 You use Table 4 to figure your deduction for the house. Amended tax return 2012 April is the fourth month of your tax year. Amended tax return 2012 Your deduction for 1985 through 2003 is shown in the following table. Amended tax return 2012 Year Rate Deduction 1985 7. Amended tax return 2012 0% $6,650 1986 9. Amended tax return 2012 0% 8,550 1987 8. Amended tax return 2012 0% 7,600 1988 7. Amended tax return 2012 0% 6,650 1989 7. Amended tax return 2012 0% 6,650 1990 6. Amended tax return 2012 0% 5,700 1991 5. Amended tax return 2012 0% 4,750 1992 5. Amended tax return 2012 0% 4,750 1993 5. Amended tax return 2012 0% 4,750 1994 5. Amended tax return 2012 0% 4,750 1995 5. Amended tax return 2012 0% 4,750 1996 5. Amended tax return 2012 0% 4,750 1997 5. Amended tax return 2012 0% 4,750 1998 4. Amended tax return 2012 0% 3,800 1999 4. Amended tax return 2012 0% 3,800 2000 4. Amended tax return 2012 0% 3,800 2001 4. Amended tax return 2012 0% 3,800 2002 4. Amended tax return 2012 0% 3,800 2003 1. Amended tax return 2012 0% 950 19-Year Real Property 19-year real property is real property that is recovery property placed in service after May 8, 1985, and before 1987. Amended tax return 2012 It includes all real property, other than that designated as 5-year, 10-year, 15-year, or 18-year real property, or low-income housing. Amended tax return 2012 The ACRS percentages for 19-year real property depend on when you placed the property in service in a trade or business or for the production of income during your tax year. Amended tax return 2012 Table 6 shows the percentages for 19-year real property. Amended tax return 2012 You find the month in your tax year that you placed the property in service. Amended tax return 2012 You use the percentages listed under that month for each year of the recovery period. Amended tax return 2012 Recovery Periods Each item of recovery property is assigned to a class of property. Amended tax return 2012 The classes of recovery property establish the recovery periods over which the unadjusted basis of items in a class is recovered. Amended tax return 2012 The classes of property are: 3-Year property 5-Year property 10-Year property 15-Year real property Low-income housing 18-Year real property 19-Year real property Alternate ACRS Method (Modified Straight Line Method) ACRS provides an alternate ACRS method that could be elected. Amended tax return 2012 This alternate ACRS method uses a recovery percentage based on a modified straight line method. Amended tax return 2012 This alternate ACRS method generally uses percentages other than those from the tables. Amended tax return 2012 If you elected the alternate ACRS method, you determine the recovery period by using the following schedule. Amended tax return 2012 This schedule is for other than 18- and 19-year real property and low-income housing: In the case of: You could have elected a recovery period of: 3-year property 3, 5, or 12 years 5-year property 5, 12, or 25 years 15-year real property 15, 35, or 45 years Percentages. Amended tax return 2012   The straight-line percentages for the alternate ACRS method are: Recovery Period Percentage 5 years 20. Amended tax return 2012 00% 10 years 10. Amended tax return 2012 00% 12 years 8. Amended tax return 2012 333% 15 years 6. Amended tax return 2012 667% 25 years 4. Amended tax return 2012 00% 35 years 2. Amended tax return 2012 857%   You apply the percentage to the unadjusted basis(defined earlier) of the property to figure your ACRS deduction. Amended tax return 2012 There are tables for 18- and 19-year real property later in this publication in the Appendix. Amended tax return 2012 For 15-year real property, see 15-year real property, later. Amended tax return 2012 3-, 5-, and 10-year property. Amended tax return 2012   If you elected to use an alternate recovery percentage, you have to use the same recovery percentage for all property in that class that you placed in service in that tax year. Amended tax return 2012 This applies throughout the recovery period you selected. Amended tax return 2012 Half-year convention. Amended tax return 2012   If you elected the alternate method, only a half-year of depreciation was deducted for the year you placed the property in service. Amended tax return 2012 This applied regardless of when in the tax year you placed the property in service. Amended tax return 2012 For each of the remaining years in the recovery period, you take a full year's deduction. Amended tax return 2012 If you hold the property for the entire recovery period, a half-year of depreciation is allowable for the year following the end of the recovery period. Amended tax return 2012 Example. Amended tax return 2012 You operate a small upholstery business. Amended tax return 2012 On March 19, 1986, you bought and placed in service a $13,000 light-duty panel truck to be used in your business and a $500 electric saw. Amended tax return 2012 You elected to use the alternate ACRS method. Amended tax return 2012 You did not elect to take a section 179 deduction. Amended tax return 2012 You decided to recover the cost of the truck, which is 3-year recovery property, over 5 years. Amended tax return 2012 The saw is 5-year property, but you decided to recover its cost over 12 years. Amended tax return 2012 For 1986, your ACRS deduction reflected the half-year convention. Amended tax return 2012 In the first year, you deducted half of the amount determined for a full year. Amended tax return 2012 Your ACRS deduction for 1986 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. Amended tax return 2012 00     Electric saw   12 years straight line = 8. Amended tax return 2012 333% 8. Amended tax return 2012 333% ÷ $500 = $41. Amended tax return 2012 67 Half-year convention -½ of $41. Amended tax return 2012 67= 20. Amended tax return 2012 84 Total ACRS deduction for 1986 $1,320. Amended tax return 2012 84       You take a full year of depreciation for both the truck and the saw for the years 1987 through 1990. Amended tax return 2012 Your ACRS deduction for each of those years is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600     Electric saw     12 years straight line = 8. Amended tax return 2012 333% 8. Amended tax return 2012 333% ÷ $500 = $41. Amended tax return 2012 67 Total annual ACRS deduction for 1987 through 1990 $2,641. Amended tax return 2012 67       In 1991, you take a half-year of depreciation for the truck and a full year of depreciation for the saw. Amended tax return 2012 Your ACRS deduction for 1991 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. Amended tax return 2012 00     Electric saw   12 years straight line = 8. Amended tax return 2012 333% 8. Amended tax return 2012 333% ÷ $500 = $41. Amended tax return 2012 67 Total ACRS deduction for 1991 $1,341. Amended tax return 2012 67       The truck is fully depreciated after 1991. Amended tax return 2012 You take a full year of depreciation for the saw for the years 1992 through 1997. Amended tax return 2012 Your ACRS deduction for each of those years is as follows: Electric saw     12 years straight line = 8. Amended tax return 2012 333% 8. Amended tax return 2012 333% ÷ $500 = $41. Amended tax return 2012 67 Total annual ACRS deduction for 1992 through 1997 $41. Amended tax return 2012 67       You take a half-year of depreciation for the saw for 1998. Amended tax return 2012 Your ACRS deduction for 1998 is as follows: Electric saw   12 years straight line = 8. Amended tax return 2012 333% 8. Amended tax return 2012 333% ÷ $500 = $41. Amended tax return 2012 67 Half-year convention -½ of $41. Amended tax return 2012 67= 20. Amended tax return 2012 84 Total ACRS deduction for 1998 $20. Amended tax return 2012 84       The saw is fully depreciated after 1998. Amended tax return 2012 15-year real property. Amended tax return 2012   Under ACRS, you could also elect to use the alternate ACRS method for 15-year real property. Amended tax return 2012 The alternate ACRS method allows you to depreciate your 15-year real property using the straight line ACRS method over the alternate recovery periods of 15, 35, or 45 years. Amended tax return 2012 If you selected a 15-year recovery period, you use the percentage (6. Amended tax return 2012 667%) from the schedule above. Amended tax return 2012 You prorate this percentage for the number of months the property was in service in the first year. Amended tax return 2012 If you selected a 35- or 45-year recovery period, you use either Table 11 or 15. Amended tax return 2012 Alternate periods for 18-year real property. Amended tax return 2012   For 18-year real property, the alternate recovery periods are 18, 35, or 45 years. Amended tax return 2012 The percentages for 18-year real property under the alternate method are in Tables 7, 8, 10, 11, 14, and 15 in the Appendix. Amended tax return 2012 There are two tables for each alternate recovery period. Amended tax return 2012 One table shows the percentage for property placed in service after June 22, 1984. Amended tax return 2012 The other table has the percentages for property placed in service after March 15, 1984, and before June 23, 1984. Amended tax return 2012 Alternate periods for 19-year real property. Amended tax return 2012   For 19-year real property, the alternate recovery periods are 19, 35, or 45 years. Amended tax return 2012 If you selected a 19-year recovery period, use Table 9 to determine your deduction. Amended tax return 2012 If you select a 35- or 45-year recovery period, use either Table 13 or 14. Amended tax return 2012 Example. Amended tax return 2012 You placed in service an apartment building on August 3, 1986. Amended tax return 2012 The building is 19-year real property. Amended tax return 2012 The sales contract allocated $300,000 to the building and $100,000 to the land. Amended tax return 2012 You use the calendar year as your tax year. Amended tax return 2012 You chose the alternate ACRS method over a recovery period of 35 years. Amended tax return 2012 For 1986, you figure your ACRS deduction usingTable 13. Amended tax return 2012 August is the eighth month of your tax year. Amended tax return 2012 The percentage from Table 13 for the eighth month is 1. Amended tax return 2012 1%. Amended tax return 2012 Your deduction was $3,300 ($300,000 ÷ 1. Amended tax return 2012 1%). Amended tax return 2012 The deduction rate from ACRS Table 13 for years 2 through 20 is 2. Amended tax return 2012 9% so that your deduction in 1987 through 2005 is $8,700 ($300,000 ÷ 2. Amended tax return 2012 9%). Amended tax return 2012 Alternate periods for low-income housing. Amended tax return 2012   For low-income housing, the alternate recovery periods are 15, 35, or 45 years. Amended tax return 2012 If you selected a 15-year period for this property, use 6. Amended tax return 2012 667% as the percentage. Amended tax return 2012 If you selected a 35- or 45-year period, use either Table 11, 12, or 15. Amended tax return 2012 Election. Amended tax return 2012   You had to make the election to use the alternate ACRS method by the return due date (including extensions) for the tax year you placed the property in service. Amended tax return 2012 Revocation of election. Amended tax return 2012   Your election to use an alternate ACRS method, once made, can be changed only with the consent of the Commissioner. Amended tax return 2012 The Commissioner grants consent only in extraordinary circumstances. Amended tax return 2012 Any request for a revocation will be considered a request for a ruling. Amended tax return 2012 ACRS Deduction in Short Tax Year For a tax year that is less than 12 months, the ACRS deduction is prorated on a 12-month basis. Amended tax return 2012 Figure the amount of the ACRS deduction for a short tax year as follows: First, you figure the ACRS deduction for a full year. Amended tax return 2012 You figure this by multiplying the unadjusted basis by the recovery percentage. Amended tax return 2012 You then multiply the ACRS deduction determined for a full tax year by a fraction. Amended tax return 2012 The numerator (top number) of the fraction is the number of months in the short tax year and the denominator (bottom number) is 12. Amended tax return 2012 For example, a corporation placed in service in June 1986 an item of 3-year property with an unadjusted basis of $10,000. Amended tax return 2012 The corporation files a tax return, because of a change in its accounting period, for the 6-month short tax year ending June 30, 1986. Amended tax return 2012 The full year's ACRS deduction for this item is $2,500 ($10,000 ÷ 25%), the first year percentage from the 3-year table. Amended tax return 2012 The ACRS deduction for the short tax year is $1,250 ($2,500 ÷ 6/12). Amended tax return 2012 You use the full ACRS percentages during the remaining years of the recovery period. Amended tax return 2012 For the first tax year after the recovery period, the unrecovered basis will be deductible. Amended tax return 2012 Exception. Amended tax return 2012   For the tax year in which you placed 15-, 18-, or 19-year real property in service or in the tax year you dispose of it, you compute the ACRS deduction for the number of months that the property is in service during that tax year. Amended tax return 2012 You compute the number of months using either a full month or mid-month convention. Amended tax return 2012 This is true regardless of the number of months in the tax year and the recovery period and method used. Amended tax return 2012 Dispositions A disposition is the permanent withdrawal of property from use in your trade or business or in the production of income. Amended tax return 2012 You can make a withdrawal by sale, exchange, retirement, abandonment, or destruction. Amended tax return 2012 You generally recognize gain or loss on the disposition of an asset by sale. Amended tax return 2012 However, nonrecognition rules can allow you to postpone some gain. Amended tax return 2012 See Publication 544. Amended tax return 2012 If you physically abandon property, you can deduct as a loss the adjusted basis of the asset at the time of its abandonment. Amended tax return 2012 Your intent must be to discard the asset so that you will not use it again or retrieve it for sale, exchange, or other disposition. Amended tax return 2012 Early dispositions. Amended tax return 2012   The disposal of an asset before the end of its specified recovery period, is referred to as an early disposition. Amended tax return 2012 When an early disposition occurs, the depreciation deduction in the year of disposition depends on the class of property involved. Amended tax return 2012 Early dispositions of ACRS property other than 15-, 18-, or 19-year real property. Amended tax return 2012   Generally, you get no ACRS deduction for the tax year in which you dispose of or retire recovery property, except for 15-, 18-, and 19-year real property. Amended tax return 2012 This means there is no depreciation deduction under ACRS in the year you dispose of or retire any of your 3-, 5-, or 10-year recovery property. Amended tax return 2012 Dispositions — mass asset accounts. Amended tax return 2012   The law provides a special rule to avoid the calculation of gain on the disposition of assets from mass asset accounts. Amended tax return 2012 A mass asset account includes items usually minor in value in relation to the group, numerous in quantity, impractical to separately identify, and not usually accounted for on a separate basis, but on a total dollar value. Amended tax return 2012 Examples of mass assets include minor items of office, plant, and store furniture and fixtures. Amended tax return 2012   Under the special rule, if you elected to use a mass asset account, you recognize gain to the extent of the proceeds from the disposition of the asset. Amended tax return 2012 You leave the unadjusted basis of the property in the account until recovered in future years. Amended tax return 2012 If you did this, include the total proceeds realized from the disposition in income on the tax return for the year of disposition. Amended tax return 2012 Early dispositions — 15-year real property. Amended tax return 2012   If you dispose of 15-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. Amended tax return 2012 You use a full-month convention. Amended tax return 2012 For a disposition at any time during a particular month before the end of the recovery period, no deduction is allowed for the month of disposition. Amended tax return 2012 This applies whether you use the regular ACRS method or elected the alternate ACRS method. Amended tax return 2012 Example. Amended tax return 2012 You purchased and placed in service a rental house on March 2, 1984, for $98,000 (not including the cost of land). Amended tax return 2012 You file your return based on a calendar year. Amended tax return 2012 Your rate from Table 1 for the third month is 10%. Amended tax return 2012 Your ACRS deduction for 1984 was $9,800 ($98. Amended tax return 2012 000 ÷ 10%). Amended tax return 2012 For 1985 through 1988, you figured your ACRS deductions using 11%, 9%, 8%, and 7% ÷ $98,000. Amended tax return 2012 For 1989 through 1992, you figured your ACRS deductions using 6% for each year. Amended tax return 2012 The deduction each year was $98,000 ÷ 6%. Amended tax return 2012 For 1993 and 1994, the ACRS deduction is ($98,000 ÷ 5%) $4,900 for each year. Amended tax return 2012 You sell the house on June 1, 1995. Amended tax return 2012 You figure your ACRS deduction for 1995 for the full year and then prorate that amount for the months of use. Amended tax return 2012 The full ACRS deduction for 1995 is $4,900 ($98,000 ÷ 5%). Amended tax return 2012 You then prorate this amount to the 5 months in 1995 during which it was rented. Amended tax return 2012 Your ACRS deduction for 1995 is $2,042 ($4,900 ÷ 5/12). Amended tax return 2012 Early dispositions — 18- and 19-year real property. Amended tax return 2012   If you dispose of 18- or 19-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. Amended tax return 2012 For 18-year property placed in service before June 23, 1984, use a full-month convention on a disposition. Amended tax return 2012 For 18-year property placed in service after June 22, 1984, and for 19-year property, determine the number of months in use by using the mid-month convention. Amended tax return 2012 Under the mid-month convention,treat real property disposed of any time during a month as disposed of in the middle of that month. Amended tax return 2012 Count the month of disposition as half a month of use. Amended tax return 2012 Example. Amended tax return 2012 You purchased and placed in service a rental house on July 2, 1984, for $100,000 (not including the cost of land). Amended tax return 2012 You file your return based on a calendar year. Amended tax return 2012 Your rate from Table 4 for the seventh month is 4%. Amended tax return 2012 You figured your ACRS deduction for 1984 was $4,000 ($100,000 ÷ 4%). Amended tax return 2012 In 1985 through 1994, your ACRS deductions were 9%, 8%, 8%, 7%, 6%, 6%, 5%, 5%, and 5% ÷ $100,000. Amended tax return 2012 You sell the house on September 24, 1995. Amended tax return 2012 Figure your ACRS deduction for 1995 for the months of use. Amended tax return 2012 The full ACRS deduction for 1995 is $5,000 ($100,000 ÷ 5%). Amended tax return 2012 Prorate this amount for the 8. Amended tax return 2012 5 months in 1995 that you held the property. Amended tax return 2012 Under the mid-month convention, you count September as half a month. Amended tax return 2012 Your ACRS deduction for 1995 is $3,542 ($5,000 ÷ 8. Amended tax return 2012 5/12). Amended tax return 2012 Depreciation Recapture If you dispose of property depreciated under ACRS that is section 1245 recovery property, you will generally recognize gain or loss. Amended tax return 2012 Gain recognized on a disposition is ordinary income to the extent of prior depreciation deductions taken. Amended tax return 2012 This recapture rule applies to all personal property in the 3-year, 5-year, and 10-year classes. Amended tax return 2012 You recapture gain on manufactured homes and theme park structures in the 10-year class as section 1245 property. Amended tax return 2012 Section 1245 property generally includes all personal property. Amended tax return 2012 See Section 1245 property in chapter 4 of Publication 544 for more information. Amended tax return 2012 You treat dispositions of section 1250 real property on which you have a gain as section 1245 recovery property. Amended tax return 2012 You recognize gain on this property as ordinary income to the extent of prior depreciation deductions taken. Amended tax return 2012 Section 1250 property includes most real property. Amended tax return 2012 See Section 1250 property in chapter 4 of Publication 544 for more information. Amended tax return 2012 This rule applies to all section 1250 real property except the following property: Any 15-, 18-, or 19-year real property that is residential rental property. Amended tax return 2012 Any 15-, 18-, or 19-year real property that you elected to depreciate using the alternate ACRS method. Amended tax return 2012 Any 15-, 18-, or 19-year real property that is subsidized low-income housing. Amended tax return 2012 For these recapture rules, you treat the section 179 deduction and 50% of the investment credit that reduced your basis as depreciation. Amended tax return 2012 See Publication 544 for further discussion of dispositions of section 1245 and 1250 property. Amended tax return 2012 Prev  Up  Next   Home   More Online Publications