Chapter 10 Depreciation, Cost Recovery, Depletion and Amortization
Chapter 10 • Depreciation, Cost Recovery, Depletion and Amortization
Learning Objectives Classify property and calculate depreciation under the pre-ACRS rules Classify property and calculate cost recovery under the ACRs rules Classify property and calculate cost recovery under the MACRS rules
Learning Objectives • Classify property and calculate depreciation under the pre-ACRS rules • Classify property and calculate cost recovery under the ACRS rules • Classify property and calculate cost recovery under the MACRS rules
Learning Objectives Calculate amortization for intangible assets and understand the difference between amortizable and non -amortizable assets Apply cost and percentage methods and understand the treatment of intangible drilling costs
Learning Objectives • Calculate amortization for intangible assets and understand the difference between amortizable and non-amortizable assets • Apply cost and percentage methods and understand the treatment of intangible drilling costs
Introduction Allows taxpayers to deduct a reasonable allowance for the exhaustion, wear and tear, and obsolescence Taxpayers must use specific depreciation methods depending on when an asset is placed into service
Introduction • Allows taxpayers to deduct a reasonable allowance for the exhaustion, wear and tear, and obsolescence. • Taxpayers must use specific depreciation methods depending on when an asset is placed into service
Depreciation and Cost Recovery Property placed into service prior to 1981 Property placed into after December 30, 1980 and before January 1, 1987 Property placed into service after December 31,1986
Depreciation and Cost Recovery • Property placed into service prior to 1981 • Property placed into after December 30, 1980 and before January 1, 1987 • Property placed into service after December 31, 1986