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proper timing of an item, and is to be treated as a change
in method of accounting. [Sec. 1.446-1(e)(2)(ii)(b), Income
Tax Regs.]
Once a change in method of accounting is identified, the
procedures for securing the Commissioner’s consent are contained
in section 1.446-1(e)(3), Income Tax Regs. To secure such
consent, the taxpayer must “file an application on Form 3115 with
the Commissioner” or, alternatively, must comply with any
administrative procedures the Commissioner might prescribe for
permitting certain types of changes in accounting method. Id.
B. Depreciation Deductions
Depreciation deductions are primarily governed by sections
167 and 168. In relevant part, section 167 provides:
SEC. 167. DEPRECIATION.
(a) General Rule.--There shall be allowed as a
depreciation deduction a reasonable allowance for the
exhaustion, wear and tear (including a reasonable
allowance for obsolescence)--
(1) of property used in the trade or
business, or
(2) of property held for the production of
income.
(b) Cross Reference.--
For determination of depreciation deduction in
case of property to which section 168 applies, see
section 168.
Section 168, in turn, describes a specific depreciation
system for tangible property. Section 168 was added to the
Internal Revenue Code by the Economic Recovery Tax Act of 1981,
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