- 6 -
167(a)(1). For tangible property placed in service after
December 31, 1986, such deduction is computed under MACRS. Sec.
168(a); Tax Reform Act of 1986, Pub. L. 99-514, secs. 201, 203,
100 Stat. 2085, 2122, 2143. The application of MACRS is
mandatory: “Except as otherwise provided in this section, the
depreciation deduction provided by section 167(a) for any
tangible property shall be determined using (1) the applicable
depreciation method, (2) the applicable recovery period, and (3)
the applicable convention”. Sec. 168(a)(emphasis added).
Petitioner, therefore, must use MACRS to depreciate its equipment
unless an exception applies.
Section 168(f) provides certain exceptions to the otherwise
mandatory provisions of section 168(a). Specifically, property
may be excluded from using MACRS if:
(A) the taxpayer elects to exclude such property from
the application of this section, and
(B) for the 1st taxable year for which a depreciation
deduction would be allowable with respect to such
property in the hands of the taxpayer, the property is
properly depreciated under the unit-of-production
method or any method of depreciation not expressed in a
term of years * * *.
Sec. 168(f)(1).
Respondent claims that petitioner failed to elect out of
MACRS on its original returns pursuant to section 168(f)(1)(A).
Further, on this point, respondent argues that petitioner did not
make the election timely because petitioner made the election on
amended returns after the audit, the issuance of the deficiency
Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011