- 6 - OPINION I. General Rules A. Depreciation Deductions Depreciation deductions are primarily governed by sections 167 and 168. Section 168 describes a specific depreciation system for tangible property. As part of the Tax Reform Act of 1986, Pub. L. 99-514, secs. 201, 203, 100 Stat. 2122, 2143, Congress replaced the accelerated cost recovery system with MACRS, effective generally for property placed in service after December 31, 1986, and section 168 was amended accordingly. As such, depreciation deductions for tangible property placed in service after 1986 are generally determined under section 168. Section 168 prescribes two systems for determining depreciation deductions: (1) The general depreciation system in section 168(a), and (2) the alternative depreciation system in section 168(g). Taxpayers are required to use the alternative depreciation system for “any tangible property which during the taxable year is used predominantly outside the United States”. Sec. 168(g)(1)(A). B. Adjustments Pursuant to Section 481 Section 481(a) provides for adjustments required by changes in a taxpayer’s method of accounting. If a taxpayer has changed his method of accounting, the taxpayer must take “into account those adjustments which are determined to be necessary solely byPage: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 Next
Last modified: May 25, 2011