Hello and welcome to the session. This is Professor Hat and in this session, we're going to look at depreciation for tax purposes and cost recovery. Specifically, we will be focusing on the half-year convention. This topic is covered in the income tax course, the CPA exam regulation section, as well as the enrolled agent exam. Before we begin, I would like to remind my students that I would like to connect with them on both a personal and professional level. If you have a LinkedIn account, please connect with me. I post my lectures and other related news on LinkedIn. If you are a Facebook user, please like my Facebook page. You can also connect with me personally on Facebook. I also encourage you to subscribe to my YouTube channel, like my videos, share them, and put them in playlists. You can also email them to your classmates and friends if you think they would find them helpful. I have a Twitter account and a website where I host all my lecture materials organized by chapter and topic. Now let's dive into the topic of depreciation. I hope you are already familiar with the concept of depreciation because in order to take this financial income tax course or any introductory personal income tax course, you should have already covered financial accounting, which includes depreciation. So, what exactly is depreciation? It is not a decline in value, contrary to what some might think. Depreciation is the cost allocation or reclassification of an asset from an asset account to an expense account. Let me explain how it works from a matching perspective under GAAP. When you purchase an asset, let's say a vehicle for $10,000, that vehicle is recorded as an asset on the balance sheet. However, it does not become an expense right away. Instead,...
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Macrs recovery period table Form: What You Should Know
The revised rule does not affect the determination of the cost of depreciable property that is subject to GDS. The cost basis is the cost of the property immediately before and after the date a cost basis adjustment is made to recover the cost of the asset under the modified accelerated cost recovery system. If the taxpayer is entitled to a 25 percent depreciation allowance under the GDS method and the cost basis of the asset becomes less than 25 percent, the cost basis can be reduced to a lower percentage by depreciating the asset at a lower percentage for up to 40 years. If the taxpayer's cost basis increases above 25 percent, the entire amount of depreciation is amortized over the rest of the life of the asset. 2022 Publication 946 and Publication 549 (GDS and GDS-2) The taxpayer must compute the cost basis by using the procedures defined in the rules of the GDS and GDS-2 schedules. The table applies to all property, such as real and personal property, farm machinery, equipment of a similar type used in any trade or business, and real estate. It also applies to property that is placed in service after December 31, 2021.
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