Sec+168+Accelerated+Cost+Recovery+System

=Depreciation= toc Depreciation is treated as an annual operating expense; thus allowed as a deduction each year for the total deprecation. – it is a cost spreading device over a period. Example of Depreciation

Prerequisite for deduction: §167(a) and §168(a) restrict the depreciation deduction to either: 1) Property used in a trade or business or 2) property held for the production of income.

2) 150% in certain cases:
A) 15 or 20 year properties B) Farming Property (as defined in 263A(3)(4))

3) Straight Line Method
A) Nonresidential Real Property B) Residential Rental Property C) Railroad Grading or Tunnel Bore D) Owner may elect under Paragraph 5 E) Property described in Subsection (e)(3)(D)(ii)

II) Recovery Period
(c) describes the recovery period (Page 183)