TAX-FREE EXCHANGES COMPLICATE DEPRECIATION CALCULATIONS

The provisions allowing a carryover of tax attributes in like-kind exchanges of property and involuntary conversions have sometimes yielded results more favorable to the taxpayer than those intended by Congress. In an attempt to ameliorate such unintended results, the IRS issued Notice 2000-4 in Jan...

Full description

Saved in:
Bibliographic Details
Published inPractical Tax Strategies Vol. 74; no. 1; p. 4
Main Authors Brown, William P, Hume, Evelyn C
Format Trade Publication Article
LanguageEnglish
Published Boston Thomson Reuters (Tax & Accounting) Inc 01.01.2005
Subjects
Accelerated cost recovery system
Carryover
Conventions
Depreciation methods
Internal Revenue Code
Involuntary conversions
Like kind exchange
Modified accelerated cost recovery system
Restaurants
Section 179
Service stations
Tax regulations
Taxpayers
TD 9115
United States > US
Online AccessGet full text

Cover

More Information
Summary:The provisions allowing a carryover of tax attributes in like-kind exchanges of property and involuntary conversions have sometimes yielded results more favorable to the taxpayer than those intended by Congress. In an attempt to ameliorate such unintended results, the IRS issued Notice 2000-4 in January 2000 providing that carryover basis in replacement property placed in service after January 3, 2000, would be depreciated over the remaining recovery period of the relinquished property and using the same depreciation method and convention as was used for the relinquished property. The shortcoming of the provisions of Notice 2000-4 is its inability to address the myriad "special cases" that occur in practice. On February 27, 2004, the IRS issued temporary and proposed regulations (TD 9115) on depreciation of assets depreciated under the modified accelerated cost recovery system (MACRS) rules of section 168 and acquired in a like-kind exchange subject to the provisions of section 1031 or in an involuntary conversion under section 1033.
ISSN:1523-6250