Download e-book for iPad: Brilliant Fun 1 Teacher's Book by Charlotte Covill, Jeanne Perrett

By Charlotte Covill, Jeanne Perrett

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Also attach to the form— either on a plain sheet of paper or on Schedule E of Form T—a statement giving the amount of the expenditure, the nature of the expenditure, the date incurred, the type of timber being grown, and the purpose for which the timber is being grown. A separate statement must be included for each property for which reforestation expenditures are being amortized. If the trees are disposed of within 10 years, all of the taxes saved by amortization deductions previously claimed with respect to those trees are subject to recapture as ordinary income (to the extent of any gain realized from the disposal).

Original and Adjusted Basis When a capital asset is acquired, the amount to be entered into the account at that time for that particular asset depends on how the property was obtained, as discussed in the following paragraphs. This amount is called the original basis of the acquired property. The original basis may change as capital improvements are made to the asset, or as allowances for depletion, amortization, or depreciation are deducted. Costs incurred for capital improvements will increase the basis; allowances for depletion, amortization, and depreciation will decrease it.

Under the mid-month convention, property is assumed to be placed in service or disposed of at the midpoint of the month. • Depreciation method is the specific procedure used to calculate your depreciation deduction. There are five depreciation methods under MACRS: (1) the 200 percent declining balance method over the GDS recovery period, (2) the 150 percent declining balance method over the GDS recovery period, (3) the straight line method over the GDS recovery period, (4) the 150 percent declining balance method over the applicable ADS recovery period (for certain property placed in service before 1999), and (5) the straight line method over the applicable ADS recovery period.

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