New "mass assets" regulation.New Regs. Sec. 1.168(i)-1 allows taxpayers to pool similar assets into general asset accounts, which can be depreciated Depreciated may refer to:
Asset additions may be grouped into a single general asset account if the assets (1) have the same asset class (2) have the same applicable depreciation method and recovery period, (3) have the same applicable convention and (4) are placed in service in the same year (Regs. Sec. 1.168(i)-1c) (2)). Passenger automobiles for which depreciation is limited under Sec. 280F must be grouped into a separate asset account (Regs. Sec. 1.168(i)-i(c)(2)(D)). Typically, the general asset account group is terminated on disposition of the entire asset group or the last remaining asset.
A general asset account may not include an asset used in both a business (or for production of income) and a personal activity. The final regulations have specific rules for assets qualifying for credit under Sec. 47 or 48. Any basis increase on credit recapture recapture n. in income tax, the requirement that the taxpayer pay the amount of tax savings from past years due to accelerated depreciation or deferred capital gains upon sale of property. (See: income tax)
RECAPTURE, war. removes the asset from the mass asset account treatment. The amount of tax basis in the general asset account is net of any Sec. 179 expensed amounts.
Although general asset accounting treatment is advantageous because it simplifies recordkeeping, it may be disadvantageous dis·ad·van·ta·geous
dis·advan·ta due to the treatment of dispositions.
An asset retired from a general asset account is treated as having a zero basis for determining gain or loss on disposition. As such, no loss is recognized on disposal (until the entire general asset group is terminated)., Moreover, any amount realized “Amount Realized” is one of two variables in the formula used to compute gains and losses when determining gross income for tax purposes. The Amount Realized – Adjusted Basis tells the amount of Realized Gain (if positive) or Realized Loss (if negative). on a disposition is recognized as ordinary income, to the extent amounts received do not exceed unadjusted depreciable depreciable
Of, relating to, or being a long-term tangible asset that is subject to depreciation. basis plus expensed amounts under Sec. 179 and less previously recognized ordinary income. Amounts received above this limitation likely qualify for Sec. 1231 treatment.
Unlike the proposed mass asset depreciation regulation, the final regulation allows taxpayers to elect qualifying disposition treatment in certain instances, even though they do not terminate the entire general asset group. Qualifying dispositions include the cessation, termination, curtailment Curtailment
The act of contracting or reducing operations of a company in the hope of bringing it financial or operational stability. This management technique is often used when a company has grown too fast and is unable to effectively manage its operations. or disposition of a business, manufacturing or other income-producing process, operation, facility, plant or other unit (other than by transfer to a supply scrap, or similar account). The preamble A clause at the beginning of a constitution or statute explaining the reasons for its enactment and the objectives it seeks to attain.
Generally a preamble is a declaration by the legislature of the reasons for the passage of the statute, and it aids in the interpretation of to the new regulation refers to a genuine business contraction and not to sales of undivided interests undivided interest n. title to real property held by two or more persons without specifying the interests of each party by percentage or description of a portion of the real estate. (other than a sale of the taxpayer's entire interest in such assets)
Special rules apply t in certain nonrecognition transactions described in Sec. 168(i)(7)(b). If a disposition is a qualifying disposition, the taxpayer is permitted to recover any remaining basis in the disposed. assets. Gain or loss on qualified dispositions is calculated under Secs. 1245 and 1250.
A taxpayer electing to use general asset accounts must maintain records that (1) identify the assets included in each general asset account (e.g., "General" Asset Account #1, all 1995 additions in asset class 00.11 for Salt Lake City facility), (2) establish the unadjusted depreciable basis and depreciation reserve of the general asset account and (3) reflect the amount realized on dispositions from each general asset account. Recordkeeping practices should be consistently applied to general asset accounts.
Regs. Sec. 1.168(i)-l(f)(3) allows general asset account treatment for assets generating foreignsource income. If, however, the inclusion of these assets in a general asset account results in a substantial distortion of income, the Service can disregard the general asset account election and make reallocations of income or expense to clearly reflect income.
The new regulation also provides rules coordinating the general asset account rules with the rules of Temp. Regs. Sec. 1.861-9T(g)(3), relating to relating to relate prep → concernant
relating to relate prep → bezüglich +gen, mit Bezug auf +acc allocation and apportionment The process by which legislative seats are distributed among units entitled to representation; determination of the number of representatives that a state, county, or other subdivision may send to a legislative body. The U.S. of interest expense under the asset method. The regulation also provides rules for determining the source of income from the disposition of an asset in a general asset account.
The annual election to place assets in the general asset account is made by typing (or legibly leg·i·ble
1. Possible to read or decipher: legible handwriting.
2. Plainly discernible; apparent: legible weaknesses in character and disposition. printing) at the top of Form 4562, Depreciation and Amortization, "GENERAL" ASSET ACCOUNT ELECTION MADE UNDER SECTION 1.168(i)(4), or in the manner provided for on Form 4562 and its instructions (in accordance with Regs. Sec. 1.168(i)-1(k)(3)), and by maintaining records that identify the assets included in each general asset account, establish the unadjusted depreciable basis and depreciation reserve of the general asset account, and reflect the amount realized during the tax year on disposition from each general asset account. The taxpayer's recordkeeping practices should be consistently applied to the general asset accounts. Although the regulations do not explicitly require it, an additional statement should be attached to Form 4562, specifically identifying the property subject to the election. The election is also binding for computing alternative minimum taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. . The election must be made by each member of a consolidated or affiliated group, and at the entity level for partnerships and S corporations.
The election should not be considered an "all or nothing" election. The regulations were written to provide flexibility to the taxpayer. A taxpayer may include as many or as few assets as desired in general asset accounts in a given year. For example, a taxpayer may elect general asset account treatment on all five-year property, yet not elect general, asset account treatment for seven-year property. In addition, a taxpayer may elect general asset account treatment for a portion of five-year property in the same class and exclude the remaining additions even though they are identical in class. Although the regulations are intended to provide flexibility, a taxpayer could conceivably eliminate much of the simplicity provided by the election by creating too many general asset accounts.
Regs. Sec. 1.168(i)-1 is effective for property placed in service in tax years ending after Oct. 10, 1994. For depreciable assets placed in service after Dec. 31, 1986, in tax years ending before Oct. 11, 1994, the IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. allows any reasonable method that is consistently applied to the taxpayer's general asset accounts.
From Thomas A. Shanks
The shanks and tattlers are wading bird species in a number of genera characterised by a medium length bill and long, often brightly coloured legs. , J.D., and Richard A. Manson, CPA (Computer Press Association, Landing, NJ) An earlier membership organization founded in 1983 that promoted excellence in computer journalism. Its annual awards honored outstanding examples in print, broadcast and electronic media. The CPA disbanded in 2000. , Cleveland, Ohio "Cleveland" redirects here. For the Cleveland metropolitan area, see . For other uses, see Cleveland (disambiguation).
Cleveland is a city in the U.S. state of Ohio and the county seat of Cuyahoga County, the most populous county in the state. , and Steven R. Weisberg, CPA, Detroit, Mich.