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Download tax forms 2011 Accelerated Cost Recovery System (ACRS) Table of Contents Topics - This chapter discusses: Useful Items - You may want to see: ACRS Defined What Can and Cannot Be Depreciated Under ACRSRecovery Property Nonrecovery Property How To Figure the DeductionUnadjusted Basis Classes of Recovery Property Recovery Periods Alternate ACRS Method (Modified Straight Line Method) ACRS Deduction in Short Tax Year DispositionsEarly dispositions of ACRS property other than 15-, 18-, or 19-year real property. Download tax forms 2011 Dispositions — mass asset accounts. Download tax forms 2011 Early dispositions — 15-year real property. Download tax forms 2011 Early dispositions — 18- and 19-year real property. Download tax forms 2011 Depreciation Recapture Topics - This chapter discusses: The definition of ACRS What can and cannot be depreciated under ACRS How to figure the deduction Dispositions Useful Items - You may want to see: Publication 544 Sales and Other Dispositions of Assets 551 Basis of Assets 583 Starting a Business and Keeping Records Form (and Instructions) 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization The Accelerated Cost Recovery System (ACRS) applies to property first used before 1987. Download tax forms 2011 It is the name given to tax rules for getting back (recovering) through depreciation deductions the cost of property used in a trade or business or to produce income. Download tax forms 2011 These rules are mandatory and generally apply to tangible property placed in service after 1980 and before 1987. Download tax forms 2011 If you placed property in service during this period, you must continue to figure your depreciation under ACRS. Download tax forms 2011 If you used listed property placed in service after June 18, 1984, less than 50% for business in 1995, see Predominant Use Test in chapter 3. Download tax forms 2011 Listed property includes cars, other means of transportation, and certain computers. Download tax forms 2011 Any additions or improvements placed in service after 1986, including any components of a building (such as plumbing, wiring, storm windows, etc. Download tax forms 2011 ), are depreciated using MACRS, discussed in chapter 3 of Publication 946. Download tax forms 2011 It does not matter that the underlying property is depreciated under ACRS or one of the other methods. Download tax forms 2011 ACRS Defined ACRS consists of accelerated depreciation methods and an alternate ACRS method that could have been elected. Download tax forms 2011 The alternate ACRS method used a recovery percentage based on a modified straight line method. Download tax forms 2011 The law prescribes fixed percentages to be uses for each class of property. Download tax forms 2011 Property depreciable under ACRS is called recovery property. Download tax forms 2011 The recovery class of property determines the recovery period. Download tax forms 2011 Generally, the class life of property places it in a 3-year, 5-year, 10-year, 15-year, 18-year, or 19-year recovery class. Download tax forms 2011 Under ACRS, the prescribed percentages are used to recover the unadjusted basis of recovery property. Download tax forms 2011 To figure a depreciation deduction, you multiply the prescribed percentage for the recovery class by the unadjusted basis of the recovery property. Download tax forms 2011 You must continue to figure your depreciation under ACRS for property placed in service after 1980 and before 1987. Download tax forms 2011 For property you placed in service after 1986, you must use MACRS, discussed in chapter 3 of Publication 946. Download tax forms 2011 What Can and Cannot Be Depreciated Under ACRS ACRS applies to most depreciable tangible property placed in service after 1980 and before 1987. Download tax forms 2011 It includes new or used and real or personal property. Download tax forms 2011 The property must be for use in a trade or business or for the production of income. Download tax forms 2011 Property you acquired before 1981 or after 1986 is not ACRS recovery property. Download tax forms 2011 For information on depreciating property acquired before 1981, see chapter 2. Download tax forms 2011 For information on depreciating property acquired after 1986, see chapter 3 of Publication 946. Download tax forms 2011 Recovery Property Recovery property under ACRS is tangible depreciable property placed in service after 1980 and before 1987. Download tax forms 2011 It generally includes new or used property that you acquired after 1980 and before 1987 for use in your trade or business or for the production of income. Download tax forms 2011 Nonrecovery Property You cannot use ACRS for property you placed in service before 1981 or after 1986. Download tax forms 2011 Nonrecovery property also includes: Intangible property, Property you elected to exclude from ACRS that is properly depreciated under a method of depreciation that is not based on a term of years, Certain public utility property, and Certain property acquired and excluded from ACRS because of the antichurning rules. Download tax forms 2011 Intangible property. Download tax forms 2011   Intangible property is not depreciated under ACRS. Download tax forms 2011 Property depreciated under methods not expressed in a term of years. Download tax forms 2011   Certain property depreciated under a method not expressed in a term of years is not depreciated under ACRS. Download tax forms 2011 This included any property: If you made an irrevocable election to exclude such property, and In the first year that you could have claimed depreciation, you properly used the unit-of-production method or any method of depreciation not expressed in a term of years (not including the retirement-replacement-betterment method). Download tax forms 2011 Public utility property. Download tax forms 2011   Public utility property for which the taxpayer does not use a normalization method of accounting is excluded from ACRS and is subject to depreciation under a special rule. Download tax forms 2011 Additions or improvements to ACRS property after 1986. Download tax forms 2011   Any additions or improvements placed in service after 1986, including any components of a building (plumbing, wiring, storm windows, etc. Download tax forms 2011 ) are depreciated using MACRS, discussed in chapter 3 of Publication 946. Download tax forms 2011 It does not matter that the underlying property is depreciated under ACRS or one of the other methods. Download tax forms 2011 How To Figure the Deduction After you determine that your property can be depreciated under ACRS, you are ready to figure your deduction. Download tax forms 2011 Because the conventions are built into the percentage table rates, you only need to know the following: The unadjusted basis of your recovery property, The classes of recovery property, The recovery periods, and Whether to use the prescribed percentages based on accelerated methods or percentages based on using the alternate ACRS method. Download tax forms 2011 Unadjusted Basis To figure your ACRS deduction, you multiply the unadjusted basis in your recovery property by its applicable percentage for the year. Download tax forms 2011 Unadjusted basis is the same amount you would use to figure gain on a sale, but it is figured without taking into account any depreciation taken in earlier years. Download tax forms 2011 However, reduce your original basis by the amount of amortization taken on the property and by any section 179 deduction claimed as discussed in chapter 2 of Publication 946. Download tax forms 2011 If you buy property, your unadjusted basis is usually its cost minus any amortized amount and minus any section 179 deduction elected. Download tax forms 2011 If you acquire property in some other way, such as by inheriting it, getting it as a gift, or building it yourself, you figure your unadjusted basis under other rules. Download tax forms 2011 See Publication 551. Download tax forms 2011 Classes of Recovery Property All recovery property under ACRS is in one of the following classes. Download tax forms 2011 The class for your property was determined when you began to depreciate it. Download tax forms 2011 3-Year Property 3-year property includes automobiles, light-duty trucks (actual unloaded weight less than 13,000 pounds), and tractor units for use over-the-road. Download tax forms 2011 Race horses over 2 years old when placed in service are 3-year property. Download tax forms 2011 Any other horses over 12 years old when you placed them in service are also included in the 3-year property class. Download tax forms 2011 The ACRS percentages for 3-year recovery property are: Recovery Period Percentage 1st year 25% 2nd year 38% 3rd year 37% If you used the percentages above to depreciate your 3-year recovery property, your property, except for certain passenger automobiles, is fully depreciated. Download tax forms 2011 You cannot claim depreciation for this property after 1988. Download tax forms 2011 5-Year Property 5-year property includes computers, copiers, and equipment, such as office furniture and fixtures. Download tax forms 2011 It also includes single purpose agricultural or horticultural structures and petroleum storage facilities (other than buildings and their structural components). Download tax forms 2011 The ACRS percentages for 5-year recovery property are: Recovery period Percentage 1st year 15% 2nd year 22% 3rd through 5th year 21% If you used the percentages above to depreciate your 5-year recovery property, it is fully depreciated. Download tax forms 2011 You cannot claim depreciation for this property after 1990. Download tax forms 2011 10-Year Property 10-year property includes certain real property such as theme-park structures and certain public utility property. Download tax forms 2011 Manufactured homes (including mobile homes) and railroad tank cars are also 10-year property. Download tax forms 2011 You do not treat a building, and its structural components, as 10-year property by reason of a change in use after you placed the property in service. Download tax forms 2011 For example, a building (15-year real property) that was placed in service in 1981 and was converted to a theme-park structure in 1986 remains 15-year real property. Download tax forms 2011 The ACRS percentages for 10-year recovery property are: Recovery Period Percentage 1st year 8% 2nd year 14% 3rd year 12% 4th through 6th year 10% 7th through 10th year 9% If you used the percentages above, you cannot claim depreciation for this property after 1995. Download tax forms 2011 Example. Download tax forms 2011 On April 21, 1986, you bought and placed in service a new mobile home for $26,000 to be used as rental property. Download tax forms 2011 You paid $10,000 cash and signed a note for $16,000 giving you an unadjusted basis of $26,000. Download tax forms 2011 On June 8, 1986, you bought and placed in service a used mobile home for use as rental property at a total cost of $11,500. Download tax forms 2011 The total unadjusted basis of your 10-year recovery property placed in service in 1986 was $37,500 ($26,000 + $11,500). Download tax forms 2011 Your ACRS deduction was $3,000 (8% × $37,500). Download tax forms 2011 In 1987, your ACRS deduction was $5,250 (14% × $37,500). Download tax forms 2011 In 1988, your ACRS deduction was $4,500 (12% × $37,500). Download tax forms 2011 In 1989, 1990, and 1991, your ACRS deduction was $3,750 (10% × $37,500). Download tax forms 2011 In 1992, 1993, 1994, and 1995 your deduction for each year is $3,375 (9% × $37,500). Download tax forms 2011 15-Year Real Property 15-year real property is real property that is recovery property placed in service before March 16, 1984. Download tax forms 2011 It includes all real property, such as buildings, other than that designated as 5-year or 10-year property. Download tax forms 2011 Unlike the 3-, 5-, or 10-year classes of property, the percentages for 15-year real property depend on when you placed the property in service during your tax year. Download tax forms 2011 You could group 15-year real property by month and year placed in service. Download tax forms 2011 In Table 1, at the end of this publication in the Appendix, find the month in your tax year that you placed the property in service in your trade or business or for the production of income. Download tax forms 2011 You use the percentages listed under that month for each year of the recovery period to determine your depreciation deduction each year. Download tax forms 2011 Example. Download tax forms 2011 On March 5, 1984, you placed an apartment building in service in your business. Download tax forms 2011 It is 15-year real property. Download tax forms 2011 After subtracting the value of the land, your unadjusted basis in the building is $250,000. Download tax forms 2011 You use the calendar year as your tax year. Download tax forms 2011 March is the third month of your tax year. Download tax forms 2011 Your ACRS deduction for 1984 was $25,000 (10% × $250,000). Download tax forms 2011 For 1985, the percentage for the third month of the second year of the recovery period is 11%. Download tax forms 2011 Your deduction was $27,500 (11% × $250,000). Download tax forms 2011 For the third, fourth, and fifth years of the recovery period (1986, 1987, and 1988), the percentages are 9%, 8%, and 7%. Download tax forms 2011 For 1989 through 1992, the percentage for the third month is 6%. Download tax forms 2011 Your deduction each year is $15,000 (6% × $250,000). Download tax forms 2011 For 1993, 1994, and 1995, the percentage for the third month is 5%. Download tax forms 2011 Your depreciation deduction is $12,500 (5% × $250,000) for 1993, 1994, and 1995. Download tax forms 2011 Low-Income Housing Low-income housing that was assigned a 15-year recovery period under ACRS includes the following types of property: Federally assisted housing projects where the mortgage is insured under section 221(d)(3) or 236 of the National Housing Act, or housing financed or assisted by direct loan or tax abatement under similar provisions of state or local laws. Download tax forms 2011 Low-income rental housing for which a depreciation deduction for rehabilitation expenditures is allowed. Download tax forms 2011 Low-income rental housing held for occupancy by families or individuals eligible to receive subsidies under section 8 of the United States Housing Act of 1937, as amended, or under the provisions of state or local laws that authorize similar subsidies for low-income families. Download tax forms 2011 Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. Download tax forms 2011 The ACRS percentages for low-income housing real property, like the regular 15-year real property percentages, depend on when you placed the property in service. Download tax forms 2011 Find the month in your tax year in Table 2 or 3 at the end of this publication in the Appendix that you first placed the property in service as rental housing. Download tax forms 2011 Use the percentages listed under that month for each year of the recovery period. Download tax forms 2011 Table 2 shows percentages for low-income housing placed in service before May 9, 1985. Download tax forms 2011 Table 3 shows percentages for low-income housing placed in service after May 8, 1985, and before 1987. Download tax forms 2011 Example. Download tax forms 2011 In May 1986, you acquired and placed in service a house that qualified as low-income rental housing under item 3) of the above listing. Download tax forms 2011 You use the calendar year as your tax year. Download tax forms 2011 You use Table C–3 because the property was placed in service after May 8, 1985. Download tax forms 2011 Your unadjusted basis for the property, not including the land, was $59,000. Download tax forms 2011 Your deduction for 1986 through 2001 is shown in the following table. Download tax forms 2011 Year Rate Deduction 1986 8. Download tax forms 2011 9% $5,251 1987 12. Download tax forms 2011 1% 7,139 1988 10. Download tax forms 2011 5% 6,195 1989 9. Download tax forms 2011 1% 5,369 1990 7. Download tax forms 2011 9% 4,661 1991 6. Download tax forms 2011 9% 4,071 1992 5. Download tax forms 2011 9% 3,481 1993 5. Download tax forms 2011 2% 3,068 1994 4. Download tax forms 2011 6% 2,714 1995 4. Download tax forms 2011 6% 2,714 1996 4. Download tax forms 2011 6% 2,714 1997 4. Download tax forms 2011 6% 2,714 1998 4. Download tax forms 2011 6% 2,714 1999 4. Download tax forms 2011 5% 2,655 2000 4. Download tax forms 2011 5% 2,655 2001 1. Download tax forms 2011 5% 885 18-Year Real Property 18-year real property is real property that is recovery property placed in service after March 15, 1984, and before May 9, 1985. Download tax forms 2011 It includes real property, such as buildings, other than that designated as 5-year, 10-year, 15-year real property, or low-income housing. Download tax forms 2011 The ACRS percentages for 18-year real property depend on when you placed the property in service in your trade or business or for the production of income during your tax year. Download tax forms 2011 There are also tables for 18-year real property in the Appendix. Download tax forms 2011 Table 4 shows the percentages for 18-year real property you placed in service after June 22, 1984, and before May 9, 1985. Download tax forms 2011 Table 5 is for 18-year real property placed in service after March 15, 1984, and before June 23, 1984. Download tax forms 2011 Find the month in your tax year that you placed the property in service in a trade or business or for the production of income. Download tax forms 2011 Use the percentages listed under that month for each year of the recovery period. Download tax forms 2011 Example. Download tax forms 2011 On April 28, 1985, you bought and placed in service a rental house. Download tax forms 2011 The house, not including the land, cost $95,000. Download tax forms 2011 This is your unadjusted basis for the house. Download tax forms 2011 You use the calendar year as your tax year. Download tax forms 2011 Because the house was placed in service after June 22, 1984, and before May 9, 1985, it is 18-year real property. Download tax forms 2011 You use Table 4 to figure your deduction for the house. Download tax forms 2011 April is the fourth month of your tax year. Download tax forms 2011 Your deduction for 1985 through 2003 is shown in the following table. Download tax forms 2011 Year Rate Deduction 1985 7. Download tax forms 2011 0% $6,650 1986 9. Download tax forms 2011 0% 8,550 1987 8. Download tax forms 2011 0% 7,600 1988 7. Download tax forms 2011 0% 6,650 1989 7. Download tax forms 2011 0% 6,650 1990 6. Download tax forms 2011 0% 5,700 1991 5. Download tax forms 2011 0% 4,750 1992 5. Download tax forms 2011 0% 4,750 1993 5. Download tax forms 2011 0% 4,750 1994 5. Download tax forms 2011 0% 4,750 1995 5. Download tax forms 2011 0% 4,750 1996 5. Download tax forms 2011 0% 4,750 1997 5. Download tax forms 2011 0% 4,750 1998 4. Download tax forms 2011 0% 3,800 1999 4. Download tax forms 2011 0% 3,800 2000 4. Download tax forms 2011 0% 3,800 2001 4. Download tax forms 2011 0% 3,800 2002 4. Download tax forms 2011 0% 3,800 2003 1. Download tax forms 2011 0% 950 19-Year Real Property 19-year real property is real property that is recovery property placed in service after May 8, 1985, and before 1987. Download tax forms 2011 It includes all real property, other than that designated as 5-year, 10-year, 15-year, or 18-year real property, or low-income housing. Download tax forms 2011 The ACRS percentages for 19-year real property depend on when you placed the property in service in a trade or business or for the production of income during your tax year. Download tax forms 2011 Table 6 shows the percentages for 19-year real property. Download tax forms 2011 You find the month in your tax year that you placed the property in service. Download tax forms 2011 You use the percentages listed under that month for each year of the recovery period. Download tax forms 2011 Recovery Periods Each item of recovery property is assigned to a class of property. Download tax forms 2011 The classes of recovery property establish the recovery periods over which the unadjusted basis of items in a class is recovered. Download tax forms 2011 The classes of property are: 3-Year property 5-Year property 10-Year property 15-Year real property Low-income housing 18-Year real property 19-Year real property Alternate ACRS Method (Modified Straight Line Method) ACRS provides an alternate ACRS method that could be elected. Download tax forms 2011 This alternate ACRS method uses a recovery percentage based on a modified straight line method. Download tax forms 2011 This alternate ACRS method generally uses percentages other than those from the tables. Download tax forms 2011 If you elected the alternate ACRS method, you determine the recovery period by using the following schedule. Download tax forms 2011 This schedule is for other than 18- and 19-year real property and low-income housing: In the case of: You could have elected a recovery period of: 3-year property 3, 5, or 12 years 5-year property 5, 12, or 25 years 15-year real property 15, 35, or 45 years Percentages. Download tax forms 2011   The straight-line percentages for the alternate ACRS method are: Recovery Period Percentage 5 years 20. Download tax forms 2011 00% 10 years 10. Download tax forms 2011 00% 12 years 8. Download tax forms 2011 333% 15 years 6. Download tax forms 2011 667% 25 years 4. Download tax forms 2011 00% 35 years 2. Download tax forms 2011 857%   You apply the percentage to the unadjusted basis(defined earlier) of the property to figure your ACRS deduction. Download tax forms 2011 There are tables for 18- and 19-year real property later in this publication in the Appendix. Download tax forms 2011 For 15-year real property, see 15-year real property, later. Download tax forms 2011 3-, 5-, and 10-year property. Download tax forms 2011   If you elected to use an alternate recovery percentage, you have to use the same recovery percentage for all property in that class that you placed in service in that tax year. Download tax forms 2011 This applies throughout the recovery period you selected. Download tax forms 2011 Half-year convention. Download tax forms 2011   If you elected the alternate method, only a half-year of depreciation was deducted for the year you placed the property in service. Download tax forms 2011 This applied regardless of when in the tax year you placed the property in service. Download tax forms 2011 For each of the remaining years in the recovery period, you take a full year's deduction. Download tax forms 2011 If you hold the property for the entire recovery period, a half-year of depreciation is allowable for the year following the end of the recovery period. Download tax forms 2011 Example. Download tax forms 2011 You operate a small upholstery business. Download tax forms 2011 On March 19, 1986, you bought and placed in service a $13,000 light-duty panel truck to be used in your business and a $500 electric saw. Download tax forms 2011 You elected to use the alternate ACRS method. Download tax forms 2011 You did not elect to take a section 179 deduction. Download tax forms 2011 You decided to recover the cost of the truck, which is 3-year recovery property, over 5 years. Download tax forms 2011 The saw is 5-year property, but you decided to recover its cost over 12 years. Download tax forms 2011 For 1986, your ACRS deduction reflected the half-year convention. Download tax forms 2011 In the first year, you deducted half of the amount determined for a full year. Download tax forms 2011 Your ACRS deduction for 1986 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. Download tax forms 2011 00     Electric saw   12 years straight line = 8. Download tax forms 2011 333% 8. Download tax forms 2011 333% ÷ $500 = $41. Download tax forms 2011 67 Half-year convention -½ of $41. Download tax forms 2011 67= 20. Download tax forms 2011 84 Total ACRS deduction for 1986 $1,320. Download tax forms 2011 84       You take a full year of depreciation for both the truck and the saw for the years 1987 through 1990. Download tax forms 2011 Your ACRS deduction for each of those years is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600     Electric saw     12 years straight line = 8. Download tax forms 2011 333% 8. Download tax forms 2011 333% ÷ $500 = $41. Download tax forms 2011 67 Total annual ACRS deduction for 1987 through 1990 $2,641. Download tax forms 2011 67       In 1991, you take a half-year of depreciation for the truck and a full year of depreciation for the saw. Download tax forms 2011 Your ACRS deduction for 1991 is as follows: Light-duty truck   5 years straight line = 20% 20% ÷ $13,000 = $2,600 Half-year convention -½ of $2,600= $1,300. Download tax forms 2011 00     Electric saw   12 years straight line = 8. Download tax forms 2011 333% 8. Download tax forms 2011 333% ÷ $500 = $41. Download tax forms 2011 67 Total ACRS deduction for 1991 $1,341. Download tax forms 2011 67       The truck is fully depreciated after 1991. Download tax forms 2011 You take a full year of depreciation for the saw for the years 1992 through 1997. Download tax forms 2011 Your ACRS deduction for each of those years is as follows: Electric saw     12 years straight line = 8. Download tax forms 2011 333% 8. Download tax forms 2011 333% ÷ $500 = $41. Download tax forms 2011 67 Total annual ACRS deduction for 1992 through 1997 $41. Download tax forms 2011 67       You take a half-year of depreciation for the saw for 1998. Download tax forms 2011 Your ACRS deduction for 1998 is as follows: Electric saw   12 years straight line = 8. Download tax forms 2011 333% 8. Download tax forms 2011 333% ÷ $500 = $41. Download tax forms 2011 67 Half-year convention -½ of $41. Download tax forms 2011 67= 20. Download tax forms 2011 84 Total ACRS deduction for 1998 $20. Download tax forms 2011 84       The saw is fully depreciated after 1998. Download tax forms 2011 15-year real property. Download tax forms 2011   Under ACRS, you could also elect to use the alternate ACRS method for 15-year real property. Download tax forms 2011 The alternate ACRS method allows you to depreciate your 15-year real property using the straight line ACRS method over the alternate recovery periods of 15, 35, or 45 years. Download tax forms 2011 If you selected a 15-year recovery period, you use the percentage (6. Download tax forms 2011 667%) from the schedule above. Download tax forms 2011 You prorate this percentage for the number of months the property was in service in the first year. Download tax forms 2011 If you selected a 35- or 45-year recovery period, you use either Table 11 or 15. Download tax forms 2011 Alternate periods for 18-year real property. Download tax forms 2011   For 18-year real property, the alternate recovery periods are 18, 35, or 45 years. Download tax forms 2011 The percentages for 18-year real property under the alternate method are in Tables 7, 8, 10, 11, 14, and 15 in the Appendix. Download tax forms 2011 There are two tables for each alternate recovery period. Download tax forms 2011 One table shows the percentage for property placed in service after June 22, 1984. Download tax forms 2011 The other table has the percentages for property placed in service after March 15, 1984, and before June 23, 1984. Download tax forms 2011 Alternate periods for 19-year real property. Download tax forms 2011   For 19-year real property, the alternate recovery periods are 19, 35, or 45 years. Download tax forms 2011 If you selected a 19-year recovery period, use Table 9 to determine your deduction. Download tax forms 2011 If you select a 35- or 45-year recovery period, use either Table 13 or 14. Download tax forms 2011 Example. Download tax forms 2011 You placed in service an apartment building on August 3, 1986. Download tax forms 2011 The building is 19-year real property. Download tax forms 2011 The sales contract allocated $300,000 to the building and $100,000 to the land. Download tax forms 2011 You use the calendar year as your tax year. Download tax forms 2011 You chose the alternate ACRS method over a recovery period of 35 years. Download tax forms 2011 For 1986, you figure your ACRS deduction usingTable 13. Download tax forms 2011 August is the eighth month of your tax year. Download tax forms 2011 The percentage from Table 13 for the eighth month is 1. Download tax forms 2011 1%. Download tax forms 2011 Your deduction was $3,300 ($300,000 ÷ 1. Download tax forms 2011 1%). Download tax forms 2011 The deduction rate from ACRS Table 13 for years 2 through 20 is 2. Download tax forms 2011 9% so that your deduction in 1987 through 2005 is $8,700 ($300,000 ÷ 2. Download tax forms 2011 9%). Download tax forms 2011 Alternate periods for low-income housing. Download tax forms 2011   For low-income housing, the alternate recovery periods are 15, 35, or 45 years. Download tax forms 2011 If you selected a 15-year period for this property, use 6. Download tax forms 2011 667% as the percentage. Download tax forms 2011 If you selected a 35- or 45-year period, use either Table 11, 12, or 15. Download tax forms 2011 Election. Download tax forms 2011   You had to make the election to use the alternate ACRS method by the return due date (including extensions) for the tax year you placed the property in service. Download tax forms 2011 Revocation of election. Download tax forms 2011   Your election to use an alternate ACRS method, once made, can be changed only with the consent of the Commissioner. Download tax forms 2011 The Commissioner grants consent only in extraordinary circumstances. Download tax forms 2011 Any request for a revocation will be considered a request for a ruling. Download tax forms 2011 ACRS Deduction in Short Tax Year For a tax year that is less than 12 months, the ACRS deduction is prorated on a 12-month basis. Download tax forms 2011 Figure the amount of the ACRS deduction for a short tax year as follows: First, you figure the ACRS deduction for a full year. Download tax forms 2011 You figure this by multiplying the unadjusted basis by the recovery percentage. Download tax forms 2011 You then multiply the ACRS deduction determined for a full tax year by a fraction. Download tax forms 2011 The numerator (top number) of the fraction is the number of months in the short tax year and the denominator (bottom number) is 12. Download tax forms 2011 For example, a corporation placed in service in June 1986 an item of 3-year property with an unadjusted basis of $10,000. Download tax forms 2011 The corporation files a tax return, because of a change in its accounting period, for the 6-month short tax year ending June 30, 1986. Download tax forms 2011 The full year's ACRS deduction for this item is $2,500 ($10,000 ÷ 25%), the first year percentage from the 3-year table. Download tax forms 2011 The ACRS deduction for the short tax year is $1,250 ($2,500 ÷ 6/12). Download tax forms 2011 You use the full ACRS percentages during the remaining years of the recovery period. Download tax forms 2011 For the first tax year after the recovery period, the unrecovered basis will be deductible. Download tax forms 2011 Exception. Download tax forms 2011   For the tax year in which you placed 15-, 18-, or 19-year real property in service or in the tax year you dispose of it, you compute the ACRS deduction for the number of months that the property is in service during that tax year. Download tax forms 2011 You compute the number of months using either a full month or mid-month convention. Download tax forms 2011 This is true regardless of the number of months in the tax year and the recovery period and method used. Download tax forms 2011 Dispositions A disposition is the permanent withdrawal of property from use in your trade or business or in the production of income. Download tax forms 2011 You can make a withdrawal by sale, exchange, retirement, abandonment, or destruction. Download tax forms 2011 You generally recognize gain or loss on the disposition of an asset by sale. Download tax forms 2011 However, nonrecognition rules can allow you to postpone some gain. Download tax forms 2011 See Publication 544. Download tax forms 2011 If you physically abandon property, you can deduct as a loss the adjusted basis of the asset at the time of its abandonment. Download tax forms 2011 Your intent must be to discard the asset so that you will not use it again or retrieve it for sale, exchange, or other disposition. Download tax forms 2011 Early dispositions. Download tax forms 2011   The disposal of an asset before the end of its specified recovery period, is referred to as an early disposition. Download tax forms 2011 When an early disposition occurs, the depreciation deduction in the year of disposition depends on the class of property involved. Download tax forms 2011 Early dispositions of ACRS property other than 15-, 18-, or 19-year real property. Download tax forms 2011   Generally, you get no ACRS deduction for the tax year in which you dispose of or retire recovery property, except for 15-, 18-, and 19-year real property. Download tax forms 2011 This means there is no depreciation deduction under ACRS in the year you dispose of or retire any of your 3-, 5-, or 10-year recovery property. Download tax forms 2011 Dispositions — mass asset accounts. Download tax forms 2011   The law provides a special rule to avoid the calculation of gain on the disposition of assets from mass asset accounts. Download tax forms 2011 A mass asset account includes items usually minor in value in relation to the group, numerous in quantity, impractical to separately identify, and not usually accounted for on a separate basis, but on a total dollar value. Download tax forms 2011 Examples of mass assets include minor items of office, plant, and store furniture and fixtures. Download tax forms 2011   Under the special rule, if you elected to use a mass asset account, you recognize gain to the extent of the proceeds from the disposition of the asset. Download tax forms 2011 You leave the unadjusted basis of the property in the account until recovered in future years. Download tax forms 2011 If you did this, include the total proceeds realized from the disposition in income on the tax return for the year of disposition. Download tax forms 2011 Early dispositions — 15-year real property. Download tax forms 2011   If you dispose of 15-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. Download tax forms 2011 You use a full-month convention. Download tax forms 2011 For a disposition at any time during a particular month before the end of the recovery period, no deduction is allowed for the month of disposition. Download tax forms 2011 This applies whether you use the regular ACRS method or elected the alternate ACRS method. Download tax forms 2011 Example. Download tax forms 2011 You purchased and placed in service a rental house on March 2, 1984, for $98,000 (not including the cost of land). Download tax forms 2011 You file your return based on a calendar year. Download tax forms 2011 Your rate from Table 1 for the third month is 10%. Download tax forms 2011 Your ACRS deduction for 1984 was $9,800 ($98. Download tax forms 2011 000 ÷ 10%). Download tax forms 2011 For 1985 through 1988, you figured your ACRS deductions using 11%, 9%, 8%, and 7% ÷ $98,000. Download tax forms 2011 For 1989 through 1992, you figured your ACRS deductions using 6% for each year. Download tax forms 2011 The deduction each year was $98,000 ÷ 6%. Download tax forms 2011 For 1993 and 1994, the ACRS deduction is ($98,000 ÷ 5%) $4,900 for each year. Download tax forms 2011 You sell the house on June 1, 1995. Download tax forms 2011 You figure your ACRS deduction for 1995 for the full year and then prorate that amount for the months of use. Download tax forms 2011 The full ACRS deduction for 1995 is $4,900 ($98,000 ÷ 5%). Download tax forms 2011 You then prorate this amount to the 5 months in 1995 during which it was rented. Download tax forms 2011 Your ACRS deduction for 1995 is $2,042 ($4,900 ÷ 5/12). Download tax forms 2011 Early dispositions — 18- and 19-year real property. Download tax forms 2011   If you dispose of 18- or 19-year real property, you base your ACRS deduction for the year of disposition on the number of months in use. Download tax forms 2011 For 18-year property placed in service before June 23, 1984, use a full-month convention on a disposition. Download tax forms 2011 For 18-year property placed in service after June 22, 1984, and for 19-year property, determine the number of months in use by using the mid-month convention. Download tax forms 2011 Under the mid-month convention,treat real property disposed of any time during a month as disposed of in the middle of that month. Download tax forms 2011 Count the month of disposition as half a month of use. Download tax forms 2011 Example. Download tax forms 2011 You purchased and placed in service a rental house on July 2, 1984, for $100,000 (not including the cost of land). Download tax forms 2011 You file your return based on a calendar year. Download tax forms 2011 Your rate from Table 4 for the seventh month is 4%. Download tax forms 2011 You figured your ACRS deduction for 1984 was $4,000 ($100,000 ÷ 4%). Download tax forms 2011 In 1985 through 1994, your ACRS deductions were 9%, 8%, 8%, 7%, 6%, 6%, 5%, 5%, and 5% ÷ $100,000. Download tax forms 2011 You sell the house on September 24, 1995. Download tax forms 2011 Figure your ACRS deduction for 1995 for the months of use. Download tax forms 2011 The full ACRS deduction for 1995 is $5,000 ($100,000 ÷ 5%). Download tax forms 2011 Prorate this amount for the 8. Download tax forms 2011 5 months in 1995 that you held the property. Download tax forms 2011 Under the mid-month convention, you count September as half a month. Download tax forms 2011 Your ACRS deduction for 1995 is $3,542 ($5,000 ÷ 8. Download tax forms 2011 5/12). Download tax forms 2011 Depreciation Recapture If you dispose of property depreciated under ACRS that is section 1245 recovery property, you will generally recognize gain or loss. Download tax forms 2011 Gain recognized on a disposition is ordinary income to the extent of prior depreciation deductions taken. Download tax forms 2011 This recapture rule applies to all personal property in the 3-year, 5-year, and 10-year classes. Download tax forms 2011 You recapture gain on manufactured homes and theme park structures in the 10-year class as section 1245 property. Download tax forms 2011 Section 1245 property generally includes all personal property. Download tax forms 2011 See Section 1245 property in chapter 4 of Publication 544 for more information. Download tax forms 2011 You treat dispositions of section 1250 real property on which you have a gain as section 1245 recovery property. Download tax forms 2011 You recognize gain on this property as ordinary income to the extent of prior depreciation deductions taken. Download tax forms 2011 Section 1250 property includes most real property. Download tax forms 2011 See Section 1250 property in chapter 4 of Publication 544 for more information. Download tax forms 2011 This rule applies to all section 1250 real property except the following property: Any 15-, 18-, or 19-year real property that is residential rental property. Download tax forms 2011 Any 15-, 18-, or 19-year real property that you elected to depreciate using the alternate ACRS method. Download tax forms 2011 Any 15-, 18-, or 19-year real property that is subsidized low-income housing. Download tax forms 2011 For these recapture rules, you treat the section 179 deduction and 50% of the investment credit that reduced your basis as depreciation. Download tax forms 2011 See Publication 544 for further discussion of dispositions of section 1245 and 1250 property. Download tax forms 2011 Prev  Up  Next   Home   More Online Publications
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SOI Tax Stats - Split-Interest Trust Statistics

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Split Interest Trust Data OneSheet (PDF) 
The OneSheet presents a project description, highlights of the data, and selected figures.

Split-interest trusts make distributions to both charitable and noncharitable beneficiaries, while providing tax benefits to their donor. All split-interest trusts must annually file Form 5227, Split-Interest Trust Information Return, to report financial activity and determine if they should be treated as a private foundation. Based on the method and timing of distributions, split-interest trusts are divided into the following four categories:

  • Charitable remainder annuity trusts—distribute income in a series of fixed payments to one or more noncharitable beneficiaries for a defined period of time, after which the remaining value of the trust is transferred to a charitable beneficiary.
  • Charitable remainder unitrusts—distribute a percentage of the fair market value to one or more noncharitable beneficiaries for a defined period of time, after which remaining value of the trust is transferred to a charitable beneficiary.
  • Charitable lead trusts—distribute a sequence of payments to a charitable beneficiary for a period of time, after which the remaining trust assets are transferred to a noncharitable beneficiary.
  • Pooled income funds—allow donors to donate assets to a charity. The pooled assets are invested as a group and each donor receives income based on the ratio of his or her contribution to the total value of the investment pool. After the death of the donor, his or her prorated share of the investment pool is withdrawn and given to the charitable organization.

For information about selected terms and concepts, a description of the data sources and limitations, and links to recent revisions of Form 5227, please visit Split Interest Trust Study Metadata.


Statistical Tables

The following tables are available as Microsoft Excel® files. A free Excel viewer is available for download, if needed.

Charitable Remainder Annuity Trusts:

Charitable Remainder Unitrusts:

Charitable Lead Trusts:

Pooled Income Funds:


Projections
For selected tax returns, including the Form 5227, IRS's Office of Research produces annual forecasts of the number of returns that will be filed in future years.     
      Projections of Returns to be Filed in Future Calendar Years


Publications and Papers

The following are available as PDF files.  A free Adobe® reader is available for download, if needed.


Other SOI Data on Trusts

Certain nonexempt charitable trusts are also annually required to file Form 990-PF, Return of Private Foundation (or Section 4947(a)(1) Charitable Trust Treated as a Private Foundation).  Form 1041 is the income tax return filed by to report income, distributions, and tax liability of estates and trusts.


Other IRS Data and Related Links

For tax administration data on this topic, as well as other types of taxes, choose from the links below.

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Page Last Reviewed or Updated: 27-Mar-2014

The Download Tax Forms 2011

Download tax forms 2011 Index A Assistance (see Tax help) C Capital construction fund, Capital Construction Fund Comments, Comments and suggestions. Download tax forms 2011 F Free tax services, How To Get Tax Help H Help (see Tax help) M More information (see Tax help) P Publications (see Tax help) S Suggestions, Comments and suggestions. Download tax forms 2011 T Tax help, How To Get Tax Help Taxpayer Advocate, Contacting your Taxpayer Advocate. Download tax forms 2011 TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications