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H&r block printable coupon , Benefits paid to a spouse or former spouse. H&r block printable coupon Birth of dependent, Death or birth. H&r block printable coupon C Change of address, Reminders Change of name, Reminders Change of withholding, Reminders Child custody, Custodial parent and noncustodial parent. H&r block printable coupon Child support Alimony, difference from, Child support. H&r block printable coupon Clearly associated with contingency, Clearly associated with a contingency. H&r block printable coupon Contingency relating to child, Contingency relating to your child. H&r block printable coupon Payment specifically designated as, Specifically designated as child support. H&r block printable coupon Child support under pre-1985 agreement, Child support under pre-1985 agreement. H&r block printable coupon Child tax credit, Exemptions for Dependents Children Birth of child Head of household, qualifying person to file as, Death or birth. 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Topic 303 - Checklist of Common Errors When Preparing Your Tax Return

Before filing your return, review it to make sure it is correct and complete. The following checklist may help you to avoid common errors:

  • Did you consider filing your tax return electronically? By electronically filing your tax return, many common errors may be avoided or corrected by the computer software. Depending on your income, you may even qualify to e-file for free by using Free File tax software. For more information, visit the IRS website at www.irs.gov and click on the e-file logo on our home page.
  • Did you clearly print your name, social security number, and address, including ZIP code directly on your return? Note that if you are married but filing a separate return, do not include your spouse's name in the name, address and social security number fields on the return.
  • Did you enter the names and social security numbers for yourself, your spouse (if filing jointly), your dependents, and qualifying children for the earned income credit or child tax credit, exactly as those names and numbers appear on each person's social security card? If there have been any name changes be sure to contact the Social Security Administration at www.ssa.gov or call at 800-772-1213.
  • Did you check only one filing status?
  • Did you check the appropriate exemption boxes and enter the names and social security numbers exactly as those names and numbers appear on each person's social security card, for all dependents you claimed? Is the total number of exemptions entered?
  • Did you enter income, deductions, and credits on the correct lines and are the totals correct?
  • If you show a negative amount on your return, did you put brackets around it?
  • If you are taking the standard deduction and checked any box indicating either you or your spouse were age 65 or older or blind, did you find the correct standard deduction using the chart in the Form 1040 Instructions (PDF) or the Form 1040A Instructions (PDF)?
  • Did you figure the tax correctly? If you used the tax tables, did you use the correct column for your filing status?
  • Did you sign and date the return? If it is a joint return, did your spouse also sign and date the return?
  • Do you have a Form W-2 (PDF) from each of your employers and did you attach Copy B of each Form W-2 to your return? If you have more than one job, combine the wages and withholdings from all Form W-2s you receive and report those amounts on one return.
  • Did you attach each Form 1099-R (PDF) that shows federal tax was withheld?
  • Did you attach all other necessary schedules and forms in sequence number order as shown in the upper right-hand corner?
  • Did you use the correct mailing address from your tax form instructions?
  • Did you use a postage stamp on the envelope?
  • If you owe tax, did you enclose a check or money order made payable to the "United States Treasury" with the return and include your name, address, social security number, daytime telephone number, tax form, and tax year on the payment? For additional information, refer to Topic 158.
  • If you are due a refund and requested direct deposit, did you check your financial institution's routing and account numbers?
  • Did you make a copy of the signed return and all schedules for your records?

A few of the most common errors are:

  1. Incorrect or missing social security numbers.
  2. Incorrect tax entered based on taxable income and filing status.
  3. Computation errors in figuring the taxable income, withholding and estimated tax payments, earned income credit, standard deduction for age 65 or over or blind, the taxable amount of social security benefits, and child and dependent care credit. Also, missing or incorrect identification numbers for child care providers.
  4. Withholding and estimated tax payments entered on the wrong line.
  5. Math errors, both addition and subtraction.

It is important that you review your entire return because any errors may delay the processing of your return.

Page Last Reviewed or Updated: January 22, 2014

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H&r block printable coupon 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. H&r block printable coupon Dispositions — mass asset accounts. H&r block printable coupon Early dispositions — 15-year real property. H&r block printable coupon Early dispositions — 18- and 19-year real property. H&r block printable coupon 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. H&r block printable coupon 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. H&r block printable coupon These rules are mandatory and generally apply to tangible property placed in service after 1980 and before 1987. 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H&r block printable coupon 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. H&r block printable coupon Nonrecovery Property You cannot use ACRS for property you placed in service before 1981 or after 1986. H&r block printable coupon 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. H&r block printable coupon Intangible property. H&r block printable coupon   Intangible property is not depreciated under ACRS. H&r block printable coupon Property depreciated under methods not expressed in a term of years. 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H&r block printable coupon   Any additions or improvements placed in service after 1986, including any components of a building (plumbing, wiring, storm windows, etc. H&r block printable coupon ) are depreciated using MACRS, discussed in chapter 3 of Publication 946. H&r block printable coupon It does not matter that the underlying property is depreciated under ACRS or one of the other methods. H&r block printable coupon How To Figure the Deduction After you determine that your property can be depreciated under ACRS, you are ready to figure your deduction. H&r block printable coupon 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. 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H&r block printable coupon You cannot claim depreciation for this property after 1988. H&r block printable coupon 5-Year Property 5-year property includes computers, copiers, and equipment, such as office furniture and fixtures. H&r block printable coupon It also includes single purpose agricultural or horticultural structures and petroleum storage facilities (other than buildings and their structural components). H&r block printable coupon 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. H&r block printable coupon You cannot claim depreciation for this property after 1990. H&r block printable coupon 10-Year Property 10-year property includes certain real property such as theme-park structures and certain public utility property. H&r block printable coupon Manufactured homes (including mobile homes) and railroad tank cars are also 10-year property. H&r block printable coupon 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. H&r block printable coupon 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. H&r block printable coupon 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. H&r block printable coupon Example. H&r block printable coupon On April 21, 1986, you bought and placed in service a new mobile home for $26,000 to be used as rental property. H&r block printable coupon You paid $10,000 cash and signed a note for $16,000 giving you an unadjusted basis of $26,000. H&r block printable coupon 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. H&r block printable coupon The total unadjusted basis of your 10-year recovery property placed in service in 1986 was $37,500 ($26,000 + $11,500). H&r block printable coupon Your ACRS deduction was $3,000 (8% × $37,500). H&r block printable coupon In 1987, your ACRS deduction was $5,250 (14% × $37,500). H&r block printable coupon In 1988, your ACRS deduction was $4,500 (12% × $37,500). H&r block printable coupon In 1989, 1990, and 1991, your ACRS deduction was $3,750 (10% × $37,500). H&r block printable coupon In 1992, 1993, 1994, and 1995 your deduction for each year is $3,375 (9% × $37,500). H&r block printable coupon 15-Year Real Property 15-year real property is real property that is recovery property placed in service before March 16, 1984. H&r block printable coupon It includes all real property, such as buildings, other than that designated as 5-year or 10-year property. H&r block printable coupon 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. H&r block printable coupon You could group 15-year real property by month and year placed in service. H&r block printable coupon 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. H&r block printable coupon You use the percentages listed under that month for each year of the recovery period to determine your depreciation deduction each year. H&r block printable coupon Example. H&r block printable coupon On March 5, 1984, you placed an apartment building in service in your business. H&r block printable coupon It is 15-year real property. H&r block printable coupon After subtracting the value of the land, your unadjusted basis in the building is $250,000. H&r block printable coupon You use the calendar year as your tax year. H&r block printable coupon March is the third month of your tax year. H&r block printable coupon Your ACRS deduction for 1984 was $25,000 (10% × $250,000). H&r block printable coupon For 1985, the percentage for the third month of the second year of the recovery period is 11%. H&r block printable coupon Your deduction was $27,500 (11% × $250,000). H&r block printable coupon For the third, fourth, and fifth years of the recovery period (1986, 1987, and 1988), the percentages are 9%, 8%, and 7%. H&r block printable coupon For 1989 through 1992, the percentage for the third month is 6%. H&r block printable coupon Your deduction each year is $15,000 (6% × $250,000). H&r block printable coupon For 1993, 1994, and 1995, the percentage for the third month is 5%. H&r block printable coupon Your depreciation deduction is $12,500 (5% × $250,000) for 1993, 1994, and 1995. H&r block printable coupon 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. H&r block printable coupon Low-income rental housing for which a depreciation deduction for rehabilitation expenditures is allowed. H&r block printable coupon 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. H&r block printable coupon Housing financed or assisted by direct loan or insured under Title V of the Housing Act of 1949. H&r block printable coupon 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. H&r block printable coupon 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. H&r block printable coupon Use the percentages listed under that month for each year of the recovery period. H&r block printable coupon Table 2 shows percentages for low-income housing placed in service before May 9, 1985. H&r block printable coupon Table 3 shows percentages for low-income housing placed in service after May 8, 1985, and before 1987. H&r block printable coupon Example. H&r block printable coupon 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. H&r block printable coupon You use the calendar year as your tax year. H&r block printable coupon You use Table C–3 because the property was placed in service after May 8, 1985. H&r block printable coupon Your unadjusted basis for the property, not including the land, was $59,000. H&r block printable coupon Your deduction for 1986 through 2001 is shown in the following table. H&r block printable coupon Year Rate Deduction 1986 8. H&r block printable coupon 9% $5,251 1987 12. H&r block printable coupon 1% 7,139 1988 10. H&r block printable coupon 5% 6,195 1989 9. H&r block printable coupon 1% 5,369 1990 7. H&r block printable coupon 9% 4,661 1991 6. H&r block printable coupon 9% 4,071 1992 5. H&r block printable coupon 9% 3,481 1993 5. H&r block printable coupon 2% 3,068 1994 4. H&r block printable coupon 6% 2,714 1995 4. H&r block printable coupon 6% 2,714 1996 4. H&r block printable coupon 6% 2,714 1997 4. H&r block printable coupon 6% 2,714 1998 4. H&r block printable coupon 6% 2,714 1999 4. H&r block printable coupon 5% 2,655 2000 4. H&r block printable coupon 5% 2,655 2001 1. H&r block printable coupon 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. H&r block printable coupon It includes real property, such as buildings, other than that designated as 5-year, 10-year, 15-year real property, or low-income housing. H&r block printable coupon 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. H&r block printable coupon There are also tables for 18-year real property in the Appendix. H&r block printable coupon Table 4 shows the percentages for 18-year real property you placed in service after June 22, 1984, and before May 9, 1985. H&r block printable coupon Table 5 is for 18-year real property placed in service after March 15, 1984, and before June 23, 1984. H&r block printable coupon 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. H&r block printable coupon Use the percentages listed under that month for each year of the recovery period. H&r block printable coupon Example. H&r block printable coupon On April 28, 1985, you bought and placed in service a rental house. H&r block printable coupon The house, not including the land, cost $95,000. H&r block printable coupon This is your unadjusted basis for the house. H&r block printable coupon You use the calendar year as your tax year. H&r block printable coupon Because the house was placed in service after June 22, 1984, and before May 9, 1985, it is 18-year real property. H&r block printable coupon You use Table 4 to figure your deduction for the house. H&r block printable coupon April is the fourth month of your tax year. H&r block printable coupon Your deduction for 1985 through 2003 is shown in the following table. H&r block printable coupon Year Rate Deduction 1985 7. H&r block printable coupon 0% $6,650 1986 9. H&r block printable coupon 0% 8,550 1987 8. H&r block printable coupon 0% 7,600 1988 7. H&r block printable coupon 0% 6,650 1989 7. H&r block printable coupon 0% 6,650 1990 6. H&r block printable coupon 0% 5,700 1991 5. H&r block printable coupon 0% 4,750 1992 5. H&r block printable coupon 0% 4,750 1993 5. H&r block printable coupon 0% 4,750 1994 5. H&r block printable coupon 0% 4,750 1995 5. H&r block printable coupon 0% 4,750 1996 5. H&r block printable coupon 0% 4,750 1997 5. H&r block printable coupon 0% 4,750 1998 4. H&r block printable coupon 0% 3,800 1999 4. H&r block printable coupon 0% 3,800 2000 4. H&r block printable coupon 0% 3,800 2001 4. H&r block printable coupon 0% 3,800 2002 4. H&r block printable coupon 0% 3,800 2003 1. H&r block printable coupon 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. H&r block printable coupon 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. H&r block printable coupon 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. H&r block printable coupon Table 6 shows the percentages for 19-year real property. H&r block printable coupon You find the month in your tax year that you placed the property in service. H&r block printable coupon You use the percentages listed under that month for each year of the recovery period. H&r block printable coupon Recovery Periods Each item of recovery property is assigned to a class of property. H&r block printable coupon The classes of recovery property establish the recovery periods over which the unadjusted basis of items in a class is recovered. H&r block printable coupon 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. H&r block printable coupon This alternate ACRS method uses a recovery percentage based on a modified straight line method. H&r block printable coupon This alternate ACRS method generally uses percentages other than those from the tables. H&r block printable coupon If you elected the alternate ACRS method, you determine the recovery period by using the following schedule. H&r block printable coupon 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. H&r block printable coupon   The straight-line percentages for the alternate ACRS method are: Recovery Period Percentage 5 years 20. H&r block printable coupon 00% 10 years 10. H&r block printable coupon 00% 12 years 8. H&r block printable coupon 333% 15 years 6. H&r block printable coupon 667% 25 years 4. H&r block printable coupon 00% 35 years 2. H&r block printable coupon 857%   You apply the percentage to the unadjusted basis(defined earlier) of the property to figure your ACRS deduction. H&r block printable coupon There are tables for 18- and 19-year real property later in this publication in the Appendix. H&r block printable coupon For 15-year real property, see 15-year real property, later. H&r block printable coupon 3-, 5-, and 10-year property. H&r block printable coupon   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. H&r block printable coupon This applies throughout the recovery period you selected. H&r block printable coupon Half-year convention. H&r block printable coupon   If you elected the alternate method, only a half-year of depreciation was deducted for the year you placed the property in service. H&r block printable coupon This applied regardless of when in the tax year you placed the property in service. H&r block printable coupon For each of the remaining years in the recovery period, you take a full year's deduction. H&r block printable coupon 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. H&r block printable coupon Example. H&r block printable coupon You operate a small upholstery business. H&r block printable coupon 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. H&r block printable coupon You elected to use the alternate ACRS method. H&r block printable coupon You did not elect to take a section 179 deduction. H&r block printable coupon You decided to recover the cost of the truck, which is 3-year recovery property, over 5 years. H&r block printable coupon The saw is 5-year property, but you decided to recover its cost over 12 years. H&r block printable coupon For 1986, your ACRS deduction reflected the half-year convention. H&r block printable coupon In the first year, you deducted half of the amount determined for a full year. H&r block printable coupon 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. H&r block printable coupon 00     Electric saw   12 years straight line = 8. H&r block printable coupon 333% 8. H&r block printable coupon 333% ÷ $500 = $41. H&r block printable coupon 67 Half-year convention -½ of $41. H&r block printable coupon 67= 20. H&r block printable coupon 84 Total ACRS deduction for 1986 $1,320. H&r block printable coupon 84       You take a full year of depreciation for both the truck and the saw for the years 1987 through 1990. H&r block printable coupon 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. H&r block printable coupon 333% 8. H&r block printable coupon 333% ÷ $500 = $41. H&r block printable coupon 67 Total annual ACRS deduction for 1987 through 1990 $2,641. H&r block printable coupon 67       In 1991, you take a half-year of depreciation for the truck and a full year of depreciation for the saw. H&r block printable coupon 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. H&r block printable coupon 00     Electric saw   12 years straight line = 8. H&r block printable coupon 333% 8. H&r block printable coupon 333% ÷ $500 = $41. H&r block printable coupon 67 Total ACRS deduction for 1991 $1,341. H&r block printable coupon 67       The truck is fully depreciated after 1991. H&r block printable coupon You take a full year of depreciation for the saw for the years 1992 through 1997. H&r block printable coupon Your ACRS deduction for each of those years is as follows: Electric saw     12 years straight line = 8. H&r block printable coupon 333% 8. H&r block printable coupon 333% ÷ $500 = $41. H&r block printable coupon 67 Total annual ACRS deduction for 1992 through 1997 $41. H&r block printable coupon 67       You take a half-year of depreciation for the saw for 1998. H&r block printable coupon Your ACRS deduction for 1998 is as follows: Electric saw   12 years straight line = 8. H&r block printable coupon 333% 8. H&r block printable coupon 333% ÷ $500 = $41. H&r block printable coupon 67 Half-year convention -½ of $41. H&r block printable coupon 67= 20. H&r block printable coupon 84 Total ACRS deduction for 1998 $20. H&r block printable coupon 84       The saw is fully depreciated after 1998. H&r block printable coupon 15-year real property. H&r block printable coupon   Under ACRS, you could also elect to use the alternate ACRS method for 15-year real property. H&r block printable coupon 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. H&r block printable coupon If you selected a 15-year recovery period, you use the percentage (6. H&r block printable coupon 667%) from the schedule above. H&r block printable coupon You prorate this percentage for the number of months the property was in service in the first year. H&r block printable coupon If you selected a 35- or 45-year recovery period, you use either Table 11 or 15. H&r block printable coupon Alternate periods for 18-year real property. H&r block printable coupon   For 18-year real property, the alternate recovery periods are 18, 35, or 45 years. H&r block printable coupon The percentages for 18-year real property under the alternate method are in Tables 7, 8, 10, 11, 14, and 15 in the Appendix. H&r block printable coupon There are two tables for each alternate recovery period. H&r block printable coupon One table shows the percentage for property placed in service after June 22, 1984. H&r block printable coupon The other table has the percentages for property placed in service after March 15, 1984, and before June 23, 1984. H&r block printable coupon Alternate periods for 19-year real property. H&r block printable coupon   For 19-year real property, the alternate recovery periods are 19, 35, or 45 years. H&r block printable coupon If you selected a 19-year recovery period, use Table 9 to determine your deduction. H&r block printable coupon If you select a 35- or 45-year recovery period, use either Table 13 or 14. H&r block printable coupon Example. H&r block printable coupon You placed in service an apartment building on August 3, 1986. H&r block printable coupon The building is 19-year real property. H&r block printable coupon The sales contract allocated $300,000 to the building and $100,000 to the land. H&r block printable coupon You use the calendar year as your tax year. H&r block printable coupon You chose the alternate ACRS method over a recovery period of 35 years. H&r block printable coupon For 1986, you figure your ACRS deduction usingTable 13. H&r block printable coupon August is the eighth month of your tax year. H&r block printable coupon The percentage from Table 13 for the eighth month is 1. H&r block printable coupon 1%. H&r block printable coupon Your deduction was $3,300 ($300,000 ÷ 1. H&r block printable coupon 1%). H&r block printable coupon The deduction rate from ACRS Table 13 for years 2 through 20 is 2. H&r block printable coupon 9% so that your deduction in 1987 through 2005 is $8,700 ($300,000 ÷ 2. H&r block printable coupon 9%). H&r block printable coupon Alternate periods for low-income housing. H&r block printable coupon   For low-income housing, the alternate recovery periods are 15, 35, or 45 years. H&r block printable coupon If you selected a 15-year period for this property, use 6. H&r block printable coupon 667% as the percentage. H&r block printable coupon If you selected a 35- or 45-year period, use either Table 11, 12, or 15. H&r block printable coupon Election. H&r block printable coupon   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. H&r block printable coupon Revocation of election. H&r block printable coupon   Your election to use an alternate ACRS method, once made, can be changed only with the consent of the Commissioner. H&r block printable coupon The Commissioner grants consent only in extraordinary circumstances. H&r block printable coupon Any request for a revocation will be considered a request for a ruling. H&r block printable coupon 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. H&r block printable coupon Figure the amount of the ACRS deduction for a short tax year as follows: First, you figure the ACRS deduction for a full year. H&r block printable coupon You figure this by multiplying the unadjusted basis by the recovery percentage. H&r block printable coupon You then multiply the ACRS deduction determined for a full tax year by a fraction. H&r block printable coupon The numerator (top number) of the fraction is the number of months in the short tax year and the denominator (bottom number) is 12. H&r block printable coupon For example, a corporation placed in service in June 1986 an item of 3-year property with an unadjusted basis of $10,000. H&r block printable coupon 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. H&r block printable coupon The full year's ACRS deduction for this item is $2,500 ($10,000 ÷ 25%), the first year percentage from the 3-year table. H&r block printable coupon The ACRS deduction for the short tax year is $1,250 ($2,500 ÷ 6/12). H&r block printable coupon You use the full ACRS percentages during the remaining years of the recovery period. H&r block printable coupon For the first tax year after the recovery period, the unrecovered basis will be deductible. H&r block printable coupon Exception. H&r block printable coupon   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. H&r block printable coupon You compute the number of months using either a full month or mid-month convention. H&r block printable coupon This is true regardless of the number of months in the tax year and the recovery period and method used. H&r block printable coupon Dispositions A disposition is the permanent withdrawal of property from use in your trade or business or in the production of income. H&r block printable coupon You can make a withdrawal by sale, exchange, retirement, abandonment, or destruction. H&r block printable coupon You generally recognize gain or loss on the disposition of an asset by sale. H&r block printable coupon However, nonrecognition rules can allow you to postpone some gain. H&r block printable coupon See Publication 544. H&r block printable coupon If you physically abandon property, you can deduct as a loss the adjusted basis of the asset at the time of its abandonment. H&r block printable coupon 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. H&r block printable coupon Early dispositions. H&r block printable coupon   The disposal of an asset before the end of its specified recovery period, is referred to as an early disposition. H&r block printable coupon When an early disposition occurs, the depreciation deduction in the year of disposition depends on the class of property involved. H&r block printable coupon Early dispositions of ACRS property other than 15-, 18-, or 19-year real property. H&r block printable coupon   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. H&r block printable coupon 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. H&r block printable coupon Dispositions — mass asset accounts. H&r block printable coupon   The law provides a special rule to avoid the calculation of gain on the disposition of assets from mass asset accounts. H&r block printable coupon 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. H&r block printable coupon Examples of mass assets include minor items of office, plant, and store furniture and fixtures. H&r block printable coupon   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. H&r block printable coupon You leave the unadjusted basis of the property in the account until recovered in future years. H&r block printable coupon If you did this, include the total proceeds realized from the disposition in income on the tax return for the year of disposition. H&r block printable coupon Early dispositions — 15-year real property. H&r block printable coupon   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. H&r block printable coupon You use a full-month convention. H&r block printable coupon 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. H&r block printable coupon This applies whether you use the regular ACRS method or elected the alternate ACRS method. H&r block printable coupon Example. H&r block printable coupon You purchased and placed in service a rental house on March 2, 1984, for $98,000 (not including the cost of land). H&r block printable coupon You file your return based on a calendar year. H&r block printable coupon Your rate from Table 1 for the third month is 10%. H&r block printable coupon Your ACRS deduction for 1984 was $9,800 ($98. H&r block printable coupon 000 ÷ 10%). H&r block printable coupon For 1985 through 1988, you figured your ACRS deductions using 11%, 9%, 8%, and 7% ÷ $98,000. H&r block printable coupon For 1989 through 1992, you figured your ACRS deductions using 6% for each year. H&r block printable coupon The deduction each year was $98,000 ÷ 6%. H&r block printable coupon For 1993 and 1994, the ACRS deduction is ($98,000 ÷ 5%) $4,900 for each year. H&r block printable coupon You sell the house on June 1, 1995. H&r block printable coupon You figure your ACRS deduction for 1995 for the full year and then prorate that amount for the months of use. H&r block printable coupon The full ACRS deduction for 1995 is $4,900 ($98,000 ÷ 5%). H&r block printable coupon You then prorate this amount to the 5 months in 1995 during which it was rented. H&r block printable coupon Your ACRS deduction for 1995 is $2,042 ($4,900 ÷ 5/12). H&r block printable coupon Early dispositions — 18- and 19-year real property. H&r block printable coupon   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. H&r block printable coupon For 18-year property placed in service before June 23, 1984, use a full-month convention on a disposition. H&r block printable coupon 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. H&r block printable coupon Under the mid-month convention,treat real property disposed of any time during a month as disposed of in the middle of that month. H&r block printable coupon Count the month of disposition as half a month of use. H&r block printable coupon Example. H&r block printable coupon You purchased and placed in service a rental house on July 2, 1984, for $100,000 (not including the cost of land). H&r block printable coupon You file your return based on a calendar year. H&r block printable coupon Your rate from Table 4 for the seventh month is 4%. H&r block printable coupon You figured your ACRS deduction for 1984 was $4,000 ($100,000 ÷ 4%). H&r block printable coupon In 1985 through 1994, your ACRS deductions were 9%, 8%, 8%, 7%, 6%, 6%, 5%, 5%, and 5% ÷ $100,000. H&r block printable coupon You sell the house on September 24, 1995. H&r block printable coupon Figure your ACRS deduction for 1995 for the months of use. H&r block printable coupon The full ACRS deduction for 1995 is $5,000 ($100,000 ÷ 5%). H&r block printable coupon Prorate this amount for the 8. H&r block printable coupon 5 months in 1995 that you held the property. H&r block printable coupon Under the mid-month convention, you count September as half a month. H&r block printable coupon Your ACRS deduction for 1995 is $3,542 ($5,000 ÷ 8. H&r block printable coupon 5/12). H&r block printable coupon Depreciation Recapture If you dispose of property depreciated under ACRS that is section 1245 recovery property, you will generally recognize gain or loss. H&r block printable coupon Gain recognized on a disposition is ordinary income to the extent of prior depreciation deductions taken. H&r block printable coupon This recapture rule applies to all personal property in the 3-year, 5-year, and 10-year classes. H&r block printable coupon You recapture gain on manufactured homes and theme park structures in the 10-year class as section 1245 property. H&r block printable coupon Section 1245 property generally includes all personal property. H&r block printable coupon See Section 1245 property in chapter 4 of Publication 544 for more information. H&r block printable coupon You treat dispositions of section 1250 real property on which you have a gain as section 1245 recovery property. H&r block printable coupon You recognize gain on this property as ordinary income to the extent of prior depreciation deductions taken. H&r block printable coupon Section 1250 property includes most real property. H&r block printable coupon See Section 1250 property in chapter 4 of Publication 544 for more information. H&r block printable coupon 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. H&r block printable coupon Any 15-, 18-, or 19-year real property that you elected to depreciate using the alternate ACRS method. H&r block printable coupon Any 15-, 18-, or 19-year real property that is subsidized low-income housing. H&r block printable coupon For these recapture rules, you treat the section 179 deduction and 50% of the investment credit that reduced your basis as depreciation. H&r block printable coupon See Publication 544 for further discussion of dispositions of section 1245 and 1250 property. H&r block printable coupon Prev  Up  Next   Home   More Online Publications