New client brought me previous year tax return with Schedule E rental. Tax preparer set up asset method in prior year as straight line for federal but 200 DB for CA. I have never seen a tax preparer set up different methods for federal vs. state for an asset before. I did find the following CA information, but being the federal method was set up straight line, the CA return, if tax preparer had used the same method, would not have resulted in more deprecation during the first 2/3 of the useful life through use of the double declining balance method.
R&TC ยง24349(b)(4) provides that, for California purposes, taxpayers may use any consistent method of depreciation as long the method does not result in more depreciation during the first 2/3 of the useful life than would result through use of the double declining balance method. Under this test, ACRS or MACRS would be an allowable method for California for 3-year ACRS/MACRS property, which also has a 3-year mid-range ADR life. Most other classes of ACRS/MACRS property would not meet this test.
Is this a common depreciation procedure that I have been unaware?
Peggy Sioux
R&TC ยง24349(b)(4) provides that, for California purposes, taxpayers may use any consistent method of depreciation as long the method does not result in more depreciation during the first 2/3 of the useful life than would result through use of the double declining balance method. Under this test, ACRS or MACRS would be an allowable method for California for 3-year ACRS/MACRS property, which also has a 3-year mid-range ADR life. Most other classes of ACRS/MACRS property would not meet this test.
Is this a common depreciation procedure that I have been unaware?
Peggy Sioux
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