How has depreciation changed in your years of practice? Whether you have been in practice for 5 years or 40 years, the changes in the rules on depreciation have been staggering. Let’s walk down memory lane and see just where each of us gets lost in the Depreciation Maze.

1. Navigating the Depreciation Maze ICPAS Chicago Metro Chapter August 19, 2009 Brian T. Whitlock, CPA, JD, LLM

25. Depreciation Recapture Rules

56. ©2007 Ronald R. Tidd Property – 1231, 1245, 1250 §§1231,1245 and1250 Application — General Procedures Calculations § 1231 §1231 Gains §1231 Gains Sales – §1245 Sales – §1250 Losses Gains Gains Ordinary Gains Ordinary Gains

58. Bonus Depreciation Example : Assume that in 2008 a taxpayer purchases new 5-year property and places it in service for $10,000, subject to the half-year convention. 50% - first-year depreciation $5,000 The remaining $5,000 of the cost is deductible under the MACRS rules. 20 percent, or $1,000, is also allowed as a depreciation deduction in 2008. The total depreciation deduction for 2008 is $6,000.

61. Election out of Bonus Depreciation There is no official form : Election Out of Special Depreciation Allowance of Code Section 168(k) Taxpayer's name: __________________ Taxpayer's address: ______________________ Taxpayer's tax identification number: ___________________ Attachment to Form ______, Tax Year Ending ____________ Pursuant to Code Section168(k)(2)(D)(iii), the taxpayer, ______________, hereby elects out of the special depreciation allowance of Code Section 168(k) for all property placed in service by the taxpayer during the taxable year which would otherwise qualify for the special depreciation allowance under Code Section 168(k) and which is in the following classes: [list classes for which election is made]

63. Illinois Bonus Depreciation Modification Rules

72. Illinois Bonus Depreciation Example

73. Illinois Bonus Depreciation Example

74. Illinois Bonus Depreciation Example

75. Illinois Bonus Depreciation Example

76. Illinois Bonus Depreciation Example

79. Illinois Bonus Depreciation Example

80. Illinois Bonus Depreciation Example

81. Questions and Comments