Calculating depreciation on a like-kind exchange or an involuntary conversion: temporary regulations have modified the rules for computing depreciation on exchanged or converted property. This article focuses on the use of the optional tables for like-kind exchanges and involuntary conversions.

Tax Adviser, The, January, 2006 by Mason, J. David

EXECUTIVE SUMMARY

* For like-kind exchanges and involuntary conversions, annual depreciation on carryover basis is split between the portion allocable to the relinquished property and to the replacement property.

* Temp. Regs. Sec. 1.168(i)-6T(e) provides a transaction coefficient and other rules for applying the optional depreciation tables to exchanged and converted property.

* Taxpayers can opt out of using the optional tables and compute depreciation manually.

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The Service issued Temp. Kegs. Sec. 1.168-6T in February 2004 in the belief that taxpayers were ...