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Guideline Depreciation Revenue Procedure 62-21 u NTIL THE PROMULGATION of Revenue Procedure 62-21, revenue agents examined depreciation deductions based upon facts and circumstances which could be demonstrated by taxpayers in support of their useful lives. In the absence of valid support, agents could fall back on Bulletin F to determine an appropriate life. The Bulletin, however, had not been revised since 1942 and did not reflect current obsolescence and usage rates. The new Revenue Procedure is a result of the Treasury's efforts to update Bulletin F. Under the guideline procedure, classes of assets are generally subject to depreciation by industry rather than by the nature of the property, as under Bulletin F. Thus, the same electric drill would have a guideline life of 18 years if used in the production of ferrous metals and a guideline life of 8 years if used in producing electronic equipment. No important changes have been made in the useful lives of buildings except that the procedure requires building components (which, heretofore, had been depreciated separately from the buildings on a shorter life) to be included as part of the building and depreciated over the longer building life. Rev. Proc. 62-21 is effective for all tax returns filed on or after July 12, 1962. The general rules provide that assets are to be categorized by classes and a class life determined in accordance with technical rules set forth in Section 4 of the procedure and in Technical Information Release (TIR) 399. If the class life used is greater than or equal to the guideline life for a particular class of assets, no adjustments to useful life may be made by an examining agent for the first three years to which the procedure applies (not necessarily the same as the first three years to which the taxpayer applies the procedure), and the taxpayer will also get the benefits of the transition rule discussed below. In using guideline lives or longer, the taxpayer is entitled to three years of undisturbed depreciation followed by, at worst, a 25% lengthening of life with the use of this lengthened life for an additional undisturbed three years. At best, the use of guideline lives will entitle the taxpayer to continue computing depreciation for an indefinite period of time on the lives selected, as long as retirement and replacement practices are in accord with depreciation policies. Where the class life used is less than the guideline life, the taxpayer will not automatically obtain the benefit of the original three-year "holiday". However, both the 20 THE QUARTERLY
Object Description
Title |
Guideline depreciation & revenue procedure 62-21 |
Author |
Padwe, Gerald W. |
Subject |
Depreciation allowances -- Law and legislation -- United States |
Personal Name |
Padwe, Gerald W. |
Portrait |
Padwe, Gerald W. |
Office/Department |
Touche, Ross, Bailey & Smart. New York Office |
Citation |
Quarterly, Vol. 10, no. 1 (1964, March), p. 20-27 |
Date-Issued | 1964 |
Source | Originally published by: Touche, Ross, Bailey & Smart |
Rights | Copyright and permission to republish held by: Deloitte |
Type | Text |
Format | PDF image with OCR under text, scanned at 400dpi |
Collection | Deloitte Digital Collection |
Digital Publisher | University of Mississippi. Digital Accounting Collection |
Date-Digitally Created | 2009 |
Language | eng |
Identifier | Quarterly_1964_March-p20-27 |