Use the following rules to determine the classification of the property under ADS.
Under ADS, the depreciation deduction for most property is based on the property's class life. See section 168(g)(3) for special rules for determining the class life for certain property. See Pub. 946 for information on recovery periods for ADS and the Table of Class Lives and Recovery Periods.
Use line 20a for all property depreciated under ADS, except property that does not have a class life, residential rental and nonresidential real property, water utility property, and railroad gradings and tunnel bores. Use line 20b for property that does not have a class life. Use line 20c for residential rental and nonresidential real property.
Water utility property and railroad gradings and tunnel bores.
These assets are 50-year property under ADS. There is no separate line to report 50-year property. Therefore, attach a statement showing the same information required in columns (a) through (g). Include the deduction in the line 22 “Total” and write “See attachment” in the bottom margin of the form.
Column (b) — Month and year placed in service. For 40-year property, enter the month and year placed in service or converted to use in a trade or business or for the production of income.
Column (c) — Basis for depreciation (business/investment use only). See the instructions for line 19, column (c).
Column (d) — Recovery period. On line 20a, enter the property's class life.
Column (e) — Convention. Under ADS, the applicable conventions are the same as those used under GDS. See the instructions for line 19, column (e).
Column (g) — Depreciation deduction. Figure the depreciation deduction in the same manner as under GDS, except use the straight line method over the ADS recovery period and use the applicable convention.
MACRS recapture. If you later dispose of property you depreciated using MACRS, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the depreciation previously allowed or allowable for the property. Depreciation, for this purpose, includes any of the following deductions taken during the 2014 tax year.
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Any section 179 expense deduction claimed on the property,
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Any special depreciation allowance available for the property (unless you elected not to claim it),
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Any deduction under section 179B for capital costs incurred in complying with Environmental Protection Agency sulfur regulations, and
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Any deduction under section 179D for certain energy efficient commercial building property placed in service before January 1, 2015.
There is no recapture for residential rental and nonresidential real property, unless that property is qualified property for which you claimed a special depreciation allowance (discussed earlier). For more information on depreciation recapture, see Pub. 946.