Section 3: 5–15%R9
Basis and Cost Recovery (Depreciation, Section 179, Bonus)
Exam insight
Almost every property question starts with basis and ends with cost recovery. Get the depreciation order wrong, Section 179, then bonus, then MACRS, and the rest of your answer unravels.
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What AICPA wants you to know
- 1Compute the initial basis of purchased, gifted, and inherited property
- 2Apply the gift double-basis rule and the inherited-property FMV step-up
- 3Calculate MACRS depreciation using the correct convention and recovery period
- 4Order Section 179 expensing, bonus depreciation, and MACRS correctly
- 5Apply OBBBA-era limits: $2.5M Section 179 and 100% permanent bonus depreciation
- 6Amortize Section 197 intangibles and start-up/organizational costs