Treasury Regulations (26 C.F.R.)
26 CFR § 1.167(a)-4
Leased property.
# (a) In general.
Capital expenditures made by either a lessee or lessor for the erection of a building or for other permanent improvements on leased property are recovered by the lessee or lessor under the provisions of the Internal Revenue Code (Code) applicable to the cost recovery of the building or improvements, if subject to depreciation or amortization, without regard to the period of the lease. For example, if the building or improvement is property to which section 168 applies, the lessee or lessor determines the depreciation deduction for the building or improvement under section 168. See section 168(i)(8)(A). If the improvement is property to which section 167 or section 197 applies, the lessee or lessor determines the depreciation or amortization deduction for the improvement under section 167 or section 197, as applicable.
# (b)
Effective/applicability date—(1) In general. Except as provided in paragraph (b)(2) or (b)(3) of this section, this section applies to taxable years beginning on or after January 1, 2014.
(2) Application of this section to leasehold improvements placed in service after December 31, 1986, in taxable years beginning before January 1, 2014. For leasehold improvements placed in service after December 31, 1986, in taxable years beginning before January 1, 2014, a taxpayer may—
(i) Apply the provisions of this section; or
(ii) Depreciate any leasehold improvement to which section 168 applies under the provisions of section 168 and depreciate or amortize any leasehold improvement to which section 168 does not apply under the provisions of the Code that are applicable to the cost recovery of that leasehold improvement, without regard to the period of the lease.
(3) Application of this section to leasehold improvements placed in service before January 1, 1987. Section 1.167(a)-4 as contained in 26 CFR part 1 edition revised as of April 1, 2011, applies to leasehold improvements placed in service before January 1, 1987.
(4) Change in method of accounting. Except as provided in § 1.446-1(e)(2)(ii)(d)(3)(i), a change to comply with this section for depreciable assets placed in service in a taxable year ending on or after December 30, 2003, is a change in method of accounting to which the provisions of section 446(e) and the regulations under section 446(e) apply. Except as provided in § 1.446-1(e)(2)(ii)(d)(3)(i), a taxpayer also may treat a change to comply with this section for depreciable assets placed in service in a taxable year ending before December 30, 2003, as a change in method of accounting to which the provisions of section 446(e) and the regulations under section 446(e) apply.
[T.D. 9636, 78 FR 57706, Sept. 19, 2013]
Source: view the official text
In this part (40 sections)
- 1.165-6 · Farming losses.
- 1.165-7 · Casualty losses.
- 1.165-8 · Theft losses.
- 1.165-9 · Sale of residential property.
- 1.165-10 · Wagering losses.
- 1.165-11 · Election to take disaster loss deduction for preceding year.
- 1.165-12 · Denial of deduction for losses on registration-required…
- 1.166-1 · Bad debts.
- 1.166-2 · Evidence of worthlessness.
- 1.166-3 · Partial or total worthlessness.
- 1.166-4 · Reserve for bad debts.
- 1.166-5 · Nonbusiness debts.
- 1.166-6 · Sale of mortgaged or pledged property.
- 1.166-7 · Worthless bonds issued by an individual.
- 1.166-8 · Losses of guarantors, endorsers, and indemnitors incurred on…
- 1.166-9 · Losses of guarantors, endorsers, and indemnitors incurred, on…
- 1.166-10 · Reserve for guaranteed debt obligations.
- 1.167(a)-1 · Depreciation in general.
- 1.167(a)-2 · Tangible property.
- 1.167(a)-3 · Intangibles.
- 1.167(a)-4 · Leased property.
- 1.167(a)-5 · Apportionment of basis.
- 1.167(a)-5T · Application of section 1060 to section 167 (temporary).
- 1.167(a)-6 · Depreciation in special cases.
- 1.167(a)-7 · Accounting for depreciable property.
- 1.167(a)-8 · Retirements.
- 1.167(a)-9 · Obsolescence.
- 1.167(a)-10 · When depreciation deduction is allowable.
- 1.167(a)-11 · Depreciation based on class lives and asset depreciation…
- 1.167(a)-12 · Depreciation based on class lives for property first…
- 1.167(a)-13T · Certain elections for intangible property (temporary).
- 1.167(a)-14 · Treatment of certain intangible property excluded from…
- 1.167(b)-0 · Methods of computing depreciation.
- 1.167(b)-1 · Straight line method.
- 1.167(b)-2 · Declining balance method.
- 1.167(b)-3 · Sum of the years-digits method.
- 1.167(b)-4 · Other methods.
- 1.167(c)-1 · Limitations on methods of computing depreciation under…
- 1.167(d)-1 · Agreement as to useful life and rates of depreciation.
- 1.167(e)-1 · Change in method.