Enrolled Agent Exam [Part 2] 45, Alternative Depreciation System (ADS)

Enrolled Agent Exam [Part 2] 46, Section 1245 Depreciation Recapture

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - Section 1245 recaptures depreciation on personal property as ordinary income. - The recapture amount is the lesser of the gain realized or the total depreciation taken. - Any gain exceeding the recaptured amount is typically treated as a Section 1231 gain. - Section 1245 applies to assets like equipment and vehicles, not buildings (which are Section 1250). - All transactions involving Section 1245 property are reported on Form 4797. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

Enrolled Agent Exam [Part 2] 45, Alternative Depreciation System (ADS)

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - When the Alternative Depreciation System (ADS) is mandatory for property such as foreign use and tax-exempt use property. - The consequences of a real property trade or business electing out of the Section 163(j) interest limitation. - How ADS utilizes the straight-line method over longer recovery periods compared to the General Depreciation System (GDS). - The rule that property depreciated under ADS is ineligible for bonus depreciation, a common exam trap. - The binding and irrevocable nature of an election to use ADS for a specific class of property for a given tax year. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

Enrolled Agent Exam [Part 2] 44, Listed Property — Vehicles and Computers

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - Listed property like vehicles and computers requires strict, contemporaneous written records to substantiate business use. - To claim accelerated depreciation (MACRS, Section 179), business use must exceed 50% in the year the asset is placed in service. - If business use is 50% or less, you are restricted to the slower straight-line method under the Alternative Depreciation System (ADS). - Depreciation recapture is required if business use drops to 50% or less in a subsequent year, treating the excess depreciation taken as ordinary income. - Annual depreciation on passenger automobiles is capped by the luxury auto limits under IRC §280F, regardless of the vehicle's cost or business-use percentage. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

Enrolled Agent Exam [Part 2] 43, Section 179 Expensing — Limits

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - The two primary limitations on the Section 179 deduction: the overall investment limit and the business taxable income limit. - How to calculate the reduction in the maximum Section 179 expense when total asset purchases exceed the phase-out threshold. - That the deduction is ultimately capped by the business's taxable income for the year, a common exam trap. - Any amount disallowed due to the taxable income limitation can be carried forward to subsequent tax years indefinitely. - Which types of real property improvements, such as HVAC and roofs, qualify for the Section 179 expense election. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

Enrolled Agent Exam [Part 2] 42, Bonus Depreciation — Phase-Down Schedule

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - The bonus depreciation rate for 2024 is 60%, and it decreases by 20% each year until it reaches zero in 2027. - Used property now qualifies for bonus depreciation, a significant change from pre-TCJA rules and a common exam trap. - The election to opt out of bonus depreciation must be made for an entire asset class, not on an asset-by-asset basis. - Bonus depreciation is claimed on Form 4562, Depreciation and Amortization. - Certain long-production-period property benefits from a one-year delay in the phase-down schedule. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep