E&P calculation tax assumptions

When calculating earnings and profits for ACRS real property and low-income housing using the optional straight-line method, the application uses a formula-based calculation because tables for the 40-year optional straight-line method don’t exist.

Depreciation for assets with section 179 expense is taken over 5 taxable years with short years counting as full years. Assets with partial section 179 expense are treated as 2 assets: one-fifth of 179 expense per year and the remaining depreciable basis (after subtracting 100% section 179 expense) straight line over the earnings and profits life.