Treatment follows IRS Notice 2000-4
If the treatment follows IRS Notice 2000-4, the replacement asset is determined in the following ways.
After 1/1/87, if you exchange an asset with a treatment that's depreciating using the MACRS, ACRS, Straight-line, 125% DB, 150% DB, or 200% DB method, the application assumes that you're acquiring a MACRS asset for the treatment.
If, at any time, you exchange an asset with a treatment that's depreciating using the Years Digits, Amortization, Units of Production, Memo, Land, or user-defined method, the application assumes that you're acquiring a non-MACRS asset for the treatment. The application sets up the treatment for the replacement asset with the same method of depreciation as the original asset.
Because IRS Notice 2000-4 applies only to MACRS replacement assets, the application sets up MACRS replacement assets for treatments that follow the Notice as aggregate assets that consist of component assets.
A component asset is set up for the following items.
The original asset.
Any components for the aggregate if you are exchanging an aggregate asset.
The amount of boot given for the exchange.
For the like-kind exchange of an aggregate asset or for a mass trade, each treatment must calculate using either a MACRS or a non-MACRS method of depreciation throughout each component so that the application can set up the aggregate asset correctly. For example, in a mass trade you shouldn't trade together an asset with a Tax treatment that depreciates using the MACRS method and an asset with a Tax treatment that depreciates using the Units of Production method.
In a mass trade, standard mileage autos should only be traded with other standard mileage autos. Assets that are expensed using standard mileage aren't considered MACRS assets.