California Code of Regulations › Title 18 - Public Revenues › Division 3 - Franchise Tax Board › Chapter 3.5 - Bank and Corporation Tax › Subchapter 7 - Net Income › Article 1 - Deductions › Section 24352 - Change in Method

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) In
					 General. Any change in the method of computing the depreciation allowances with
					 respect to a particular account is a change in method of accounting, and such a
					 change will be permitted only with the consent of the Franchise Tax Board,
					 except that certain changes to the straight line method shall be permitted
					 without consent as provided in Section
					 24352 and subsection (b) of this
					 regulation. A change in method of computing depreciation will be permitted only
					 with respect to all the assets contained in a particular account as defined in
					 Reg. 24349(g). Any change in the percentage of the current straight line rate
					 under the declining balance method, as for example, from 200 percent of the
					 straight line rate to any other percent of the straight line rate, or any
					 change in the interest factor used in connection with a compound interest or
					 sinking fund method will constitute a change in method of depreciation and will
					 require the consent of the Franchise Tax Board. Any request for a change in
					 method of depreciation shall be made in accordance with Section
					 24651 and the regulations
					 thereunder and shall state the character and location of the property, method
					 of depreciation being used and the method proposed, the date of acquisition,
					 the cost or other basis and adjustments thereto, amounts recovered through
					 depreciation and other allowances, the estimated salvage value, the estimated
					 remaining life of the property, and such other information as may be
					 required.
(b) Declining Balance to
					 Straight Line. In the case of an account to which the method described in
					 Section 24349(b)(2) is
					 applicable, a taxpayer may change without the consent of the Franchise Tax
					 Board, from the declining balance method of depreciation to the straight line
					 method at any time during the useful life of the property under the following
					 conditions. Such a change may not be made if a provision prohibiting such a
					 change is contained in an agreement under Section
					 24351. When the change is made,
					 the unrecovered cost or other basis (less a reasonable estimate for salvage)
					 shall be recovered through annual allowances over the estimated remaining
					 useful life determined in accordance with the circumstances existing at that
					 time. With respect to any account, this change will be permitted only if
					 applied to all the assets in the account as defined in Reg. 24349(g). The
					 taxpayer shall furnish a statement with respect to the property which is the
					 subject of the change showing the date of acquisition, cost or other basis,
					 amounts recovered through depreciation and other allowances, the estimated
					 salvage value, the character of the property, the remaining useful life of the
					 property, and such other information as may be required. The statement shall be
					 attached to the taxpayer's return for the income year in which the change is
					 made. A change to the straight line method must be adhered to for the entire
					 income year of the change and for all subsequent income years unless, with the
					 consent of the Franchise Tax Board, a change to another method is
					 permitted.
1. New
						section filed 9-19-69; effective thirtieth day thereafter (Register 69, No.
						38).[FN***]
This regulation is based on Section
						26 CFR
						1.167(e)-1.
Note: Authority cited: Section
						  26422,
						  Revenue and Taxation Code.