<P> The method and life used in depreciating an asset is an accounting method, change of which requires IRS approval . </P> <P> Taxpayers may track the basis and accumulated depreciation of assets individually or in vintage accounts, as in the old ADR system . Where assets are tracked in vintage accounts, a first - in - first - out convention is usually applied to determine basis of assets retired . </P> <P> At various times, additional depreciation deductions have been allowed to encourage investment . These allowances generally have had limitations . For example, an additional deduction of 50% of the cost of qualifying property is allowed for certain property acquired after December 31, 2007 and before January 1, 2011 A nearly identical allowance was available for property acquired after September 10, 2001 and before 2005 . The IRS recently issued guidance clarifying when taxpayers are eligible for 100 percent bonus depreciation . In addition, the guidance provides procedures for electing 100 percent bonus depreciation and 50 percent bonus depreciation for certain property . In addition to extending the availability of bonus depreciation in general, the Tax Relief Act provided for a new 100 percent depreciation deduction for qualified property that is acquired and placed into service by the taxpayer between September 8, 2010, and January 1, 2014 . Special rules have also applied for biofuel, recycling, and disaster assistance property . </P> <P> Decoupling modification is a tax terminology resulting from the federal tax law enacted March 9, 2002, which created a new tax deduction for "bonus depreciation" that threatened to cost states very large amounts of revenue . Federal Bonus Depreciation, Section 168 (k) of the Internal Revenue Code, allows the acceleration of depreciation on federal tax returns, for example, writing off a higher amount of depreciation for the first year an asset goes into service . States that refuse to accept this method of calculating depreciation for state taxes, for example, Iowa and Maryland, publish forms with instructions so stating . </P>

What is the recovery period under modified accelerated cost recovery system