1.300
1.300 Accelerated Deductions from Gross Income
Tax Expenditure Name
Tax Expenditure Number
FY2017
FY2018
FY2019
FY2020
FY2021
Accelerated Deductions from Gross Income
1.300
215.6
233.8
247.8
244.6
242.2
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Tax Item
Description
Origin
FY2021
1.301
Modified Accelerated Depreciation on Rental Housing
Modified Accelerated Depreciation on Rental Housing
Landlords and investors in rental housing may use accelerated methods of depreciation for new and used rental housing. Rental housing placed in service after 1988 is depreciated on a straight-line basis over a 27.5-year period. Rental housing placed in service before 1988 was depreciable over shorter periods (generally 19 or 20 years), and, instead of straight-line depreciation, the 175% declining balance method was permitted. Straight-line depreciation over the property's expected useful life is the generally accepted method for recovering the cost of building structures. The excess of allowable depreciation over such generally accepted depreciation is a tax expenditure, resulting in a deferral of tax or an interest-free loan.
17.9
1.303
Modified Accelerated Depreciation on Buildings (other than Rental Housing)
Modified Accelerated Depreciation on Buildings (other than Rental Housing)
Individuals or investors in a trade or business may use accelerated methods of depreciation for buildings. Construction may be depreciated under methods that produce faster depreciation than economic depreciation. The precise rates have been changed repeatedly in recent years as the result of revisions in the federal tax code. Structures (other than rental housing) placed in service after 1987 are depreciated on a straight-line basis over a 31.5-year life. The excess of accelerated depreciation over economic depreciation is a tax expenditure, resulting in a deferral of tax or an interest-free loan.
12.3
1.304
Modified Accelerated Cost Recovery System (MACRS) for Equipment
Modified Accelerated Cost Recovery System (MACRS) for Equipment
For depreciable tangible personal property placed in service after 1980, capital costs may be recovered using the Accelerated Cost Recovery System (ACRS), which applies accelerated methods of depreciation over set recovery periods. For property placed in service after 1987, Massachusetts has adopted the Modified Accelerated Cost Recovery System (MACRS), which generally uses double declining balance depreciation over specified periods that are substantially shorter than actual useful lives (200% declining balance for 3-, 5-, 7- and 10-year recovery property and 150% declining balance for 15- and 20-year property). The excess of accelerated depreciation over economic depreciation is a tax expenditure, resulting in a deferral of tax or an interest-free loan.
86.7
1.305
Deduction for Excess First-Year Depreciation
Deduction for Excess First-Year Depreciation
A taxpayer may elect to expense the cost of any section 179 property and deduct it in the year the property is placed in service. The "Tax Cuts and Jobs Act" increased the maximum deduction from $500,000 to $1 million. It also increased the phase-out threshold from $2 million to $2.5 million. For taxable years beginning after 2018, these amounts of $1 million and $2.5 million will be adjusted for inflation. Any remaining cost may be depreciated according to MACRS as described in item 2.305. The immediate deduction constitutes a tax expenditure, resulting in a deferral of tax or an interest-free loan.
123.9
1.306
Election to Deduct and Amortize Business Start-up Costs
Election to Deduct and Amortize Business Start-up Costs
Individuals or investors in a trade or business may elect to treat business start-up expenditures as deferred expenses and amortize them over a period of not less than 180 months, starting with the month in which the business begins. For a more detailed description of this tax expenditure, see corporate excise item 2.304.
0.6
1.308
Expensing Exploration and Development Costs
Expensing Exploration and Development Costs
Individuals or investors in extractive industries (mining or drilling natural resources) may take an immediate deduction for certain exploration and development costs. For a more detailed description of this tax expenditure, see corporate excise item 2.309; the provisions for individual taxpayers are somewhat more liberal than those that apply to corporations.
Negligible
1.312
Expensing Certain Capital Outlays of Farmers
Expensing Certain Capital Outlays of Farmers
Farmers may use certain favorable accounting rules. For instance, they may use the cash basis method of accounting and may deduct up to 50% of non-paid farming expenses as current expenses even though these expenditures are for inventories on hand at the end of the year. They also may deduct certain capital outlays, such as expenses for fertilizers and soil and water conservation if they are consistent with a federal- or state-approved plan. Generally, these special rules are not available to farming corporations and syndicates.
0.5
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