| Publication 954 |
2001 Tax Year |
Depreciation of Property Used on Indian Reservations
Depreciation is a loss in the value of property over the time the
property is being used. You can get back your cost of certain property
by taking deductions for depreciation. This includes the cost of
certain buildings and equipment you use in your business.
Special depreciation rules apply to qualified property that you
place in service on an Indian reservation after 1993 and before 2004.
These special rules allow you to use shorter recovery periods to
figure your depreciation deduction for qualified property. As a
result, your deduction is larger. Your business does not have to use
the property in an empowerment zone, enterprise community, or renewal
community to use these special rules.
Qualified property.
Property eligible for the shorter recovery periods is 3-, 5-, 7-,
10-, 15-, and 20-year property and nonresidential real property. You
must use this property predominantly in the active conduct of a trade
or business within an Indian reservation. Real property you rent to
others that is located on an Indian reservation is also eligible for
the shorter recovery periods.
The following property is not qualified property.
- Property used or located outside an Indian reservation on a
regular basis, other than qualified infrastructure property.
- Property acquired directly or indirectly from certain
related persons.
- Property placed in service for purposes of conducting or
housing certain gaming activities.
- Any property you must depreciate under the Alternative
Depreciation System (ADS).
Qualified infrastructure property.
Item (1) above does not apply to qualified infrastructure property
located outside the reservation that is used to connect with qualified
infrastructure property within the reservation.
Qualified infrastructure property is property that meets all the
following requirements.
- It is qualified property, as defined earlier (except that it
is outside the reservation).
- It benefits the tribal infrastructure.
- It is available to the general public.
- It is placed in service in connection with the active
conduct of a trade or business within a reservation.
Infrastructure property includes, but is not limited to, roads,
power lines, water systems, railroad spurs, and communications
facilities.
Recovery periods.
The following table shows the shorter recovery periods you can use
to depreciate qualified property.
Table 4. Recovery Periods for Qualified
Property
| | Recovery |
|
Property Class |
Period |
| 3-year |
2 years |
| 5-year |
3 years |
| 7-year |
4 years |
| 10-year |
6 years |
| 15-year |
9 years |
| 20-year |
12 years |
| Nonresidential real property |
22 years |
More information.
For more information about depreciation, including the special
rules that apply to property used on Indian reservations, see
Publication 946.
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