Tax Code and Regulation Index

How to use the Code pages in this library

Read the section for the job it actually performs. Section 167 is the allowance. Section 168 is the method, recovery period, and convention for most tangible property placed in service after 1986. Section 168(k) is an additional first-year allowance layered onto eligible property. Section 179 is an election to expense qualifying property, subject to annual dollar and phase-out limits. Section 481 is the catch-up when a method of accounting changes. Sections 1012 and 1060 are basis and residual-method allocation rules. Sections 1245 and 1250 are recapture categories that follow the personal-property versus real-property line the classification study is trying to draw.

Do not treat a recovery period as a construction specification. A five-year class is a statutory MACRS class, not a warranty that the item will last five years. Massey Motors taught a useful-life lesson under prior law; MACRS replaced that inquiry for most tangible property. The tax-law pages in this library keep that history labeled as history.

Watch effective dates. Public Law 119-21, enacted July 4, 2025, amended §168(k) and added §168(n). A printout of §168 that predates those amendments will not show the permanent 100 percent additional first-year allowance for qualified property acquired after January 19, 2025, or the qualified-production-property election. The LII §168 page opened for this research already reflected those amendments. Still, any time-sensitive sentence on a CostSeg SI page carries an as-of date for that reason.

Code sections this library cites

§167 — the allowance for depreciation. Section 167(a) permits a reasonable allowance for exhaustion, wear and tear (including obsolescence) of property used in a trade or business or held for the production of income. Land is not depreciable. Personal-use property is outside the allowance. Section 168, §168(k), and §168(n) operate as the method and the additions to that §167(a) deduction.

§168 — MACRS recovery periods, methods, conventions, qualified improvement property, and (in subsection (k)) bonus depreciation; subsection (n) is qualified production property. Residential rental property is recovered over 27.5 years when the 80 percent dwelling-unit rental-income test in §168(e)(2)(A) is met. Nonresidential real property is recovered over 39 years. Qualified improvement property is an interior improvement to a nonresidential building after the building was first placed in service; it is 15-year property under §168(e)(6) and §168(e)(3)(E), subject to the statutory exclusions for enlargements, elevators or escalators, and internal structural framework.

§179 — election to expense certain depreciable business assets, with annual dollar and phase-out limits. For taxable years beginning in 2026, Rev. Proc. 2025-32 states a $2,560,000 dollar limitation, reduced dollar-for-dollar once qualifying property placed in service exceeds $4,090,000, and a $32,000 sport-utility-vehicle cap. Those figures are IRS inflation adjustments, not numbers invented on this page. Whether a particular roof, HVAC system, or interior improvement is §179 property is a CPA determination under the statute and Publication 946.

§481 — adjustments required by a change in method of accounting, the usual path for a look-back study. When depreciation for property already placed in service changes from an impermissible method to a permissible one, the cumulative difference is generally taken into account under §481(a) rather than by amending every closed year. Designated change number 7 on the current automatic-change list is the usual depreciation-method change; that number comes from Rev. Proc. 2025-23, not from the older Form 3115 instructions.

§1012 and §1060 — cost basis and residual-method allocations in applicable asset acquisitions. A buyer’s depreciable basis starts from cost. In an applicable asset acquisition, written residual-method allocations can bind the parties. Peco Foods is the caution case in this library: a later study could not re-cut a building line the contract had already named.

§1245 and §1250 — recapture categories that follow personal property versus real property. Section 1245 property includes depreciable personal property and certain other tangible property; buildings and structural components are generally outside that definition. Gain on §1245 property is recaptured as ordinary income to the extent of prior depreciation. Section 1250 recapture is limited to additional depreciation — depreciation in excess of straight line — as defined in §1250(b). Unrecaptured §1250 gain rate treatment under §1(h) was not separately line-audited for this library and is not stated as a number here.

Regulations this library cites

Treas. Reg. §1.48-1 — tangible personal property, buildings, and structural components, including the sole-justification exception for certain building equipment. Paragraph (c) excludes land, buildings, inherently permanent structures, and structural components from tangible personal property, and it says local fixture law is not controlling. Paragraph (e)(1) defines a building as a structure enclosing a space within its walls, usually covered by a roof, used for shelter, housing, working, office, parking, display, or sales space. Paragraph (e)(2) lists structural components: walls, floors, roofs, permanent coverings, windows, doors, central HVAC components, plumbing, electric wiring and lighting fixtures, stairs, elevators, sprinklers, fire escapes, and other components relating to the operation or maintenance of a building. The sole-justification exception takes certain machinery out of that list when the sole justification for installation is to meet temperature or humidity requirements essential for other machinery or for processing materials or foodstuffs.

Treas. Reg. §§1.263(a)-1 and 1.263(a)-3 — capital expenditures and improvements, including the routine-maintenance safe harbor and betterment, restoration, and adaptation tests. Section 1.263(a)-3 also defines units of property for a building: the building structure and each listed building system (HVAC, plumbing, electrical, escalators, elevators, fire protection and alarm, security, gas distribution, and other systems designated in published guidance). That unit-of-property definition decides repair versus capitalization. It is not, by itself, a MACRS class. A system can be a building system for improvement analysis and still contain a dedicated equipment portion that a classification study treats as §1245 under Scott Paper or the sole-justification exception.

Treas. Reg. §1.162-3 — materials and supplies. This regulation is the materials-and-supplies companion to the tangible-property regulations. It does not assign recovery periods.

Treas. Reg. §1.168(k)-2 — additional first-year depreciation, still the acquisition-date regulation that Notice 2026-11 applies with new dates. The notice tells taxpayers to read January 19, 2025, where the regulation says September 27, 2017, and January 20, 2025, where it says September 28, 2017. Binding-contract, self-constructed-property, and 10-percent-of-cost rules live in that regulation, as applied by the notice.

Treas. Reg. §1.168(i)-8 — dispositions of MACRS property, including partial dispositions. A partial-disposition election can allow a taxpayer to recognize the remaining basis of a retired portion of an asset, such as a replaced roof, instead of capitalizing the new roof onto an undivided building account. Timing and eligibility details were not fully extracted for every example; the tax-law page states the existence of the election and stops where the opened text stops.

What a Code or regulation page is not

A CostSeg SI paraphrase is company education. It is not a certified code service, and it is not a substitute for the eCFR text a CPA will cite. Pinpoints appear only when they were confirmed on a page that was opened. This index does not invent subsection letters to make a sentence look more precise.

Publication 5653 quotes many of these authorities for examiners. That does not promote the guide to Tier 1. If the guide’s February 2025 bonus discussion is older than Public Law 119-21, the statute and Notice 2026-11 control. The tax-law pages in this library are written to keep that hierarchy visible.