Cal. Code Regs. tit. 18 § 24349(k)

Current through Register 2024 Notice Reg. No. 40, October 4, 2024

Section 24349(k) - Method of Computing Depreciation

(1) In General. Regardless of the method used in computing depreciation, deductions for depreciation shall not exceed such amounts as may be necessary to recover the unrecovered cost or other basis less salvage during the remaining useful life of the property. The reasonableness of any claim for depreciation shall be determined upon the basis of conditions known to exist at the end of the period for which the return is made. It is the responsibility of the taxpayer to establish the reasonableness of the deduction for depreciation claimed. Generally, depreciation deductions so claimed will be changed only where there is a clear and convincing basis for a change.

(2) Approved Methods. Any method of depreciation which was acceptable prior to the 1955 revision of the law or under the Internal Revenue Code of 1939 is an approved method. The most common of these methods is the straight line, whereby the annual allowance for depreciation is determined by dividing the cost of the property, less its estimated salvage value, by the number of years of its estimated life. While other methods may be used, the amount set aside for depreciation should be in accordance with a reasonably consistent plan (not necessarily at a uniform rate), whereby the aggregate of the amounts so set aside, plus the salvage value, will, at the end of the useful life of the property in the business, equal the cost or other basis of the property determined in accordance with Articles 1 and 2 of Chapter 15.

Since counterparts of Section 167(b)(2), (3), (4), (c), (d), and (e) of the Internal Revenue Code of 1954, were not enacted by the Legislature and made a part of this law until 1959, the "200 percent declining balance" and "sum-of-the-digits" methods of computing depreciation were not approved methods for determining income for state tax purposes until income years ending after December 31, 1958. However, if the declining balance method was in use prior to the 1955 revision of the law such method may be continued, but the rate must be limited to 150 percent of the applicable straight line method. In the case of new assets, i.e., assets acquired after December 31, 1954, the declining balance method may be used if the rate is limited to 150 percent of the applicable straight line method.

No deduction may be taken on account of depreciation actually sustained before January 1, 1928, under Chapter 2, or January 1, 1937, under Chapter 3.

(A) Straight line method.

(i)Application of method. Under the straight line method the cost or other basis of the property less its estimated salvage value is deductible in equal annual amounts over the period of the estimated useful life of the property. The allowance for depreciation for the taxable year is determined by dividing the adjusted basis of the property at the beginning of the taxable year, less salvage value, by the remaining useful life of the property at such time. For convenience, the allowance so determined may be reduced to a percentage or fraction. The straight line method may be used in determining a reasonable allowance for depreciation for any property which is subject to depreciation under section 167 and it shall be used in all cases where the taxpayer has not adopted a different acceptable method with respect to such property.

(ii) Illustrations. The straight line method is illustrated by the following examples:

EXAMPLE (1).

Under the straight line method items may be depreciated separately:

*Year*	*Item*	*Cost or other basis less salvage*	*Useful life*	*Depreciation Allowable*
			*Years*	*1954*	*1955*	*1956*
1954	Asset A	$1,600	4	$200¹	$400	$400
	Asset B	12,000	40	150¹	300	300

1 In this example it is assumed that the assets were placed in service on July 1, 1954.

EXAMPLE (2).

In group, classified, or composite accounting, a number of assets with the same or different useful lives may be combined into one account, and a single rate of depreciation, i.e., the group, classified, or composite rate used for the entire account. In the case of group accounts, i.e., accounts containing assets which are similar in kind and which have approximately the same estimated useful lives, the group rate is determined from the average of the useful lives of the assets. In the case of classified or composite accounts, the classified or composite rate is generally computed by determining the amount of one year's depreciation for each item or each group of similar items, and by dividing the total depreciation thus obtained by the total cost or other basis of the assets. The average rate so obtained is to be used as long as subsequent additions, retirements, or replacements do not substantially alter the relative proportions of different types of assets in the account. An example of the computation of a classified or composite rate follows:

*Cost or other basis*	*Estimated useful life Years*	*Annual depreciation*
$10,000	5	$2,000
10,000	15	667
20,000		2,667

Average rate is 13.33 percent ($2,667 / $20,000) unadjusted for salvage. Assuming the estimated salvage value is 10 percent of the cost or other basis, the rate adjusted for salvage will be 13.33 percent minus 10 percent of 13.33 percent (13.33% - 1.33%), or 12 percent.

EXAMPLE (3).

The use of the straight line method for group, classified, or composite accounts is illustrated by the following example: A taxpayer filing his returns on a calendar year basis maintains an asset account for which a group rate of 20 percent has been determined, before adjustment for salvage. Estimated salvage is determined to be 6 ²/₃ percent, resulting in an adjusted rate of 18.67 percent. During the years illustrated, the initial investment, additions, retirements, and salvage recoveries, which were determined not to change the composition of the group sufficiently to require a change in rate, were assumed to have been made as follows:

1954--Initial investment of $12,000

1957--Retirement $2,000, salvage realized $200

1958--Retirement $2,000, salvage realized $200

1959--Retirements $4,000, salvage realized $400

1959--Additions $10,000

1960--Retirement $2,000, no salvage realized

1961--Retirement $2,000, no salvage realized

Depreciable Asset Account and Depreciation Computation on Average Balances

*Year*	*Asset balance Jan. 1*	*Current additions*	*Current retirements*	*Asset balance Dec. 31*	*Average balance*	*Rate (percent)*	*Allowable depreciation*
1954	___	$12,000	___	$12,000	$6,000	18.67	$1,120
1955	$12,000	___	___	12,000	12,000	18.67	2,240
1956	12,000	___	___	12,000	12,000	18.67	2,240
1957	12,000	___	$2,000	10,000	11,000	18.67	2,054
1958	10,000	___	2,000	8,000	9,000	18.67	1,680
1959	8,000	10,000	4,000	14,000	11,000	18.67	2,054
1960	14,000	___	2,000	12,000	13,000	18.67	2,427
1961	12,000	___	2,000	10,000	11,000	18.67	2,054

Corresponding Depreciation Reserve Account

*Year*	*Depreciation reserve Jan. 1*	*Depreciation allowable*	*Current retirements*	*Salvage realized*	*Depreciation reserve Dec. 31*
1954	___	$1,120	___	___	$1,120
1955	$1,120	2,240	___	___	3,360
1956	3,360	2,240	___	___	5,600
1957	5,600	2,054	$2,000	$200	5,854
1958	5,854	1,680	2,000	200	5,734
1959	5,734	2,054	4,000	400	4,188
1960	4,188	2,427	2,000	___	4,615
1961	4,615	2,054	2,000	___	4,669

(B) Declining Balance Method.

(i) Application of Method. Under the declining balance method a uniform rate is applied each year to the unrecovered cost or other basis of the property. The unrecovered cost or other basis is the basis provided by Section 24353 adjusted for depreciation previously allowed or allowable, and for all other adjustments provided by Section 24916 and other applicable provisions of law. The declining balance rate may be determined without resort to formula. Such rate determined under Section 24349(b)(2) shall not exceed twice the appropriate straight line rate computed without adjustment for salvage. While salvage is not taken into account in determining the annual allowances under this method, in no event shall an asset (or an account) be depreciated below a reasonable salvage value. However, see Section 24352.5 for rules which permit a reduction in the amount of salvage value to be taken into account for certain personal property acquired after December 8, 1971. Also, see Section 24350 for restrictions on the use of the declining balance method.

(ii) Illustrations. The declining balance method is illustrated by the following examples:

EXAMPLE (1).

A new asset having an estimated useful life of 20 years was purchased on January 1, 1959, for $1,000. The normal straight line rate (without adjustment for salvage) is 5 percent, and the declining balance rate at twice the normal straight line rate is 10 percent. The annual depreciation allowances for 1959, 1960, and 1961 are as follows:

*Year*	*Basis*	*Declining balance rate (percent)*	*Depreciation allowance*
1959..........................	..........................$1,000	10	$100
1960..........................	..........................900	10	90
1961..........................	..........................810	10	81

(iii) Change in estimated useful life. In the declining balance method when a change is justified in the useful life estimated for an account, subsequent computations shall be made as though the revised useful life had been originally estimated. For example, assume that an account has an estimated useful life of ten years and that a declining balance rate of 20 percent is applicable. If, at the end of the sixth year, it is determined that the remaining useful life of the account is six years, computations shall be made as though the estimated useful life was originally determined as twelve years. Accordingly, the applicable depreciation rate will be 16 ²/₃ percent. This rate is thereafter applied to the unrecovered cost or other basis.

(C) Sum of the years-digits method.

(i) Applied to a single asset. Under the sum of the years-digits method annual allowances for depreciation are computed by applying changing fractions to the cost or other basis of the property reduced by estimated salvage. The numerator of the fraction changes each year to a number which corresponds to the remaining useful life of the asset (including the year for which the allowance is being computed), and the denominator which remains constant is the sum of all the years digits corresponding to the estimated useful life of the asset. See Section 24350 for restrictions on the use of the sum of the years-digits method.

(I) Illustrations. Computation of depreciation allowances on a single asset under the sum of the years-digits method is illustrated by the following examples:

EXAMPLE (1).

A new asset having an estimated useful life of five years was acquired on January 1, 1959, for $1,750. The estimated salvage is $250. For a taxpayer filing its returns on a calendar year basis, the annual depreciation allowances are as follows:

*Year*	*Cost or other basis less salvage*	Fraction¹	*Allowable depreciation*	*Depreciation reserve*
1959	$1,500	⁵/₁₅	$500	$500
1960	1,500	⁴/₁₅	400	900
1961	1,500	³/₁₅	300	1,200
1962	1,500	²/₁₅	200	1,400
1963	1,500	¹/₁₅	100	1,500
	Unrecovered value (salvage)			250

1 The denominator of the fraction is the sum of the digits representing the years of useful life, i.e., 5, 4, 3, 2, and 1, or 15.

EXAMPLE (2).

Assume in connection with an asset acquired in 1959 that 3/4 of a year's depreciation is allowable in that year. The following illustrates a reasonable method of allocating depreciation:

	*Depreciation for 12 months*		*Allowable depreciation*
			1959	1960	1961
1st year	$500	( 3/4)	$375	( 1/4) $125
2nd year	400			( 3/4) 300	( 1/4) $100
3rd year	300				( 3/4) 225
			375	425	325

(II) Change in useful life. Where in the case of a single asset, a change is justified in the useful life, subsequent computations shall be made as though the remaining useful life at the beginning of the income year of change were the useful life of a new asset acquired at such time and with a basis equal to the unrecovered cost or other basis of the asset at that time. For example, assume that a new asset with an estimated useful life of ten years is purchased in 1959. At the time of making out its return for 1964, the taxpayer finds that the asset has a remaining useful life of seven years from January 1, 1964. Depreciation for 1964 should then be computed as though 1964 were the first year of the life on an asset estimated to have a useful life of seven years, and the allowance for 1964 would be ⁷/₂₈ of the unrecovered cost or other basis of the asset after adjustment for salvage.

(ii) Remaining life.

(I)Application. Under the sum of the years-digits method, annual allowances for depreciation may also be computed by applying changing fractions to the unrecovered cost or other basis of the asset reduced by estimated salvage. The numerator of the fraction changes each year to a number which corresponds to the remaining useful life of the asset (including the year for which the allowance is being computed), and the denominator changes each year to a number which represents the sum of the digits corresponding to the years of estimated remaining useful life of the asset. For decimal equivalents of such fractions, see Table I of subdivision (ii) of subparagraph 1.167(b)(3) Code of Federal Regulations. For example, a new asset with an estimated useful life of 10 years is purchased January 1, 1959, for $6,000. Assuming a salvage value of $500, the depreciation allowance for 1959 is $1,000 ($5,500 x 0.1818, the applicable rate from Table I). For 1960, the unrecovered balance is $4,500, and the remaining life is 9 years. The depreciation allowance for 1960 would then be $900 ($4,500 x .2000, the applicable rate from Table I).

(D) Other Methods.

(a) Under Section 24349(b)(4) a taxpayer may use any consistent method of computing depreciation, such as the sinking fund method, provided depreciation allowances computed in accordance with such method do not result in accumulated allowances at the end of any income year greater than the total of the accumulated allowances which could have resulted from the use of the declining balance method described in Section 24349(b)(2). This limitation applies only during the first two-thirds of the useful life of the property. For example, an asset costing $1,000 having a useful life of six years may be depreciated under the declining balance method in accordance with Reg. 24349(k)(2)(B), at a rate of 33 1/3 percent. During the first four years or ²/₃ of its useful life, maximum depreciation allowances under the declining balance method would be as follows:

	*Current depreciation*	*Accumulated depreciation*	Balance
Cost of asset...................................................................................................................................................................................................................................................................................................$1,000
First year..........................	..........................$333	$333	667
Second year..........................	..........................222	555	445
Third year..........................	..........................148	703	297
Fourth year..........................	..........................99	802	198

An annual allowance computed by any other method under Section 24349(b)(4) could not exceed $333 for the first year, and at the end of the second year the total allowances for the two years could not exceed $555. Likewise, the total allowances for the three years could not exceed $703 and for the four years could not exceed $802. This limitation would not apply in the fifth and sixth years. See Section 24350 for restrictions on the use of certain methods.

(b) It shall be the responsibility of the taxpayer to establish to the satisfaction of the Franchise Tax Board that a method of depreciation under Section 24349(b)(4) is both a reasonable and consistent method and that it does not produce depreciation allowances in excess of the amount permitted under the limitations provided in such section.

(3) Limitations on Methods of Computing Depreciation Under Section 24349(b)(2), (3), and (4).

(A) In General.

(i) Section 24350 provides limitations on the use of the declining balance method described in Section 24349(b)(2), the sum of the years-digits method described in Section 24349(b)(3), and certain other methods authorized by Section 24349(b)(4). These methods are applicable only to tangible property having a useful life of three years or more. If construction, reconstruction, or erection by the taxpayer began before January 1, 1959, and was completed after December 31, 1958, these methods apply only to that portion of the basis of the property which is properly attributable to construction, reconstruction, or erection after December 31, 1958. Property is considered as constructed, reconstructed, or erected by the taxpayer if the work is done for him in accordance with his specifications. The portion of the basis of such property attributable to construction, reconstruction, or erection after December 31, 1958, consists of all cost of the property allocable to the period after December 31, 1958, including the cost or other basis of materials entering into such work. It is not necessary that such materials be acquired after December 31, 1958, or that they be new in use. If construction or erection by the taxpayer began after December 31, 1958, the entire cost or other basis of such construction or erection qualifies for these methods of depreciation. In the case of reconstruction of property, these methods do not apply to any part of the adjusted basis of such property on December 31, 1958. For purposes of this regulation, construction, reconstruction, or erection by the taxpayer begins when physical work is started on such construction, reconstruction, or erection.

(ii) If the property was not constructed, reconstructed, or erected by the taxpayer, these methods apply only if it was acquired after December 31, 1958, and if the original use of the property commences with the taxpayer and commences after December 31, 1958. For the purpose of the preceding sentence, property shall be deemed to be acquired when reduced to physical possession, or control. The term "original use" means the first use to which the property is put, whether or not such use corresponds to the use of such property by the taxpayer. For example, a reconditioned or rebuilt machine acquired after December 31, 1958, will not be treated as being put to original use by the taxpayer even though it is put to a different use, nor will a horse acquired for breeding purposes be treated as being put to original use by the taxpayer if prior to the purchase the horse was used for racing purposes. See Regs. 24349(k)(2)(B), (C) and (D) of the various methods.

(iii) Assets having an estimated average useful life of less than three years shall not be included in a group, classified or composite account to which the methods described in Regs. 24349(k)(2)(B), (C) and (D), are applicable. However, an incidental retirement of an asset from such an account prior to the expiration of a useful life of three years will not prevent the application of these methods to such an account.

(iv) The methods of depreciation described in Regs. 24349(k)(2)(B), (C), and (D), are not applicable to property in the hands of a distributee, vendee, transferee, donee, or grantee unless the original use of the property begins with such person and the conditions required by Section 24350 and this regulation are otherwise met.

(B) Illustrations.

(i) The application of these methods to property constructed, reconstructed, or erected by the taxpayer after December 31, 1958, may be illustrated by the following examples:

EXAMPLE (1).

If a building with a total cost of $100,000 is completed after December 31, 1958, and the portion attributable to construction after December 31, 1958, is determined by engineering estimates or by cost accounting records to be $80,000, the method referred to in subparagraph (A)(i) above, are applicable only to the $30,000 portion of the total.

EXAMPLE (2).

In 1959, a taxpayer has an old machine with an unrecovered cost of $1,000. If he contracts to have it reconditioned, or reconditions it himself, at a cost of an additional $5,000, only the $5,000 may be depreciated under the methods referred to in subparagraph (A)(i) above, whether or not the materials used for reconditioning are new in use.

EXAMPLE (3).

A taxpayer who acquired a building in 1945 makes major maintenance or repair expenditure in 1959 of a type which must be capitalized. For these expenditures the taxpayer may use a method of depreciation different from that used on the building (for example, the methods referred to in subparagraph (A)(i) above) only if he accounts for such expenditures separately from the account which contained the original building. In such case, the unadjusted basis on any parts replaced shall be removed from the asset account and shall be charged to the appropriate depreciation reserve account. In the alternative he may capitalize such expenditures by charging them to the depreciation reserve account for the building.

(ii) The application of these methods to property which was not constructed, reconstructed, or erected by the taxpayer but which was acquired after December 31, 1958, may be illustrated by the following examples:

EXAMPLE (1).

A taxpayer contracted in 1958 to purchase a new machine which he acquired in 1959 and put into first use in that year. He may use the methods referred to in subparagraph (A)(i) above, in recovering the cost of the new machine.

EXAMPLE (2).

A taxpayer instead of reconditioning his old machine buys a "factory reconditioned" machine in 1959 to replace it. He cannot apply the methods referred to in subparagraph (A)(i) above, to any part of the cost of the reconditioned machine since he is not the first user of the machine.

EXAMPLE (3).

In 1959, a taxpayer buys a house for $20,000 which had been used as a personal residence and thus had not been subject to depreciation allowances. He makes a capital addition of $5,000 and rents the property to another. The taxpayer may use the methods referred to in subparagraph (A)(i) above, only with respect to the $5,000 cost of the addition.

(C) Election to Use Methods. Subject to the limitations set forth in subparagraph (A) of this regulation, the methods of computing the allowance for depreciation specified in Section 24349(k)(2)(B), (C), and (D) may be adopted without permission and no formal election is required. In order for a taxpayer to elect to use these methods for any property described in subparagraph (A) of this regulation, he need only compute depreciation thereon under any of these methods for any taxable year ending after December 31, 1958, in which the property may first be depreciated by him. The election with respect to any property shall not be binding with respect to acquisitions of similar property in the same year or subsequent year which are set up in separate accounts. If a taxpayer has filed his return for a taxable year ending after December 31, 1958, an election to compute the depreciation allowance under any of the methods specified in Section 24349 or a change in such an election may be made in an amended return only with the consent of the Franchise Tax Board.

(4) Adjustment for Federal Investment Credit.

(A) In order to eliminate the necessity of maintaining separate depreciation schedules for State and federal tax purposes with respect to property which qualifies for the investment credit provided for by the Federal Revenue Bill of 1962 (Public Law 87-834), every taxpayer, at its election may deduct the proper depreciation allowed under the Internal Revenue Code of 1954, and:

(1) Depreciate separately over the life of the property an additional amount equal to the investment credit allowed with respect to such property;

(2) Increase the salvage value of the property by an amount equal to the investment credit allowed with respect to such property; or

(3) For the year succeeding the useful life of the property deduct the amount of the investment credit allowed with respect to such property.

A timely election under this regulation shall be made for the first income year to which the election applies, or in the case of income years beginning before January 1, 1964 on or before the last day prescribed by law (including extensions thereof) for filing a return for the last income year beginning before January 1, 1964. The election shall consist of a computation made in accordance with one of the provisions of this regulation or by filing a written statement signed by the taxpayer declaring which of the methods provided by this regulation is adopted. If a taxpayer has elected to deduct the proper depreciation allowed under the Internal Revenue Code of 1954, and has not made an election in its return or otherwise within the period provided for by this regulation, it shall be deemed to have elected to adopt method number (2).

(B)

(1) The Federal Revenue Act of 1964 permits the basis of property placed in service before January 1, 1964, which qualified for the investment credit provided for by Section 38 of the Internal Revenue Code of 1954, to be increased by an amount equal to the federal investment credit. To eliminate the necessity of maintaining separate depreciation schedules for state and federal purposes and make provisions for the various methods which were provided for treatment of the investment tax credit under paragraph (A) of this regulation the following provisions apply:

(i) To adjust the allowance for depreciation under the Bank and Corporation Tax Law, for income years beginning after December 31, 1963, a taxpayer which elected to adjust its depreciation under method (1) of Paragraph (A) of this regulation may elect to:

(a) Adjust its State depreciation allowance by reducing the proper depreciation allowed for the income year under the Internal Revenue Code of 1954, equally for each income year over the remaining life of the property as follows:

(1) Determine the amount of depreciation allowed under the Bank and Corporation Tax Law which exceeded the amount allowed under the Internal Revenue Code of 1954 attributable to property placed in service before January 1, 1964, for which the federal investment credit was allowed; and

(2) Divide such excess amount by the remaining useful life of the property.

EXAMPLE:

A new asset having a useful life of 10 years for which the federal investment credit was allowed was acquired on January 1, 1962, for $1,000. It has no salvage value and the depreciation allowance is determined under the straight line method. The depreciation allowances for 1962, 1963, and 1964 under state and federal law are as follows:

	Adjusted Basis	Depreciation
	As of December 31	Allowance
Year	State	Federal	State	Federal	Difference
1962..........................	$900	$837¹	$100	$93	$7
1963..........................	$800	$744	$100	$93	$7
					$14
1964..........................	$700	$712.25²			$101.75
	State adjustment...........................................................................................................................................................................................				-1.75³
					$100.00

If the taxpayer in the above example had used the declining balance method, with a rate not exceeding twice the straight line allowance, the adjustment would be as follows:

	Adjusted Basis		Depreciation
	As of December 31		Allowance
Year	State	Federal	State	Federal	Difference
1962..........................	$800	$744	$200	$186	$14
1963..........................	$640	$595.20	$160	$148.80	$11.20
					$25.20
1964..........................	$510.11	$532.16⁵		$133.04
	State adjustment⁴..................................................................................................................................			-3.15
				$129.89
¹ Cost............................................................................................................................................................................................					$1,000
	Less: Investment credit......................................................................................................................................................			$70
	1962 depreciation..............................................................................................................................................................			93	163
					$837
² 1963 adjusted basis...............................................................................................................................................................................................................................					$744.00
	Plus investment credit..............................................................................................................................................................				70.00
					$814.00
Less 1964 depreciation........................................................................................................................................................................................................................					$101.75
	($814.00 / 8)..............................................................................................................................................................................				$712.25
³ Adjustment (Remaining life $14 / 8 difference between State and Federal depreciation)
⁴ Adjustment (Remaining life $25.20 / 8 difference between State and Federal adjustment)
⁵ 1963 adjusted basis....................................................................................................................................................................................................................................					$595.20
	Plus investment credit..............................................................................................................................................................				70.00
					$665.20
Less 1964 depreciation....................................................................................................................................................................................................					$133.04
					$532.16

(b) Claim the same depreciation as allowed by the Internal Revenue Code of 1954 and the Federal Revenue Act of 1964 for income years beginning after December 31, 1963, provided the taxpayer reports as net income for its first income year ending after December 31, 1963, the total amount attributable to the State depreciation deduction which exceeded the depreciation deduction allowed under the Internal Revenue Code of 1954, because of the reduction in basis required by Section 48(g). A taxpayer may make the adjustment provided for by this paragraph only if the excess State depreciation deduction is subject to tax measured by net income.

(c) Claim the same depreciation as allowed by the Internal Revenue Code of 1954 and the Federal Revenue Act of 1964, for income years beginning after December 31, 1963, provided that:

(1) Amended returns or schedules are filed for any income years for which method (1) of paragraph (A) was applicable; and

(2) Any additional taxes due for additional amounts deducted for the period method (1) of paragraph (A) was applicable are paid, including interest thereon.

(2) No adjustment is required in the case of taxpayers which elected to adopt methods (2) or (3) of paragraph (A) of this regulation. Such taxpayers may elect within the time prescribed by paragraph (3) to deduct the same depreciation allowance which is allowed under the Internal Revenue Code of 1954 with respect to qualified property.

(3) If property subject to the provisions of this regulation is sold or exchanged prior to the end of its useful life, and its basis for determining gain or loss is determined by reference to its adjusted basis under the Internal Revenue Code of 1954, in addition to any other adjustments, proper adjustment in respect of the property shall be made for any difference between depreciation allowed under the Bank and Corporation Tax Law and the Internal Revenue Code of 1954.

The elections provided by this paragraph shall be made for the first income year ending after December 31, 1963. Adjustments may be made in returns filed for any income year ending on or before December 31, 1966, provided that the required adjustments are made for all applicable years. An election to make the adjustment provided for by this regulation shall be made by computing the depreciation allowance in the manner provided for by this regulation.

Cal. Code Regs. Tit. 18, § 24349(k)

1. Repealer and new section filed 1-6-77; effective thirtieth day thereafter (Register 77, No. 2).

Note: Authority cited: Section 26422, Revenue and Taxation Code. Reference: Section 24349, Revenue and Taxation Code.

1. Repealer and new section filed 1-6-77; effective thirtieth day thereafter (Register 77, No. 2).