> 26 US Code Section 174, paragraph D - Treatment upon disposition, retirement, or abandonment
If any property with respect to which specified research or experimental
expenditures are paid or incurred is disposed, retired, or abandoned
during the period during which such expenditures are allowed as an amortization
deduction under this section, no deduction shall be allowed with respect to
such expenditures on account of such disposition, retirement, or abandonment
and such amortization deduction shall continue with respect to such expenditures.
This means something different than adrr is asking about. The IRS has depreciation schedules for different asset classes. For example, trucks are 5 years; real estate is 39 years; but you can under some circumstances use an Alternative Depreciation Schedule (ADS).. the depreciation schedule should match the usable lifetime of the asset.
But if the typical lifetime is 5 years, but you use an ADS of 2 years... you are not disposing or abandoning the asset if you keep it for 2 years. 2 years is the expected life time of the asset, and at the end of year 2, the asset has a value of $0.
If you depreciate over 5 years, but then on year 2 decide you don't need the asset anymore, then you'll dispose of it. The asset is valued at 3/5ths of the original price. The paragraph you're quoting applies to this scenario.
ADS doesn't apply here though, because TCJA requires 5 years for domestic and 15 years for foreign research.
