Haw. Code R. § 18-235-110.7-08 - Placed in service
(a) In general.
Property shall be considered to be placed in service in the earliest of the
following taxable years:
(1) The taxable year
in which the period for depreciation with respect to the property
begins;
(2) The taxable year in
which under ACRS, a claim for recovery allowances with respect to the property
begins; or
(3) The taxable year in
which the property is placed in a condition or state of readiness and available
for a specifically assigned function by the taxpayer. The following examples
illustrate paragraph (3):
(A) Parts that are
acquired and set aside during the taxable year for use as a replacement for a
particular machine in order to avoid operational time loss shall be considered
to be in a condition or state of readiness and available for a specifically
assigned function by the taxpayer.
(B) If operational farm equipment is acquired
during the taxable year and it is not practicable to use the equipment for its
specifically assigned function in the taxpayer's business of farming until the
following year, the equipment shall be considered to be in a condition or state
of readiness and available for a specifically assigned function by the taxpayer
in the latter year.
(C) Equipment
that is acquired for a specifically assigned function and is operational but is
undergoing testing to eliminate defects shall be considered to be in a
condition or state of readiness and available for a specifically assigned
function by the taxpayer.
(D)
Fruit-bearing trees and vines shall not be considered to be in a condition or
state of readiness and available for a specifically assigned function until
they have reached an income-producing state.
(E) Materials and parts acquired to be used
in the construction, reconstruction or erection of an item of equipment shall
not be considered to be in a condition or state of readiness and available for
a specifically assigned function until the equipment itself is
functional.
(b) Sale-leaseback. In a sale-leaseback
transaction (as defined in section 18-235-110.7-01), the property shall be
considered to be placed in service on the date the property was first placed in
service by the seller-lessee.
Notes
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