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@chapguy19 wrote:

Can I check "Yes" to elect out of the 1.168 rule which would allow me to treat the excess and exchange basis as the same 27.5.

Doesn't Notice 2000-4 allow this? 

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Yes, but that will reduce the amount of depreciation for each of the first 18 years.  Is that what the taxpayer wants?  That usually isn't in the best interest of the taxpayer.

I think Notice 2000-4 came up with the idea, but the Regulation is what now allows it.