MACRS
Modified Accelerated Cost Recovery System (MACRS) includes the General Depreciation System (GDS) and the Alternative Depreciation System (ADS).
In 1987, the IRS replaced the Accelerated Cost Recovery method with the Modified Accelerated Cost Recovery method (MACRS). This method can only be used on assets placed in service after December 31, 1986. Under MACRS, depreciation is calculated by using either the straight line method or the declining balance with a switch to the straight line method, and by applying one of three different conventions: half-year, mid-month, or mid-quarter.
MACRS Methods for Property Currently Placed In Service:
|
Life |
Method |
|
3 |
MACRS (200% DB) 01/01/87 to Present |
|
5 |
MACRS (200% DB) 01/01/87 to Present (includes Luxury Autos) |
|
7 |
MACRS (200% DB) 01/01/87 to Present |
|
10 |
MACRS (200% DB) 01/01/87 to Present |
|
15 |
MACRS (150% DB) 01/01/87 to Present |
|
20 |
MACRS (150% DB) 01/01/87 to Present |
|
27.5 |
Residential Rental - SL - Mid Month 01/01/87 to Present |
|
39 |
Nonresidential Rental Property 05/13/93 to Present |
To simplify the computation of MACRS assets may be grouped together and depreciated as a single asset.
MACRS Classifications:
|
Life |
Classifications |
|
3 |
Class life less than 4 years. Includes certain livestock. |
|
5 |
Computers, typewriters, calculators, copiers, autos, light trucks, and cellular telephones. |
|
7 |
Office furniture, lights, shelves, carpets, and movable partitions. |
|
10 |
Boats, tugs, and barges. |
|
27.5 |
Residential rental property. |
|
31.5 |
Office buildings and long term leases placed in service before May 13, 1993. |
|
39 |
Office buildings and long term lease placed in service after May 13, 1993. |
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