MACRS Depreciation
The MACRS calculation lets you generate depreciation schedules using the MACRS method. MACRS stands for "Modified Accelerated Cost Recovery System".
MACRS categorizes all business assets into classes and specifies the time period over which you can write off assets in each class. Depending on the class of an asset, different conventions can be used to adjust the first year depreciation depending on the placed-in-service date.
The main characteristics of this method are that property class lives are less than actual useful lives and that salvage values are assumed to be zero.
In most cases, assets are depreciated using the declining balance method with a crossover to the straight line method (General Depreciation System or GDS), while for certain types of assets, the straight line method is used (Aternative Depreciation System or ADS).
The IRS "Publication 946, How to Depreciate Property", which can be downloaded here (± 500 KB) contains lots of information that can help you determine if and how an asset can be depreciated under the MACRS method.
To simplify computations, the IRS has prepared more than 18 tables with annual percentages.
Note
FinKit calculates depreciation directly using the methods described in the chapter "Figuring the Deduction Without Using the Tables".
For this reason you'll sometimes notice small differences between the percentages in the tables and the percentages as calculated by FinKit: the tables contain small adjustments to the percentages to account for rounding, while in FinKit the adjustments are made to the depreciation amounts.
Input
| • depreciation method | |
| • asset cost (or depreciation base) | |
| • property class | |
| • convention | |
| • placed in use in |
Result/Details
| • depreciation schedule |
Related topic
| Classic Depreciation |