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Depreciation methods and their associated types of property

SOLVEDby IntuitProConnect Tax14Updated October 01, 2021

The depreciation method is a mandatory entry when using ProConnect Tax to calculate depreciation. This article describes the different depreciation methods and types of property each should be used for.

ACRS / MACRS methods

When you use an ACRS or MACRS method, no entry is needed Life or Class Life unless you prefer to use a different life than expressed in the table. In general, use the MACRS method for assets placed in service after December 31, 1986 and for assets for which MACRS was elected in 1986. Use the ACRS method for assets placed in service before 1987 in accordance with the IRS instructions.

Nonrecovery methods

When using a nonrecovery method, the Life or Class life is a mandatory entry.

Under the General Depreciation System (GDS), most tangible property is assigned to one of eight main property classes. The following is a list of the property classes and examples of the types of property included in each class. This table is provided for general guidance only. For a complete discussion on property classes and types of property please see IRS Pub. 946.

Property classes and examples of the types of propertyMACRS Method entry
1) 3-year property.
a) Tractor units for over-the-road use.
b) Any race horse over 2 years old when placed in service.
c) Any other horse over 12 years old when placed in service.
34 or 35
2) 5-year property.
a) Automobiles, taxis, buses and trucks.
b) Computers and peripheral equipment.
c) Office machinery (such as typewriters, calculators, and copiers).
>53 or 54 automobile limits not applied
55 or 56 automobile limits applied*
45 or 46 truck limits applied
43 or 44 automobile limits not applied, designated as listed property
3) 7-year property.
a) Office furniture and fixtures (such as desks, files, and safes).
b) Any property that does not have a class life and has not been
designated by law as being in any other class.
57 or 58
4) 10-year property.
a) Vessels, barges, tugs, and similar water transportation equipment.
64 or 65
5) 15-year property.
a) Certain depreciable improvements made directly to land or added
to it (such as shrubbery, fences, roads, and bridges).
b) Service station buildings and other land improvements used in the
marketing of petroleum and petroleum products (but not facilities related
to petroleum and natural gas trunk pipelines).
66 or 67
6) 20-year property.
This class includes farm buildings (other than single
purpose agricultural or horticultural structures).
68 or 69
7) Residential rental property.
This class includes real property such as
a rental home or structure (including a mobile home) if 80% or more of its
gross rental income for the tax year is from dwelling units. A dwelling unit
is a house or apartment used to provide living accommodations in a
building or structure. It does not include a unit in a hotel, motel, inn, or
other establishment where more than half the units are used on a transient
basis. If you occupy any part of the building or structure for personal use,
its gross rental income includes the fair rental value of the part you occupy.
The recovery period for this property is 27.5 years.
85
8) Nonresidential real property.
This class includes section 1250 property
that is neither of the following.
a) Residential rental property (defined in (7)).
b) Property with a class life of less than 27.5 years.
The recovery period for nonresidential real property is:
39 years for property you placed in service after May 12, 1993, or
31.5 years for property you placed in service before May 13, 1993.
87

*Do not use methods 55 or 56 for automobiles that are not subject to the limits for passenger automobiles.

EntryMACRS MethodCalculation
343 yr % personalIRS Pub. 946: Tables 1-5
CONVENTION: mid-quarter or half-year
METHOD: 200DB
353 yr SL personalIRS Pub. 946: Tables 8-12
CONVENTION: mid-quarter or half-year
435 yr % personal, automobile limits are not applied
Designated as listed property
IRS Pub. 946: Tables 1-5
CONVENTION: mid-quarter or half-year
METHOD: 200DB
445 yr % personal, automobile limits are not applied
Designated as listed property
IRS Pub. 946: Tables 8-12
(divides depreciable basis by the life)
CONVENTION: mid-quarter or half-year
535 yr % personal, automobile limits are not appliedIRS Pub. 946: Tables 1-5
CONVENTION: mid-quarter or half-year
METHOD: 200DB
545 yr SL personal, automobile limits are not appliedIRS Pub. 946: Tables 8-12
(divides depreciable basis by the life)
CONVENTION: mid-quarter or half-year
55>5 yr % automobile limits appliedIRS Pub. 946: Tables 1-5
CONVENTION: mid-quarter or half-year
(see listed property limitations)
METHOD: 200DB
565 yr SL automobile limits appliedIRS Pub. 946: Tables 8-12
(divides depreciable basis by the life)
CONVENTION: mid-quarter or half-year
(see listed property limitations)
577 yr % personalIRS Pub. 946: Tables 1-5
CONVENTION: mid-quarter or half-year
METHOD: 200DB
587 yr SL personalIRS Pub. 946: Tables 8-12
(divides depreciable basis by the life)
CONVENTION: mid-quarter or half-year
6410 yr % personalIRS Pub. 946: Tables 1-5
CONVENTION: mid-quarter or half-year
METHOD: 200DB
6510 yr SL personalIRS Pub. 946: Tables 8-12
(divides depreciable basis by the life
CONVENTION: mid-quarter or half-year
6615 yr % personalIRS Pub. 946: Tables 1-5
CONVENTION: mid-quarter or half-year
METHOD: 150DB
6715 yr SL propertyIRS Pub. 946: Tables 8-12
(divides depreciable basis by the life)
CONVENTION: mid-quarter or half-year
6820 yr % propertyIRS Pub. 946: Tables 1-5
CONVENTION: mid-quarter or half-year
METHOD: 150DB
6920 yr SL propertyIRS Pub. 946: Tables 8-12
(divides depreciable basis by the life)
CONVENTION: mid-quarter or half-year
4125 yr SL propertyIRS Pub. 946: Tables 8-12
(divides depreciable basis by the life)
CONVENTION: mid-quarter or half-year
8527.5 SL Residential REIRS Pub. 946: Table 6
CONVENTION: mid-month
8731.5/39 SL Nonresidential REIRS Pub. 946: Table 7
CONVENTION: mid-month
8850 yr SL RailroadIRS Pub. 946: Tables 8-12
(divides depreciable basis by the life)
CONVENTION: mid-quarter or half-year
EntryACRS MethodCalculation
303 yr % automobileIRS Pub. 534: percentages(luxury car limitations/listed property automatic)
CONVENTION: full year
313 yr SL automobileIRS Pub. 534: divides depreciable basis by life
(luxury car limitations/listed property automatic)
CONVENTION: full year
323 yr % personalIRS Pub. 534: percentages
CONVENTION: full year
333 yr SL personalIRS Pub. 534: divides depreciable basis by life (and divides by 2 for the first year)
CONVENTION: full month
505 yr personalIRS Pub. 534: percentages
CONVENTION: full year
515 yr SL personalIRS Pub. 534: divides depreciable basis by life (and divides by 2 for the first year)
CONVENTION: full month
6010 yr % propertyIRS Pub. 534: percentages
CONVENTION: full year
6110 yr SL propertyIRS Pub. 534: divides depreciable basis by life (and
divides by 2 for the first year)
CONVENTION: full month
6215 yr % public utilityIRS Pub. 534: percentages
6315 yr SL public utilityIRS Pub. 534: divides depreciable basis by the life
(and divides by 2 for the first year)
7015 yr % x low income REIRS Pub. 534: Table 2 (if asset was placed
in service between 3/16/84 and 5/8/85) or Table 3 (if placed in service after 5/8/85)
CONVENTION: full month
7115 yr SL low income REIRS Pub. 534: Divide depreciable basis by the life
CONVENTION: full month
You can use alternate lives of 35 and 45 years.
The program does not use the table available for these lives but divides the depreciable basis by the life.
8015 yr % Real propertyIRS Pub. 534: Table 1
(for assets placed in service before 3/16/84
CONVENTION: full month
8115 yr SL Real propertyIRS Pub. 534: divides depreciable basis by the life
CONVENTION: full month
8915 yr SL RE (tables)IRS Pub. 534: straight-line % instead of dividing by
the life
8218/19 yr % REIRS Pub. 534: Assets placed in service between
3/16/84 and 5/8/85 should use an 18 year life.
Assets placed in service between 3/16/84 and
6/22/84 use Table 5
Assets placed in service after >5/8/85 have 19
year life and use Table 6
Assets placed in service between 6/23/84 and
5/8/85 use Table 4
CONVENTION: assets placed in service between
3/16/84 and 6/22/84-full monthbetween 6/23/84 and 5/8/85-mid-monthafter 5/8/85-mid-month
8318/19 SL REIRS Pub. 534: 18 yr assets use Tables 7 and 8, 19 yr asset use Table 9
CONVENTION: mid-month
Life dates are the same as for method 82
EntryNonrecoveryCalculation
90Half-yearConsiders an asset placed in service at the mid-point of the tax year.
Divides basis by the life (2 years) and prorates the amount by the number of months held that year.
91Straight-LineDivides basis by the life and prorates the amount by the number of months held that year.
An asset is held for the whole month if placed in service before the 16th of the month.
92200% DBCalculates depreciable basis, subtracts prior depreciation, multiplies the result by 2,
divides by the life and prorates the total by the number of months held that year.
An asset is held for the whole month if placed in service before the 16th of the month.
93150% DBCalculates depreciable basis, subtracts prior depreciation, multiplies the result by 1.5,
divides by the life and prorates the total by the number of months held that year.
An asset is held for the whole month if placed in service before the 16th of the month.
94125% DBCalculates depreciable basis, subtracts prior depreciation, multiplies the result by 1.25,
divides by the life and prorates the total by the number of months held that year.
An asset is held for the whole month if placed in service before the 16th of the month.
95Units of ProductionDivides adjusted basis by beginning reserves multiplied by units produced.
96CLADRNo calculation. Must use the override "Depreciation-Current Year."
97IDC S/L AmortFor oil and gas, calculated IDC expense using 60 month straight-line
EntryLandCalculation
99Land or no depreciationTracking purposes only.

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