MACRS ADS Property
Overview
The MACRS alternative depreciation system (ADS) requires taxpayers to use a single depreciation method, the straight-line method. This system is less commonly used than he general depreciation system (GDS).
Bonus Depreciation
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Acquired & Placed in Service After 9/27/17
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100% through 2022
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Phases out 2023 through 2026
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Acquired Before 9/28/17 and Placed in Service After 9/27/17
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In Service 2017: 50%
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In Service 2018: 40%
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In Service 2019: 30%
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Recovery Periods
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3 Year Property – Examples: tractor units for over-the-road use, racehorses over two years old when placed in service (all racehorses regardless of age 2009 through 2021), other horses over twelve years old when placed in service.
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5 Year Property – Examples: computers, typewriters, copiers, duplicating equipment, heavy trucks, trailers, cargo containers, autos, motorcycles, light-duty trucks, certain technological, research equipment, and appliances, carpets, furniture, etc., used in a residential rental real estate activity, and certain geothermal, solar, and wind energy property, purchased breeding livestock, and certain post 2024 green energy property.
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7 Year Property – Examples: office furnishings, fixtures and equipment, railroad track, theme park structures and breeding dogs.
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10 Year Property - Example: water transportation equipment.
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15 Year Property – Examples: municipal sewage treatment plants, telephone distribution plants, two-way communication equipment, parking lots, sidewalks, roads, landscaping and fences, qualified improvement property, service station building and petroleum marketing land improvements.
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20 Year Property – Examples: municipal sewers and farm buildings.
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27.5 Year Property – Examples: residential rental property and mobile homes.
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31.5 Year Property - Any real property which is not residential rental property and which was acquired before 05/13/93.
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39 Year Property - Nonresidential real property placed in service after 05/12/93.
Related IRC and IRS Publications and Forms
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Pub 946 – Depreciation
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Form 3115 - Change of Accounting Method
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Form 4562 – Depreciation & Amortization
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Instructions Form 4562 – Depreciation & Amortization
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IRC Sec 168
Repair & Improvement Regulations: The IRS issued temporary and identical proposed regulations (T.D. 9564; REG-168745-03) regarding the treatment of amounts paid to acquire, produce, or improve tangible property, including rules on determining whether costs related to tangible property are deductible repairs or capital improvements. These regulations, which are generally effective for tax years beginning on or after January 1, 2014 (Notice 2012-73), affect all taxpayers that acquire, produce or improve tangible property.
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