Example
The following example is extracted from IRS Publication 946:
You bought office furniture (7-year property) for $10,000 and placed it in service on August 11, 2010. You use the furniture only for business.
| Part I | |
|---|---|
| 1. MACRS system (GDS or ADS) | GDS |
| 2. Property class | 7-year |
| 3. Date placed in service | 8/11/10 |
| 4. Recovery period | 7-Year |
| 5. Method and convention | 200%DB/Half-Year |
| 6. Depreciation rate (from tables) | .1429 |
| Part II | ||
|---|---|---|
| 7. Cost or other basis* | $10,000 | |
| 8. Business/investment use | 100% | |
| 9. Multiply line 7 by line 8 | $10,000 | |
| 10. Total claimed for section 179 deduction and other items | -0- | |
| 11. Subtract line 10 from line 9. This is your tentative basis for depreciation | $10,000 | |
| 12. Multiply line 11 by .50 if the 50% special depreciation allowance applies. Multiply line 11 by 1.00 if the 100% special depreciation allowance applies. This is your special depreciation allowance. Enter -0- if this is not the year you placed the property in service, the property is not qualified property, or you elected not to claim a special allowance | -0- | |
| 13. Subtract line 12 from line 11. This is your basis for depreciation | $10,000 | |
| 14. Depreciation rate (from line 6) | .1429 | |
| 15. Multiply line 13 by line 14. This is your MACRS depreciation deduction | $1,429 | |
| *If real estate, do not include cost (basis) of land. | ||
Read more about this topic: MACRS
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