Introduction

The Modified Accelerated Cost Recovery System (MACRS) is used to recover the basis of most business and investment property placed in service after 1986. MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions.

Caution: To be sure you can use MACRS to figure depreciation for your property, see What Method Can You Use To Depreciate Your Property? in chapter 1.

This chapter explains how to determine which MACRS depreciation system applies to your property. It also discusses other information you need to know before you can figure depreciation under MACRS. This information includes the property’s recovery class, placed in service date, and basis, as well as the applicable recovery period, convention, and depreciation method. It explains how to use this information to figure your depreciation deduction and how to use a general asset account to depreciate a group of properties. Finally, it explains when and how to recapture MACRS depreciation.

Useful Items You may want to see:

Publication

225

463

544

551

587

225 Farmer’s Tax Guide

463 Travel, Gift, and Car Expenses

544 Sales and Other Dispositions of Assets

551 Basis of Assets

587 Business Use of Your Home

Form (and Instructions)

2106

4562

2106 Employee Business Expenses

4562 Depreciation and Amortization

See How To Get Tax Help at the end of this publication for information about getting publications and forms.