2017 Publication 946 Amana Air Conditioner RCB18C2CP1247513C P946

User Manual: Amana Air Conditioner RCB18C2CP1247513C

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Department of the Treasury
Internal Revenue Service

Publication 946

Contents
Future Developments . . . . . . . . . . . . . . . . . . . . . . . 2
What's New for 2017 . . . . . . . . . . . . . . . . . . . . . . . . 2

Cat. No. 13081F

What's New for 2018 . . . . . . . . . . . . . . . . . . . . . . . . 2

How To
Depreciate
Property

Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

• Section 179 Deduction
• Special Depreciation
Allowance
• MACRS
• Listed Property
For use in preparing

2017 Returns

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Chapter 1. Overview of Depreciation . . . .
What Property Can Be Depreciated? . . . .
What Property Cannot Be Depreciated? . .
When Does Depreciation Begin and End?
What Method Can You Use To Depreciate
Your Property? . . . . . . . . . . . . . . . . . .
What Is the Basis of Your Depreciable
Property? . . . . . . . . . . . . . . . . . . . . . .
How Do You Treat Repairs and
Improvements? . . . . . . . . . . . . . . . . .
Do You Have To File Form 4562? . . . . . .
How Do You Correct Depreciation
Deductions? . . . . . . . . . . . . . . . . . . . .
Chapter 2. Electing the Section 179
Deduction . . . . . . . . . . . . . . . . . . . . . . .
What Property Qualifies? . . . . . . . . . . . . .
What Property Does Not Qualify? . . . . . .
How Much Can You Deduct? . . . . . . . . . .
How Do You Elect the Deduction? . . . . . .
When Must You Recapture the Deduction?

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• IRS.gov (English)
• IRS.gov/Spanish (Español)
• IRS.gov/Chinese (中文)
Feb 28, 2018

• IRS.gov/Korean (한국어)
• IRS.gov/Russian (Pусский)
• IRS.gov/Vietnamese (TiếngViệt)

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Chapter 3. Claiming the Special Depreciation
Allowance . . . . . . . . . . . . . . . . . . . . . . . . . .
What Is Qualified Property? . . . . . . . . . . . . . .
Election To Accelerate Certain Credits in Lieu
of the Special Depreciation Allowance . . . .
How Much Can You Deduct? . . . . . . . . . . . . .
How Can You Elect Not To Claim an
Allowance? . . . . . . . . . . . . . . . . . . . . . . .
When Must You Recapture an Allowance? . . .

Get forms and other information faster and easier at:

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Chapter 4. Figuring Depreciation Under
MACRS . . . . . . . . . . . . . . . . . . . . . . . . . .
Which Depreciation System (GDS or ADS)
Applies? . . . . . . . . . . . . . . . . . . . . . . .
Which Property Class Applies Under GDS?
What Is the Placed in Service Date? . . . . . .
What Is the Basis for Depreciation? . . . . . .
Which Recovery Period Applies? . . . . . . . .
Which Convention Applies? . . . . . . . . . . . .
Which Depreciation Method Applies? . . . . .
How Is the Depreciation Deduction Figured?
How Do You Use General Asset Accounts?
When Do You Recapture MACRS
Depreciation? . . . . . . . . . . . . . . . . . . . .

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Chapter 5. Additional Rules for Listed
Property . . . . . . . . . . . . . . . . . . . . . . . . .
What Is Listed Property? . . . . . . . . . . . . . .
Can Employees Claim a Deduction? . . . . .
What Is the Business-Use Requirement? . .
Do the Passenger Automobile Limits Apply?
What Records Must Be Kept? . . . . . . . . . .
How Is Listed Property Information
Reported? . . . . . . . . . . . . . . . . . . . . . .

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Chapter 6. How To Get Tax Help . . . . . . . . . . . . . 68
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113

Future Developments
For the latest information about developments related to
Pub. 946, such as legislation enacted after this publication
was published, go to IRS.gov/Pub946.

What's New for 2017
Increased section 179 deduction dollar limits. The
maximum amount you can elect to deduct for most section 179 property you placed in service in tax years beginning in 2017 is $510,000 ($545,000 for qualified enterprise zone property). This limit is reduced by the amount
by which the cost of section 179 property placed in service during the tax year exceeds $2,030,000. See Dollar
Limits in chapter 2.
Special depreciation allowance for certain property.
You may be able to take a 50% special depreciation allowance for certain property acquired before September
28, 2017, and placed in service before January 1, 2018,
and certain plants bearing fruits and nuts, planted or grafted before September 28, 2017. The special allowance
will be phased down to 40% for certain property acquired
before September 28, 2017, and placed in service in
2018. Also, you may be able to take a 100% special depreciation allowance for certain property and certain
plants bearing fruits and nuts acquired or planted or grafted after September 27, 2017, and placed in service or
planted or grafted after September 27, 2017, and placed
in service or planted or grafted before January 1, 2023.
You may elect to apply a 50% special depreciation allowance instead of the 100% allowance for the first tax year
ending after September 27, 2017. See Certain qualified
property acquired before September 28, 2017, Certain
property acquired after September 27, 2017, and Certain
plants bearing fruits and nuts, later.
Special depreciation allowance for qualified second
generation biofuel plant property. The special depreciation allowance will not apply to qualified second
Page 2

generation biofuel plant property placed in service after
December 31, 2017. See Qualified Second Generation Biofuel Plant Property in chapter 3.
Certain race horses. The 3-year recovery period for
race horses two years old or younger will not apply to
horses placed in service after December 31, 2017. See
Which Property Class Applies Under GDS in chapter 4.
Qualified motor sports entertainment complexes.
Qualified motor sports entertainment complex property
placed in service after December 31, 2017, will not be
treated as 7-year property under MACRS. See Which
Property Class Applies Under GDS in chapter 4.
Accelerated depreciation for qualified Indian reservation property. The accelerated depreciation of property on an Indian reservation will not apply to property
placed in service after December 31, 2017, or, if you
make an irrevocable election out of all property in a class
of property that is placed in service in a tax year beginning
after December 31, 2016. See Indian Reservation Property in chapter 4.
Depreciation limits on business vehicles. The total
section 179 deduction and depreciation you can deduct
for a passenger automobile (that is not a truck or van) you
use in your business and first placed in service in 2017 is
$3,160, if the special depreciation allowance does not apply. The maximum deduction you can take for a truck or
van you use in your business and first placed in service in
2017 is $3,560, if the special depreciation allowance does
not apply. See Maximum Depreciation Deduction in chapter 5.

What's New for 2018
Section 179 deduction dollar limits. The maximum
amount you can elect to deduct for most section 179 property you placed in service in tax years beginning in 2018 is
$1,000,000. This limit is reduced by the amount by which
the cost of section 179 property placed in service during
the tax year exceeds $2,500,000.
Section 179 qualified real property. For property
placed in service in tax years beginning after December
31, 2017, section 179 qualified real property is qualified
improvement property (as defined in section 168(e)(6)),
and certain specified improvements to nonresidential real
property placed in service after the nonresidential real
property was first placed in service.
Computers and related peripheral equipment. Computers and related peripheral equipment placed in service
after December 31, 2017, in tax years ending after December 31, 2017, are not listed property.
Electing real property trade or business and electing
farm business. An electing real property trade or business (as defined in section 163(j)(7)(B)) and electing
farming business (as defined in section 163(j)(7)(C)) are
required to use the alternative depreciation system for
certain property to figure depreciation under MACRS for
tax years beginning after December 31, 2017.
Publication 946 (2017)

Reminders
Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for
Missing & Exploited Children® (NCMEC). Photographs of
missing children selected by the Center may appear in
this publication on pages that would otherwise be blank.
You can help bring these children home by looking at the
photographs
and
calling
1-800-THE-LOST
(1-800-843-5678) if you recognize a child.

Although we cannot respond individually to each comment received, we do appreciate your feedback and will
consider your comments as we revise our tax products.
Ordering forms and publications. Visit IRS.gov/
FormsPubs to download forms and publications. Otherwise, you can go to IRS.gov/OrderForms to order current
and prior-year forms and instructions. Your order should
arrive within 10 business days.
Tax questions. If you have a tax question not answered by this publication, check IRS.gov and How To
Get Tax Help at the end of this publication.

Introduction
This publication explains how you can recover the cost of
business or income-producing property through deductions for depreciation (for example, the special depreciation allowance and deductions under the Modified Accelerated Cost Recovery System (MACRS)). It also explains
how you can elect to take a section 179 deduction, instead of depreciation deductions, for certain property, and
the additional rules for listed property.
The depreciation methods discussed in this publication generally do not apply to property placed in
CAUTION service before 1987. For more information, see
Pub. 534, Depreciating Property Placed in Service Before
1987.

Definitions. Many of the terms used in this publication
are defined in the Glossary near the end of the publication. Glossary terms used in each discussion under the
major headings are listed before the beginning of each
discussion throughout the publication.
Do you need a different publication? The following table shows where you can get more detailed information
when depreciating certain types of property.
For information
on depreciating:
A car

See Publication:
463, Travel, Entertainment, Gift, and
Car Expenses

Residential rental 527, Residential Rental Property
property
(Including Rental of Vacation Home)
Office space in
your home

587, Business Use of Your Home
(Including Use by Daycare Providers)

Farm property

225, Farmer's Tax Guide

Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions.
You can send us comments from IRS.gov/
FormsComments. Or you can write to:
Internal Revenue Service
Tax Forms and Publications
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

1.
Overview of Depreciation
Introduction
Depreciation is an annual income tax deduction that allows you to recover the cost or other basis of certain property over the time you use the property. It is an allowance
for the wear and tear, deterioration, or obsolescence of
the property.
This chapter discusses the general rules for depreciating property and answers the following questions.
What property can be depreciated?
What property cannot be depreciated?
When does depreciation begin and end?
What method can you use to depreciate your property?
What is the basis of your depreciable property?
How do you treat repairs and improvements?
Do you have to file Form 4562?
How do you correct depreciation deductions?

Useful Items

You may want to see:
Publication
534 Depreciating Property Placed in Service Before
1987
535 Business Expenses
538 Accounting Periods and Methods
551 Basis of Assets
Form (and Instructions)
Sch C (Form 1040) Profit or Loss From Business
Sch C-EZ (Form 1040) Net Profit From Business
Page 3

2106 Employee Business Expenses
2106-EZ Unreimbursed Employee Business
Expenses
3115 Application for Change in Accounting Method
4562 Depreciation and Amortization
See chapter 6 for information about getting publications
and forms.

What Property Can Be
Depreciated?
Terms you may need to know
(see Glossary):
Adjusted basis
Basis
Commuting
Disposition
Fair market value
Intangible property

Example 2. You bought a new van that you will use
only for your courier business. You will be making payments on the van over the next 5 years. You own the van
and you can depreciate it.
Leased property. You can depreciate leased property
only if you retain the incidents of ownership in the property
(explained below). This means you bear the burden of exhaustion of the capital investment in the property. Therefore, if you lease property from someone to use in your
trade or business or for the production of income, you
generally cannot depreciate its cost because you do not
retain the incidents of ownership. You can, however, depreciate any capital improvements you make to the property. See How Do You Treat Repairs and Improvements
later in this chapter, and Additions and Improvements under Which Recovery Period Applies in chapter 4.
If you lease property to someone, you generally can
depreciate its cost even if the lessee (the person leasing
from you) has agreed to preserve, replace, renew, and
maintain the property. However, if the lease provides that
the lessee is to maintain the property and return to you the
same property or its equivalent in value at the expiration of
the lease in as good condition and value as when leased,
you cannot depreciate the cost of the property.
Incidents of ownership. Incidents of ownership in
property include the following.

Listed property
Placed in service

The legal title to the property.

Tangible property

The legal obligation to pay for the property.

Term interest

The responsibility to pay maintenance and operating
expenses.

Useful life

The duty to pay any taxes on the property.

You can depreciate most types of tangible property (except land), such as buildings, machinery, vehicles, furniture, and equipment. You also can depreciate certain intangible property, such as patents, copyrights, and
computer software.
To be depreciable, the property must meet all the following requirements.
It must be property you own.
It must be used in your business or income-producing
activity.
It must have a determinable useful life.
It must be expected to last more than one year.
The following discussions provide information about these
requirements.

Property You Own
To claim depreciation, you usually must be the owner of
the property. You are considered as owning property even
if it is subject to a debt.
Example 1. You made a down payment to purchase
rental property and assumed the previous owner's mortgage. You own the property and you can depreciate it.
Page 4

Chapter 1

Overview of Depreciation

The risk of loss if the property is destroyed, condemned, or diminished in value through obsolescence
or exhaustion.
Life tenant. Generally, if you hold business or investment
property as a life tenant, you can depreciate it as if you
were the absolute owner of the property. However, see
Certain term interests in property under Excepted Property, later.
Cooperative apartments. If you are a tenant-stockholder in a cooperative housing corporation and use your
cooperative apartment in your business or for the production of income, you can depreciate your stock in the corporation, even though the corporation owns the apartment.
Figure your depreciation deduction as follows.
1. Figure the depreciation for all the depreciable real
property owned by the corporation in which you have
a proprietary lease or right of tenancy. If you bought
your cooperative stock after its first offering, figure the
depreciable basis of this property as follows.
a. Multiply your cost per share by the total number of
outstanding shares, including any shares held by
the corporation.

b. Add to the amount figured in (a) any mortgage
debt on the property on the date you bought the
stock.
c. Subtract from the amount figured in (b) any mortgage debt that is not for the depreciable real property, such as the part for the land.
2. Subtract from the amount figured in (1) any depreciation for space owned by the corporation that can be
rented but cannot be lived in by tenant-stockholders.
3. Divide the number of your shares of stock by the total
number of outstanding shares, including any shares
held by the corporation.
4. Multiply the result of (2) by the percentage you figured
in (3). This is your depreciation on the stock.
Your depreciation deduction for the year cannot be
more than the part of your adjusted basis in the stock of
the corporation that is allocable to your business or income-producing property. You must also reduce your depreciation deduction if only a portion of the property is
used in a business or for the production of income.
Example. You figure your share of the cooperative
housing corporation's depreciation to be $30,000. Your
adjusted basis in the stock of the corporation is $50,000.
You use one half of your apartment solely for business
purposes. Your depreciation deduction for the stock for
the year cannot be more than $25,000 (1 2 of $50,000).
Change to business use. If you change your cooperative apartment to business use, figure your allowable depreciation as explained earlier. The basis of all the depreciable real property owned by the cooperative housing
corporation is the smaller of the following amounts.
The fair market value of the property on the date you
change your apartment to business use. This is considered to be the same as the corporation's adjusted
basis minus straight line depreciation, unless this
value is unrealistic.
The corporation's adjusted basis in the property on
that date. Do not subtract depreciation when figuring
the corporation's adjusted basis.
If you bought the stock after its first offering, the corporation's adjusted basis in the property is the amount figured in (1) above. The fair market value of the property is
considered to be the same as the corporation's adjusted
basis figured in this way minus straight line depreciation,
unless the value is unrealistic.
For a discussion of fair market value and adjusted basis, see Pub. 551.

Property Used in Your Business or
Income-Producing Activity
To claim depreciation on property, you must use it in your
business or income-producing activity. If you use property
to produce income (investment use), the income must be
taxable. You cannot depreciate property that you use
solely for personal activities.

Partial business or investment use. If you use property for business or investment purposes and for personal
purposes, you can deduct depreciation based only on the
business or investment use. For example, you cannot deduct depreciation on a car used only for commuting, personal shopping trips, family vacations, driving children to
and from school, or similar activities.
You must keep records showing the business, investment, and personal use of your property. For
RECORDS more information on the records you must keep
for listed property, such as a car, see What Records Must
Be Kept in chapter 5.
Although you can combine business and investment use of property when figuring depreciation
CAUTION deductions, do not treat investment use as qualified business use when determining whether the business-use requirement for listed property is met. For information about qualified business use of listed property, see
What Is the Business-Use Requirement in chapter 5.

Office in the home. If you use part of your home as
an office, you may be able to deduct depreciation on that
part based on its business use. For information about depreciating your home office, see Pub. 587.
Inventory. You cannot depreciate inventory because it is
not held for use in your business. Inventory is any property
you hold primarily for sale to customers in the ordinary
course of your business.
If you are a rent-to-own dealer, you may be able to treat
certain property held in your business as depreciable
property rather than as inventory. See Rent-to-own dealer
under Which Property Class Applies Under GDS in chapter 4.
In some cases, it is not clear whether property is held
for sale (inventory) or for use in your business. If it is unclear, examine carefully all the facts in the operation of the
particular business. The following example shows how a
careful examination of the facts in two similar situations results in different conclusions.
Example. Maple Corporation is in the business of
leasing cars. At the end of their useful lives, when the cars
are no longer profitable to lease, Maple sells them. Maple
does not have a showroom, used car lot, or individuals to
sell the cars. Instead, it sells them through wholesalers or
by similar arrangements in which a dealer's profit is not intended or considered. Maple can depreciate the leased
cars because the cars are not held primarily for sale to
customers in the ordinary course of business, but are
leased.
If Maple buys cars at wholesale prices, leases them for
a short time, and then sells them at retail prices or in sales
in which a dealer's profit is intended, the cars are treated
as inventory and are not depreciable property. In this situation, the cars are held primarily for sale to customers in
the ordinary course of business.
Containers. Generally, containers for the products
you sell are part of inventory and you cannot depreciate
them. However, you can depreciate containers used to
Chapter 1

Overview of Depreciation

Page 5

ship your products if they have a life longer than one year
and meet the following requirements.
They qualify as property used in your business.
Title to the containers does not pass to the buyer.
To determine if these requirements are met, consider
the following questions.
Does your sales contract, sales invoice, or other type
of order acknowledgment indicate whether you have
retained title?
Does your invoice treat the containers as separate
items?
Do any of your records state your basis in the containers?

Property Having a Determinable
Useful Life
To be depreciable, your property must have a determinable useful life. This means that it must be something that
wears out, decays, gets used up, becomes obsolete, or
loses its value from natural causes.

Property Lasting More Than One Year
To be depreciable, property must have a useful life that
extends substantially beyond the year you place it in service.
Example. You maintain a library for use in your profession. You can depreciate it. However, if you buy technical
books, journals, or information services for use in your
business that have a useful life of one year or less, you
cannot depreciate them. Instead, you deduct their cost as
a business expense.

What Property Cannot Be
Depreciated?

Land
You cannot depreciate the cost of land because land does
not wear out, become obsolete, or get used up. The cost
of land generally includes the cost of clearing, grading,
planting, and landscaping.
Although you cannot depreciate land, you can depreciate certain land preparation costs, such as landscaping
costs, incurred in preparing land for business use. These
costs must be so closely associated with other depreciable property that you can determine a life for them along
with the life of the associated property.
Example. You constructed a new building for use in
your business and paid for grading, clearing, seeding, and
planting bushes and trees. Some of the bushes and trees
were planted right next to the building, while others were
planted around the outer border of the lot. If you replace
the building, you would have to destroy the bushes and
trees right next to it. These bushes and trees are closely
associated with the building, so they have a determinable
useful life. Therefore, you can depreciate them. Add your
other land preparation costs to the basis of your land because they have no determinable life and you cannot depreciate them.

Excepted Property
Even if the requirements explained in the preceding discussions are met, you cannot depreciate the following
property.
Property placed in service and disposed of in the
same year. Determining when property is placed in
service is explained later.
Equipment used to build capital improvements. You
must add otherwise allowable depreciation on the
equipment during the period of construction to the basis of your improvements. See Uniform Capitalization
Rules in Pub. 551.

Amortization

Section 197 intangibles. You must amortize these
costs. Section 197 intangibles are discussed in detail
in chapter 8 of Pub. 535. Intangible property, such as
certain computer software, that is not section 197 intangible property, can be depreciated if it meets certain requirements. See Intangible Property, later.

Basis

Certain term interests.

Terms you may need to know
(see Glossary):

Goodwill
Intangible property
Remainder interest
Term interest
Certain property cannot be depreciated. This includes
land and certain excepted property.

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Chapter 1

Overview of Depreciation

Certain term interests in property. You cannot depreciate a term interest in property created or acquired after
July 27, 1989, for any period during which the remainder
interest is held, directly or indirectly, by a person related to
you. A term interest in property means a life interest in
property, an interest in property for a term of years, or an
income interest in a trust.
Related persons. For a description of related persons, see Related Persons, later. For this purpose, however, treat as related persons only the relationships listed
in items (1) through (10) of that discussion and substitute
“50%” for “10%” each place it appears.

Basis adjustments. If you would be allowed a depreciation deduction for a term interest in property except that
the holder of the remainder interest is related to you, you
generally must reduce your basis in the term interest by
any depreciation or amortization not allowed.
If you hold the remainder interest, you generally must
increase your basis in that interest by the depreciation not
allowed to the term interest holder. However, do not increase your basis for depreciation not allowed for periods
during which either of the following situations applies.
The term interest is held by an organization exempt
from tax.
The term interest is held by a nonresident alien individual or foreign corporation, and the income from the
term interest is not effectively connected with the conduct of a trade or business in the United States.
Exceptions. The above rules do not apply to the
holder of a term interest in property acquired by gift, bequest, or inheritance. They also do not apply to the holder
of dividend rights that were separated from any stripped
preferred stock if the rights were purchased after April 30,
1993, or to a person whose basis in the stock is determined by reference to the basis in the hands of the purchaser.

When Does Depreciation
Begin and End?
Terms you may need to know
(see Glossary):
Basis
Exchange
Placed in service
You begin to depreciate your property when you place it in
service for use in your trade or business or for the production of income. You stop depreciating property either
when you have fully recovered your cost or other basis or
when you retire it from service, whichever happens first.

Placed in Service
You place property in service when it is ready and available for a specific use, whether in a business activity, an income-producing activity, a tax-exempt activity, or a personal activity. Even if you are not using the property, it is
in service when it is ready and available for its specific
use.
Example 1. Donald Steep bought a machine for his
business. The machine was delivered last year. However,
it was not installed and operational until this year. It is considered placed in service this year. If the machine had
been ready and available for use when it was delivered, it

would be considered placed in service last year even if it
was not actually used until this year.
Example 2. On April 6, Sue Thorn bought a house to
use as residential rental property. She made several repairs and had it ready for rent on July 5. At that time, she
began to advertise it for rent in the local newspaper. The
house is considered placed in service in July when it was
ready and available for rent. She can begin to depreciate
it in July.
Example 3. James Elm is a building contractor who
specializes in constructing office buildings. He bought a
truck last year that had to be modified to lift materials to
second-story levels. The installation of the lifting equipment was completed and James accepted delivery of the
modified truck on January 10 of this year. The truck was
placed in service on January 10, the date it was ready and
available to perform the function for which it was bought.
Conversion to business use. If you place property in
service in a personal activity, you cannot claim depreciation. However, if you change the property's use to use in a
business or income-producing activity, then you can begin
to depreciate it at the time of the change. You place the
property in service in the business or income-producing
activity on the date of the change.
Example. You bought a home and used it as your personal home several years before you converted it to rental
property. Although its specific use was personal and no
depreciation was allowable, you placed the home in service when you began using it as your home. You can begin
to claim depreciation in the year you converted it to rental
property because its use changed to an income-producing use at that time.

Idle Property
Continue to claim a deduction for depreciation on property
used in your business or for the production of income
even if it is temporarily idle (not in use). For example, if
you stop using a machine because there is a temporary
lack of a market for a product made with that machine,
continue to deduct depreciation on the machine.

Cost or Other Basis Fully Recovered
You stop depreciating property when you have fully recovered your cost or other basis. You recover your basis
when your section 179 and allowed or allowable depreciation deductions equal your cost or investment in the property. See What Is the Basis of Your Depreciable Property,
later.

Retired From Service
You stop depreciating property when you retire it from
service, even if you have not fully recovered its cost or
other basis. You retire property from service when you
permanently withdraw it from use in a trade or business or
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from use in the production of income because of any of
the following events.

Films, video tapes, and recordings.

You sell or exchange the property.

Certain corporate or partnership property acquired in
a nontaxable transfer.

You convert the property to personal use.

Property you elected to exclude from MACRS.

You abandon the property.
You transfer the property to a supplies or scrap account.
The property is destroyed.
If you included the property in a general asset account, see How Do You Use General Asset AcCAUTION counts in chapter 4 for the rules that apply when
you dispose of that property.

What Method Can You Use To
Depreciate Your Property?
Terms you may need to know
(see Glossary):
Adjusted basis
Basis
Convention
Exchange
Fiduciary
Grantor
Intangible property
Nonresidential real property
Placed in service
Related persons
Residential rental property
Salvage value
Section 1245 property
Section 1250 property
Standard mileage rate
Straight line method
Unit-of-production method
Useful life
You must use the Modified Accelerated Cost Recovery
System (MACRS) to depreciate most property. MACRS is
discussed in chapter 4.
You cannot use MACRS to depreciate the following
property.
Property you placed in service before 1987.
Certain property owned or used in 1986.
Intangible property.
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The following discussions describe the property listed
above and explain what depreciation method should be
used.

Property You Placed in Service
Before 1987
You cannot use MACRS for property you placed in service before 1987 (except property you placed in service after July 31, 1986, if MACRS was elected). Property placed
in service before 1987 must be depreciated under the
methods discussed in Pub. 534.
For a discussion of when property is placed in service,
see When Does Depreciation Begin and End, earlier.
Use of real property changed. You generally must use
MACRS to depreciate real property that you acquired for
personal use before 1987 and changed to business or income-producing use after 1986.
Improvements made after 1986. You must treat an improvement made after 1986 to property you placed in
service before 1987 as separate depreciable property.
Therefore, you can depreciate that improvement as separate property under MACRS if it is the type of property that
otherwise qualifies for MACRS depreciation. For more information about improvements, see How Do You Treat
Repairs and Improvements, later, and Additions and Improvements under Which Recovery Period Applies in
chapter 4.

Property Owned or Used in 1986
You may not be able to use MACRS for property you acquired and placed in service after 1986 if any of the situations described below apply. If you cannot use MACRS,
the property must be depreciated under the methods discussed in Pub. 534.
For the following discussions, do not treat property as owned before you placed it in service. If
CAUTION you owned property in 1986 but did not place it in
service until 1987, you do not treat it as owned in 1986.

Personal property. You cannot use MACRS for personal property (section 1245 property) in any of the following situations.
1. You or someone related to you owned or used the
property in 1986.
2. You acquired the property from a person who owned
it in 1986 and as part of the transaction the user of the
property did not change.

3. You lease the property to a person (or someone related to this person) who owned or used the property in
1986.

6. The fiduciaries of two different trusts, and the fiduciaries and beneficiaries of two different trusts, if the
same person is the grantor of both trusts.

4. You acquired the property in a transaction in which:

7. A tax-exempt educational or charitable organization
and any person (or, if that person is an individual, a
member of that person's family) who directly or indirectly controls the organization.

a. The user of the property did not change, and
b. The property was not MACRS property in the
hands of the person from whom you acquired it
because of (2) or (3) above.
Real property. You generally cannot use MACRS for
real property (section 1250 property) in any of the following situations.
You or someone related to you owned the property in
1986.
You lease the property to a person who owned the
property in 1986 (or someone related to that person).
You acquired the property in a like-kind exchange, involuntary conversion, or repossession of property you
or someone related to you owned in 1986. MACRS
applies only to that part of your basis in the acquired
property that represents cash paid or unlike property
given up. It does not apply to the carried-over part of
the basis.
Exceptions. The rules above do not apply to the following.
1. Residential rental property or nonresidential real property.
2. Any property if, in the first tax year it is placed in service, the deduction under the Accelerated Cost Recovery System (ACRS) is more than the deduction under
MACRS using the half-year convention. For information on how to figure depreciation under ACRS, see
Pub. 534.
3. Property that was MACRS property in the hands of
the person from whom you acquired it because of (2)
above.
Related persons. For this purpose, the following are related persons.
1. An individual and a member of his or her family, including only a spouse, child, parent, brother, sister,
half-brother, half-sister, ancestor, and lineal descendant.

8. Two S corporations, and an S corporation and a regular corporation, if the same persons own more than
10% of the value of the outstanding stock of each corporation.
9. A corporation and a partnership if the same persons
own both of the following.
a. More than 10% of the value of the outstanding
stock of the corporation.
b. More than 10% of the capital or profits interest in
the partnership.
10. The executor and beneficiary of any estate.
11. A partnership and a person who directly or indirectly
owns more than 10% of the capital or profits interest
in the partnership.
12. Two partnerships, if the same persons directly or indirectly own more than 10% of the capital or profits interest in each.
13. The related person and a person who is engaged in
trades or businesses under common control. See
section 52(a) and 52(b) of the Internal Revenue Code.
When to determine relationship. You must determine whether you are related to another person at the
time you acquire the property.
A partnership acquiring property from a terminating
partnership must determine whether it is related to the terminating partnership immediately before the event causing the termination. For this rule, a terminating partnership
is one that sells or exchanges, within 12 months, 50% or
more of its total interest in partnership capital or profits.
Constructive ownership of stock or partnership interest. To determine whether a person directly or indirectly owns any of the outstanding stock of a corporation
or an interest in a partnership, apply the following rules.

3. Two corporations that are members of the same controlled group.

1. Stock or a partnership interest directly or indirectly
owned by or for a corporation, partnership, estate, or
trust is considered owned proportionately by or for its
shareholders, partners, or beneficiaries. However, for
a partnership interest owned by or for a C corporation,
this applies only to shareholders who directly or indirectly own 5% or more of the value of the stock of the
corporation.

4. A trust fiduciary and a corporation if more than 10% of
the value of the outstanding stock is directly or indirectly owned by or for the trust or grantor of the trust.

2. An individual is considered to own the stock or partnership interest directly or indirectly owned by or for
the individual's family.

5. The grantor and fiduciary, and the fiduciary and beneficiary, of any trust.

3. An individual who owns, except by applying rule (2),
any stock in a corporation is considered to own the

2. A corporation and an individual who directly or indirectly owns more than 10% of the value of the outstanding stock of that corporation.

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stock directly or indirectly owned by or for the individual's partner.
4. For purposes of rule (1), (2), or (3), stock or a partnership interest considered to be owned by a person under rule (1) is treated as actually owned by that person. However, stock or a partnership interest
considered to be owned by an individual under rule
(2) or (3) is not treated as owned by that individual for
reapplying either rule (2) or (3) to make another person considered to be the owner of the same stock or
partnership interest.

Intangible Property
Generally, if you can depreciate intangible property, you
usually use the straight line method of depreciation. However, you can choose to depreciate certain intangible
property under the income forecast method (discussed
later).
You cannot depreciate intangible property that is
a section 197 intangible or that otherwise does
CAUTION not meet all the requirements discussed earlier
under What Property Can Be Depreciated.

Straight Line Method
This method lets you deduct the same amount of depreciation each year over the useful life of the property. To figure your deduction, first determine the adjusted basis, salvage value, and estimated useful life of your property.
Subtract the salvage value, if any, from the adjusted basis. The balance is the total depreciation you can take
over the useful life of the property.
Divide the balance by the number of years in the useful
life. This gives you your yearly depreciation deduction.
Unless there is a big change in adjusted basis or useful
life, this amount will stay the same throughout the time
you depreciate the property. If, in the first year, you use
the property for less than a full year, you must prorate your
depreciation deduction for the number of months in use.
Example. In April, Frank bought a patent for $5,100
that is not a section 197 intangible. He depreciates the
patent under the straight line method, using a 17-year
useful life and no salvage value. He divides the $5,100
basis by 17 years to get his $300 yearly depreciation deduction. He only used the patent for 9 months during the
first year, so he multiplies $300 by 9 12 to get his deduction
of $225 for the first year. Next year, Frank can deduct
$300 for the full year.
Patents and copyrights. If you can depreciate the cost
of a patent or copyright, use the straight line method over
the useful life. The useful life of a patent or copyright is the
lesser of the life granted to it by the government or the remaining life when you acquire it. However, if the patent or
copyright becomes valueless before the end of its useful
life, you can deduct in that year any of its remaining cost
or other basis.
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Computer software. Computer software is generally a
section 197 intangible and cannot be depreciated if you
acquired it in connection with the acquisition of assets
constituting a business or a substantial part of a business.
However, computer software is not a section 197 intangible and can be depreciated, even if acquired in connection with the acquisition of a business, if it meets all of the
following tests.
It is readily available for purchase by the general public.
It is subject to a nonexclusive license.
It has not been substantially modified.
If the software meets the tests above, it may also qualify for the section 179 deduction and the special depreciation allowance, discussed later. If you can depreciate the
cost of computer software, use the straight line method
over a useful life of 36 months.
Tax-exempt use property subject to a lease. The
useful life of computer software leased under a lease
agreement entered into after March 12, 2004, to a tax-exempt organization, governmental unit, or foreign person or
entity (other than a partnership), cannot be less than
125% of the lease term.
Certain created intangibles. You can amortize certain
intangibles created on or after December 31, 2003, over a
15-year period using the straight line method and no salvage value, even though they have a useful life that cannot be estimated with reasonable accuracy. For example,
amounts paid to acquire memberships or privileges of indefinite duration, such as a trade association membership, are eligible costs.
The following are not eligible.
Any intangible asset acquired from another person.
Created financial interests.
Any intangible asset that has a useful life that can be
estimated with reasonable accuracy.
Any intangible asset that has an amortization period or
limited useful life that is specifically prescribed or prohibited by the Code, regulations, or other published
IRS guidance.
Any amount paid to facilitate an acquisition of a trade
or business, a change in the capital structure of a
business entity, and certain other transactions.
You also must increase the 15-year safe harbor amortization period to a 25-year period for certain intangibles related to benefits arising from the provision, production, or
improvement of real property. For this purpose, real property includes property that will remain attached to the real
property for an indefinite period of time, such as roads,
bridges, tunnels, pavements, and pollution control facilities.

Income Forecast Method
You can choose to use the income forecast method instead of the straight line method to depreciate the
following depreciable intangibles.

part of the property's basis that exceeds the carried-over
basis.
The nontaxable transfers covered by this rule include
the following.

Motion picture films or video tapes.

A distribution in complete liquidation of a subsidiary.

Sound recordings.

A transfer to a corporation controlled by the transferor.

Copyrights.

An exchange of property solely for corporate stock or
securities in a reorganization.

Books.
Patents.
Under the income forecast method, each year's depreciation deduction is equal to the cost of the property, multiplied by a fraction. The numerator of the fraction is the
current year's net income from the property, and the denominator is the total income anticipated from the property
through the end of the 10th taxable year following the taxable year the property is placed in service. For more information, see section 167(g) of the Internal Revenue Code.
Films, video tapes, and recordings. You cannot use
MACRS for motion picture films, video tapes, and sound
recordings. For this purpose, sound recordings are discs,
tapes, or other phonorecordings resulting from the fixation
of a series of sounds. You can depreciate this property using either the straight line method or the income forecast
method.
Participations and residuals. You can include participations and residuals in the adjusted basis of the property
for purposes of computing your depreciation deduction
under the income forecast method. The participations and
residuals must relate to income to be derived from the
property before the end of the 10th taxable year after the
property is placed in service. For this purpose, participations and residuals are defined as costs which by contract
vary with the amount of income earned in connection with
the property.
Instead of including these amounts in the adjusted basis of the property, you can deduct the costs in the taxable
year that they are paid.
Videocassettes. If you are in the business of renting
videocassettes, you can depreciate only those videocassettes bought for rental. If the videocassette has a useful
life of one year or less, you can currently deduct the cost
as a business expense.

Corporate or Partnership Property
Acquired in a Nontaxable Transfer
MACRS does not apply to property used before 1987 and
transferred after 1986 to a corporation or partnership (except property the transferor placed in service after July 31,
1986, if MACRS was elected) to the extent its basis is carried over from the property's adjusted basis in the transferor's hands. You must continue to use the same depreciation method as the transferor and figure depreciation
as if the transfer had not occurred. However, if MACRS
would otherwise apply, you can use it to depreciate the

A contribution of property to a partnership in exchange
for a partnership interest.
A partnership distribution of property to a partner.

Election To Exclude Property
From MACRS
If you can properly depreciate any property under a
method not based on a term of years, such as the
unit-of-production method, you can elect to exclude that
property from MACRS. You make the election by reporting your depreciation for the property on line 15 in Part II
of Form 4562 and attaching a statement as described in
the Instructions for Form 4562. You must make this election by the return due date (including extensions) for the
tax year you place your property in service. However, if
you timely filed your return for the year without making the
election, you can still make the election by filing an amended return within six months of the due date of the return
(excluding extensions). Attach the election to the amended return and write “Filed pursuant to section
301.9100-2” on the election statement. File the amended
return at the same address you filed the original return.
Use of standard mileage rate. If you use the standard
mileage rate to figure your tax deduction for your business
automobile, you are treated as having made an election to
exclude the automobile from MACRS. See Pub. 463 for a
discussion of the standard mileage rate.

What Is the Basis of Your
Depreciable Property?
Terms you may need to know
(see Glossary):
Abstract fees
Adjusted basis
Basis
Exchange
Fair market value
To figure your depreciation deduction, you must determine the basis of your property. To determine basis, you
need to know the cost or other basis of your property.
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Page 11

Cost as Basis
The basis of property you buy is its cost plus amounts you
paid for items such as sales tax (see Exception below),
freight charges, and installation and testing fees. The cost
includes the amount you pay in cash, debt obligations,
other property, or services.
Exception. You can elect to deduct state and local
general sales taxes instead of state and local income
taxes as an itemized deduction on Schedule A (Form
1040). If you make that choice, you cannot include those
sales taxes as part of your cost basis.
Assumed debt. If you buy property and assume (or buy
subject to) an existing mortgage or other debt on the property, your basis includes the amount you pay for the property plus the amount of the assumed debt.
Example. You make a $20,000 down payment on
property and assume the seller's mortgage of $120,000.
Your total cost is $140,000, the cash you paid plus the
mortgage you assumed.
Settlement costs. The basis of real property also includes certain fees and charges you pay in addition to the
purchase price. These generally are shown on your settlement statement and include the following.
Legal and recording fees.
Abstract fees.
Survey charges.
Owner's title insurance.
Amounts the seller owes that you agree to pay, such
as back taxes or interest, recording or mortgage fees,
charges for improvements or repairs, and sales commissions.
For fees and charges you cannot include in the basis of
property, see Real Property in Pub. 551.
Property you construct or build. If you construct, build,
or otherwise produce property for use in your business,
you may have to use the uniform capitalization rules to determine the basis of your property. For information about
the uniform capitalization rules, see Pub. 551 and the regulations under section 263A of the Internal Revenue
Code.

Other Basis
Other basis usually refers to basis that is determined by
the way you received the property. For example, your basis is other than cost if you acquired the property in exchange for other property, as payment for services you
performed, as a gift, or as an inheritance. If you acquired
property in this or some other way, see Pub. 551 to determine your basis.
Property changed from personal use. If you held property for personal use and later use it in your business or
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income-producing activity, your depreciable basis is the
lesser of the following.
1. The fair market value (FMV) of the property on the
date of the change in use.
2. Your original cost or other basis adjusted as follows.
a. Increased by the cost of any permanent improvements or additions and other costs that must be
added to basis.
b. Decreased by any deductions you claimed for
casualty and theft losses and other items that reduced your basis.
Example. Several years ago, Nia paid $160,000 to
have her home built on a lot that cost her $25,000. Before
changing the property to rental use last year, she paid
$20,000 for permanent improvements to the house and
claimed a $2,000 casualty loss deduction for damage to
the house. Land is not depreciable, so she includes only
the cost of the house when figuring the basis for depreciation.
Nia's adjusted basis in the house when she changed its
use was $178,000 ($160,000 + $20,000 − $2,000). On the
same date, her property had an FMV of $180,000, of
which $15,000 was for the land and $165,000 was for the
house. The basis for depreciation on the house is the
FMV on the date of change ($165,000), because it is less
than her adjusted basis ($178,000).
Property acquired in a nontaxable transaction. Generally, if you receive property in a nontaxable exchange,
the basis of the property you receive is the same as the
adjusted basis of the property you gave up. Special rules
apply in determining the basis and figuring the MACRS
depreciation deduction and special depreciation allowance for property acquired in a like-kind exchange or involuntary conversion. See Like-kind exchanges and involuntary conversions under How Much Can You Deduct in
chapter 3, and Figuring the Deduction for Property Acquired in a Nontaxable Exchange in chapter 4.
There are also special rules for determining the basis of
MACRS property involved in a like-kind exchange or involuntary conversion when the property is contained in a
general asset account. See How Do You Use General Asset Accounts in chapter 4.

Adjusted Basis
To find your property's basis for depreciation, you may
have to make certain adjustments (increases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you
placed it in service. These events could include the following.
Installing utility lines.
Paying legal fees for perfecting the title.
Settling zoning issues.
Receiving rebates.

Incurring a casualty or theft loss.
For a discussion of adjustments to the basis of your property, see Adjusted Basis in Pub. 551.
If you depreciate your property under MACRS, you also
may have to reduce your basis by certain deductions and
credits with respect to the property. For more information,
see What Is the Basis for Depreciation in chapter 4.
Basis adjustment for depreciation allowed or allowable. You must reduce the basis of property by the depreciation allowed or allowable, whichever is greater. Depreciation allowed is depreciation you actually deducted
(from which you received a tax benefit). Depreciation allowable is depreciation you are entitled to deduct.
If you do not claim depreciation you are entitled to deduct, you must still reduce the basis of the property by the
full amount of depreciation allowable.
If you deduct more depreciation than you should, you
must reduce your basis by any amount deducted from
which you received a tax benefit (the depreciation allowed).

How Do You Treat Repairs and
Improvements?
If you improve depreciable property, you must treat the
improvement as separate depreciable property. Improvement means an addition to or partial replacement of property that is a betterment to the property, restores the property, or adapts it to a new or different use. See section
1.263(a)-3 of the regulations.
You generally deduct the cost of repairing business
property in the same way as any other business expense.
However, if the cost is for a betterment to the property, to
restore the property, or to adapt the property to a new or
different use, you must treat it as an improvement and depreciate it.
Example. You repair a small section on one corner of
the roof of a rental house. You deduct the cost of the repair as a rental expense. However, if you completely replace the roof, the new roof is an improvement because it
is a restoration of the building. You depreciate the cost of
the new roof.
Improvements to rented property. You can depreciate
permanent improvements you make to business property
you rent from someone else.

Do You Have To File
Form 4562?

Listed property
Placed in service
Standard mileage rate
Use Form 4562 to figure your deduction for depreciation
and amortization. Attach Form 4562 to your tax return for
the current tax year if you are claiming any of the following
items.
A section 179 deduction for the current year or a section 179 carryover from a prior year. See chapter 2 for
information on the section 179 deduction.
Depreciation for property placed in service during the
current year.
Depreciation on any vehicle or other listed property,
regardless of when it was placed in service. See
chapter 5 for information on listed property.
A deduction for any vehicle if the deduction is reported
on a form other than Schedule C (Form 1040) or
Schedule C-EZ (Form 1040).
Amortization of costs if the current year is the first year
of the amortization period.
Depreciation or amortization on any asset on a corporate income tax return (other than Form 1120S, U.S.
Income Tax Return for an S Corporation) regardless
of when it was placed in service.

CAUTION

You must submit a separate Form 4562 for each
business or activity on your return for which a
Form 4562 is required.

Table 1-1 presents an overview of the purpose of the
various parts of Form 4562.
Employee. Do not use Form 4562 if you are an employee and you deduct job-related vehicle expenses using
either actual expenses (including depreciation) or the
standard mileage rate. Instead, use either Form 2106 or
Form 2106-EZ. Use Form 2106-EZ if you are claiming the
standard mileage rate and you are not reimbursed by your
employer for any expenses.

How Do You Correct
Depreciation Deductions?
If you deducted an incorrect amount of depreciation in any
year, you may be able to make a correction by filing an
amended return for that year. See Filing an Amended Return, next. If you are not allowed to make the correction on
an amended return, you may be able to change your accounting method to claim the correct amount of depreciation. See Changing Your Accounting Method, later.

Terms you may need to know
(see Glossary):
Amortization
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Page 13

Filing an Amended Return
You can file an amended return to correct the amount of
depreciation claimed for any property in any of the following situations.
You claimed the incorrect amount because of a mathematical error made in any year.

included in a class of property for which you elected a
30% special allowance instead of a 50% special allowance).
Changes in depreciation that are not a change in
method of accounting (and may only be made on an
amended return) include the following.

You claimed the incorrect amount because of a posting error made in any year.

An adjustment in the useful life of a depreciable asset
for which depreciation is determined under section
167.

You have not adopted a method of accounting for
property placed in service by you in tax years ending
after December 29, 2003.

A change in use of an asset in the hands of the same
taxpayer.

You claimed the incorrect amount on property placed
in service by you in tax years ending before December
30, 2003.
Adoption of accounting method defined. Generally,
you adopt a method of accounting for depreciation by using a permissible method of determining depreciation
when you file your first tax return, or by using the same impermissible method of determining depreciation in two or
more consecutively filed tax returns.
For an exception to the 2-year rule, see Revenue Procedure 2017-30 on page 1139 of Internal Revenue Bulletin 2017-18, available at www.irs.gov/irb/2017-18_IRB.
When to file. If an amended return is allowed, you must
file it by the later of the following.
3 years from the date you filed your original return for
the year in which you did not deduct the correct
amount. A return filed before an unextended due date
is considered filed on that due date.
2 years from the time you paid your tax for that year.

Changing Your Accounting Method
Generally, you must get IRS approval to change your
method of accounting. You generally must file Form 3115,
Application for Change in Accounting Method, to request
a change in your method of accounting for depreciation.
The following are examples of a change in method of
accounting for depreciation.
A change from an impermissible method of determining depreciation for depreciable property, if the impermissible method was used in two or more consecutively filed tax returns.
A change in the treatment of an asset from nondepreciable to depreciable or vice versa.
A change in the depreciation method, period of recovery, or convention of a depreciable asset.
A change from not claiming to claiming the special depreciation allowance if you did not make the election
to not claim any special allowance.
A change from claiming a 50% special depreciation allowance to claiming a 30% special depreciation allowance for qualified property (including property that is
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Making a late depreciation election or revoking a
timely valid depreciation election (including the election not to deduct the special depreciation allowance).
If you elected not to claim any special depreciation allowance, a change from not claiming to claiming the
special depreciation allowance is a revocation of the
election and is not an accounting method change.
Generally, you must get IRS approval to make a late
depreciation election or revoke a depreciation election. You must submit a request for a letter ruling to
make a late election or revoke an election.
Any change in the placed in service date of a depreciable asset.
See section 1.446-1(e)(2)(ii)(d) of the regulations for
more information and examples.
IRS approval. If your change in method of accounting for
depreciation is described in Revenue Procedure 2017-30,
you may be able to get approval from the IRS to make that
change under the automatic change request procedures
generally covered in Revenue Procedure 2015-13 on
page 419 of Internal Revenue Bulletin 2015-5. If you do
not qualify to use the automatic procedures to get approval, you must use the advance consent request procedures generally covered in Revenue Procedure 2015-13.
Also see the Instructions for Form 3115 for more information on getting approval, including lists of scope limitations
and automatic accounting method changes.
Additional guidance. For additional guidance and
special procedures for changing your accounting method,
automatic change procedures, amending your return, and
filing Form 3115, see Revenue Procedure 2015-13 on
page 419 of Internal Revenue Bulletin 2015-5 and Revenue Procedure 2017-30 on page 1131 of Internal Revenue Bulletin 2017-18, available at www.irs.gov/irb/
2017-18_IRB.
Section 481(a) adjustment. If you file Form 3115 and
change from an impermissible method to a permissible
method of accounting for depreciation, you can make a
section 481(a) adjustment for any unclaimed or excess
amount of allowable depreciation. The adjustment is the
difference between the total depreciation actually deducted for the property and the total amount allowable prior to
the year of change. If no depreciation was deducted, the
adjustment is the total depreciation allowable prior to the
year of change. A negative section 481(a) adjustment

Table 1-1. Purpose of Form 4562
This table describes the purpose of the various parts of Form 4562. For more information, see Form 4562
and its instructions.
Part

Purpose

• Electing the section 179 deduction
• Figuring the maximum section 179 deduction for the current year
• Figuring any section 179 deduction carryover to the next year

• Reporting the special depreciation allowance for property (other than listed property) placed in
service during the tax year
• Reporting depreciation deductions on property being depreciated under any method other than
Modified Accelerated Cost Recovery System (MACRS)

III

• Reporting MACRS depreciation deductions for property placed in service before this year
• Reporting MACRS depreciation deductions for property (other than listed property) placed in
service during the current year

• Summarizing other parts

• Reporting the special depreciation allowance for automobiles and other listed property
• Reporting MACRS depreciation on automobiles and other listed property
• Reporting the section 179 cost elected for automobiles and other listed property
• Reporting information on the use of automobiles and other transportation vehicles

• Reporting amortization deductions

results in a decrease in taxable income. It is taken into account in the year of change and is reported on your business tax returns as “other expenses.” A positive section
481(a) adjustment results in an increase in taxable income. It is generally taken into account over 4 tax years
and is reported on your business tax returns as “other income.” However, you can elect to use a one-year adjustment period and report the adjustment in the year of
change if the total adjustment is less than $50,000. Make
the election by completing the appropriate line on
Form 3115.
If you file a Form 3115 and change from one permissible method to another permissible method, the section
481(a) adjustment is zero.

Estates and trusts cannot elect the section 179
deduction.

CAUTION

This chapter explains what property does and does not
qualify for the section 179 deduction, what limits apply to
the deduction (including special rules for partnerships and
corporations), and how to elect it. It also explains when
and how to recapture the deduction.

Useful Items

You may want to see:
Publication
537 Installment Sales
544 Sales and Other Dispositions of Assets
954 Tax Incentives for Distressed Communities

Form (and Instructions)
4562 Depreciation and Amortization

Electing the Section 179
Deduction

4797 Sales of Business Property
See chapter 6 for information about getting publications
and forms.

Introduction
You can elect to recover all or part of the cost of certain
qualifying property, up to a limit, by deducting it in the year
you place the property in service. This is the section 179
deduction. You can elect the section 179 deduction instead of recovering the cost by taking depreciation deductions.

What Property Qualifies?
Terms you may need to know
(see Glossary):
Adjusted basis
Basis
Class life

Chapter 2

Electing the Section 179 Deduction

Page 15

Structural components
Tangible property
To qualify for the section 179 deduction, your property
must meet all the following requirements.
It must be eligible property.
It must be acquired for business use.
It must have been acquired by purchase.
It must not be property described later under What
Property Does Not Qualify.
The following discussions provide information about
these requirements and exceptions.

Eligible Property
To qualify for the section 179 deduction, your property
must be one of the following types of depreciable property.
1. Tangible personal property.
2. Other tangible property (except buildings and their
structural components) used as:

Portable air conditioners or heaters placed in service
by you in tax years beginning after 2015.
The treatment of property as tangible personal property
for the section 179 deduction is not controlled by its treatment under local law. For example, property may not be
tangible personal property for the deduction even if treated so under local law, and some property (such as fixtures) may be tangible personal property for the deduction
even if treated as real property under local law.
Off-the-shelf computer software. Off-the-shelf computer software is qualifying property for purposes of the
section 179 deduction. This is computer software that is
readily available for purchase by the general public, is
subject to a nonexclusive license, and has not been substantially modified. It includes any program designed to
cause a computer to perform a desired function. However,
a database or similar item is not considered computer
software unless it is in the public domain and is incidental
to the operation of otherwise qualifying software.
Qualified real property. You can elect to treat certain
qualified real property you placed in service during the tax
year as section 179 property. If this election is made, the
term “section 179 property” will include any qualified real
property that is:

a. An integral part of manufacturing, production, or
extraction, or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services,

Qualified leasehold improvement property as described in section 168(e)(6) of the Internal Revenue
Code, as in effect before the enactment of Public Law
115-97, placed in service in tax years beginning before January 1, 2018,

b. A research facility used in connection with any of
the activities in (a) above, or

Qualified restaurant property, as described in section
168(e)(7) of the Internal Revenue Code, as in effect
before the enactment of Public Law 115-97, placed in
service in tax years beginning before January 1, 2018,
or

c. A facility used in connection with any of the activities in (a) for the bulk storage of fungible commodities.
3. Single-purpose agricultural (livestock) or horticultural
structures. See chapter 7 of Pub. 225 for definitions
and information regarding the use requirements that
apply to these structures.
4. Storage facilities (except buildings and their structural
components) used in connection with distributing petroleum or any primary product of petroleum.
5. Off-the-shelf computer software.
6. Qualified real property (described below).
Tangible personal property. Tangible personal property is any tangible property that is not real property. It includes the following property.
Machinery and equipment.
Property contained in or attached to a building (other
than structural components), such as refrigerators,
grocery store counters, office equipment, printing
presses, testing equipment, and signs.
Gasoline storage tanks and pumps at retail service
stations.
Livestock, including horses, cattle, hogs, sheep,
goats, and mink and other furbearing animals.
Page 16

Chapter 2

Qualified retail improvement property as described in
section 168(e)(8) of the Internal Revenue Code, as in
effect before the enactment of Public Law 115-97,
placed in service in tax years beginning before January 1, 2018.
For more information, see Special rules for qualified section 179 real property, later.
Qualified leasehold improvement property. Generally, this is any improvement to an interior portion of a
building that is nonresidential real property, provided all of
the requirements discussed in chapter 4 under Qualified
leasehold improvement property are met.
In addition, an improvement made by the lessor does
not qualify as qualified leasehold improvement property to
any subsequent owner unless it is acquired from the original lessor by reason of the lessor’s death or in any of the
following types of transactions.
1. A transaction to which section 381(a) applies,
2. A mere change in the form of conducting the trade or
business so long as the property is retained in the
trade or business as qualified leasehold improvement

Electing the Section 179 Deduction

property and the taxpayer retains a substantial interest in the trade or business,

a. A complete liquidation of a subsidiary.
b. A transfer to a corporation controlled by the transferor.

3. A like-kind exchange, involuntary conversion, or
re-acquisition of real property to the extent that the
basis in the property represents the carryover basis,
or
4. Certain nonrecognition transactions to the extent that
your basis in the property is determined by reference
to the transferor’s or distributor’s basis in the property.
Examples include the following.
a. A complete liquidation of a subsidiary.
b. A transfer to a corporation controlled by the transferor.
c. An exchange of property by a corporation solely
for stock or securities in another corporation in a
reorganization.
Qualified restaurant property. Qualified restaurant
property is any section 1250 property that is a building or
an improvement to a building placed in service during the
tax year. Also, more than 50% of the building’s square
footage must be devoted to preparation of meals and
seating for on-premise consumption of prepared meals.
Qualified retail improvement property. Generally,
this is any improvement to an interior portion of nonresidential real property if it meets the following requirements.
1. The portion is open to the general public and is used
in the retail trade or business of selling tangible property to the general public.
2. The improvement is placed in service more than 3
years after the date the building was first placed in
service.

c. An exchange of property by a corporation solely
for stock or securities in another corporation in a
reorganization.

Property Acquired for Business Use
To qualify for the section 179 deduction, your property
must have been acquired for use in your trade or business. Property you acquire only for the production of income, such as investment property, rental property (if
renting property is not your trade or business), and property that produces royalties, does not qualify.
Partial business use. When you use property for both
business and nonbusiness purposes, you can elect the
section 179 deduction only if you use the property more
than 50% for business in the year you place it in service. If
you use the property more than 50% for business, multiply
the cost of the property by the percentage of business
use. Use the resulting business cost to figure your section
179 deduction.
Example. May Oak bought and placed in service an
item of section 179 property costing $11,000. She used
the property 80% for her business and 20% for personal
purposes. The business part of the cost of the property is
$8,800 (80% × $11,000).

Property Acquired by Purchase
To qualify for the section 179 deduction, your property
must have been acquired by purchase. For example,
property acquired by gift or inheritance does not qualify.

3. The expenses are not for the enlargement of the
building, any elevator or escalator, any structural
components benefiting a common area, or the internal structural framework of the building.

Property is not considered acquired by purchase in the
following situations.

In addition, an improvement made by the lessor does not
qualify as qualified retail improvement property to any
subsequent owner unless it is acquired from the original
lessor by reason of the lessor’s death or in any of the following types of transactions.

1. It is acquired by one component member of a controlled group from another component member of the
same group.
2. Its basis is determined either—
a. In whole or in part by its adjusted basis in the
hands of the person from whom it was acquired,
or

1. A transaction to which section 381(a) applies,
2. A mere change in the form of conducting the trade or
business so long as the property is retained in the
trade or business as qualified leasehold improvement
property and the taxpayer retains a substantial interest in the trade or business,
3. A like-kind exchange, involuntary conversion, or
re-acquisition of real property to the extent that the
basis in the property represents the carryover basis,
or
4. Certain nonrecognition transactions to the extent that
your basis in the property is determined by reference
to the transferor’s or distributor’s basis in the property.
Examples include the following.

b. Under the stepped-up basis rules for property acquired from a decedent.
3. It is acquired from a related person.
Related persons. Related persons are described under
Related persons, earlier. However, to determine whether
property qualifies for the section 179 deduction, treat as
an individual's family only his or her spouse, ancestors,
and lineal descendants and substitute "50%" for "10%"
each place it appears.
Example. Ken Larch is a tailor. He bought two industrial sewing machines from his father. He placed both

Chapter 2

Electing the Section 179 Deduction

Page 17

machines in service in the same year he bought them.
They do not qualify as section 179 property because Ken
and his father are related persons. He cannot claim a section 179 deduction for the cost of these machines.

What Property Does Not
Qualify?
Terms you may need to know
(see Glossary):
Basis

a. The term of the lease (including options to renew)
is less than 50% of the property's class life.
b. For the first 12 months after the property is transferred to the lessee, the total business deductions
you are allowed on the property (other than rents
and reimbursed amounts) are more than 15% of
the rental income from the property.
Property used for lodging. Generally, you cannot claim
a section 179 deduction for property used predominantly
to furnish lodging or in connection with the furnishing of
lodging. However, this does not apply to the following
types of property.
Nonlodging commercial facilities that are available to
those not using the lodging facilities on the same basis as they are available to those using the lodging facilities.

Class life
Certain property does not qualify for the section 179 deduction. This includes the following.

Property used by a hotel or motel in connection with
the trade or business of furnishing lodging where the
predominant portion of the accommodations is used
by transients.

Land and Improvements
Land and land improvements do not qualify as section
179 property. Land improvements include swimming
pools, paved parking areas, wharves, docks, bridges, and
fences.

Excepted Property
Even if the requirements explained earlier under What
Property Qualifies are met, you cannot elect the section
179 deduction for the following property.

Any certified historic structure to the extent its basis is
due to qualified rehabilitation expenditures.
Any energy property.
Energy property. Energy property is property that
meets the following requirements.
1. It is one of the following types of property.
a. Equipment that uses solar energy to generate
electricity, to heat or cool a structure, to provide
hot water for use in a structure, or to provide solar
process heat, except for equipment used to generate energy to heat a swimming pool.

Certain property you lease to others (if you are a noncorporate lessor).
Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging.

b. Equipment placed in service after December 31,
2005, and before January 1, 2017, that uses solar
energy to illuminate the inside of a structure using
fiber-optic distributed sunlight.

Property used predominantly outside the United
States, except property described in section 168(g)(4)
of the Internal Revenue Code.
Property used by certain tax-exempt organizations,
except property used in connection with the production of income subject to the tax on unrelated trade or
business income.

c. Equipment used to produce, distribute, or use energy derived from a geothermal deposit. For electricity generated by geothermal power, this includes equipment up to (but not including) the
electrical transmission stage.

Property used by governmental units or foreign persons or entities, except property used under a lease
with a term of less than 6 months.

d. Qualified fuel cell property or qualified microturbine property placed in service after December
31, 2005, and before January 1, 2017.

Leased property. Generally, you cannot claim a section
179 deduction based on the cost of property you lease to
someone else. This rule does not apply to corporations.
However, you can claim a section 179 deduction for the
cost of the following property.
1. Property you manufacture or produce and lease to
others.
2. Property you purchase and lease to others if both the
following tests are met.

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Chapter 2

2. The construction, reconstruction, or erection of the
property must be completed by you.
3. For property you acquire, the original use of the property must begin with you.
4. The property must meet the performance and quality
standards, if any, prescribed by Income Tax Regulations in effect at the time you get the property.
For periods before February 14, 2008, energy property
does not include any property that is public utility property

Electing the Section 179 Deduction

as defined by section 46(f)(5) of the Internal Revenue
Code (as in effect on November 4, 1990).

How Much Can You Deduct?

After you apply the dollar limit to determine a tentative deduction, you must apply the business inCAUTION come limit (described later) to determine your actual section 179 deduction.

Example. In 2017, you bought and placed in service
$510,000 in machinery and a $25,000 circular saw for
your business. You elect to deduct $485,000 for the machinery and the entire $25,000 for the saw, a total of
$510,000. This is the maximum amount you can deduct.
Your $25,000 deduction for the saw completely recovered
its cost. Your basis for depreciation is zero. The basis for
depreciation of your machinery is $25,000. You figure this
by subtracting your $485,000 section 179 deduction for
the machinery from the $510,000 cost of the machinery.

Terms you may need to know
(see Glossary):
Adjusted basis
Basis
Placed in service
Your section 179 deduction is generally the cost of the
qualifying property. However, the total amount you can
elect to deduct under section 179 is subject to a dollar
limit and a business income limit. These limits apply to
each taxpayer, not to each business. However, see Married Individuals under Dollar Limits, later. For a passenger
automobile, the total section 179 deduction and depreciation deduction are limited. See Do the Passenger Automobile Limits Apply in chapter 5.
If you deduct only part of the cost of qualifying property
as a section 179 deduction, you can generally depreciate
the cost you do not deduct.
Trade-in of other property. If you buy qualifying property with cash and a trade-in, its cost for purposes of the
section 179 deduction includes only the cash you paid.
Example. Silver Leaf, a retail bakery, traded two
ovens having a total adjusted basis of $680 for a new
oven costing $1,320. They received an $800 trade-in allowance for the old ovens and paid $520 in cash for the
new oven. The bakery also traded a used van with an adjusted basis of $4,500 for a new van costing $9,000. They
received a $4,800 trade-in allowance on the used van and
paid $4,200 in cash for the new van.
Only the portion of the new property's basis paid by
cash qualifies for the section 179 deduction. Therefore,
Silver Leaf's qualifying costs for the section 179 deduction
are $4,720 ($520 + $4,200).

Dollar Limits
The total amount you can elect to deduct under section
179 for most property placed in service in tax years beginning in 2017 generally cannot be more than $510,000. If
you acquire and place in service more than one item of
qualifying property during the year, you can allocate the
section 179 deduction among the items in any way, as
long as the total deduction is not more than $510,000.
You do not have to claim the full $510,000.
The amount you can elect to deduct is not affecTIP ted if you place qualifying property in service in a
short tax year or if you place qualifying property in
service for only a part of a 12-month tax year.

Situations affecting dollar limit. Under certain circumstances, the general dollar limits on the section 179 deduction may be reduced or increased or there may be additional dollar limits. The general dollar limit is affected by
any of the following situations.
The cost of your section 179 property placed in service exceeds $2,030,000.
Your business is an enterprise zone business.
You placed in service a sport utility or certain other vehicles.
You are married filing a joint or separate return.

Costs Exceeding $2,030,000
If the cost of your qualifying section 179 property placed in
service in a year is more than $2,030,000, you generally
must reduce the dollar limit (but not below zero) by the
amount of cost over $2,030,000. If the cost of your section
179 property placed in service during 2017 is $2,540,000
or more, you cannot take a section 179 deduction.
Example. In 2017, Jane Ash placed in service machinery costing $2,130,000. This cost is $100,000 more than
$2,030,000, so she must reduce her dollar limit to
$410,000 ($510,000 − $100,000).

Enterprise Zone Businesses
An increased section 179 deduction is available to enterprise zone businesses for qualified zone property placed
in service during the tax year, in an empowerment zone.
For more information including the definitions of “enterprise zone business” and “qualified zone property,” see
sections 1397A, 1397C, and 1397D of the Internal Revenue Code.
The dollar limit on the section 179 deduction is increased by the smaller of:
$35,000, or
The cost of section 179 property that is also qualified
zone property placed in service before January 1,
2018 (including such property placed in service by
your spouse, even if you are filing a separate return).

Chapter 2

Electing the Section 179 Deduction

Page 19

Note. You take into account only 50% (instead of 100%)
of the cost of qualified zone property placed in service in a
year when figuring the reduced dollar limit for costs exceeding $2,030,000 (explained earlier).

Sport Utility and Certain Other Vehicles
You cannot elect to expense more than $25,000 of the
cost of any heavy sport utility vehicle (SUV) and certain
other vehicles placed in service during the tax year. This
rule applies to any 4-wheeled vehicle primarily designed
or used to carry passengers over public streets, roads, or
highways, that is rated at more than 6,000 pounds gross
vehicle weight and not more than 14,000 pounds gross
vehicle weight. However, the $25,000 limit does not apply
to any vehicle:
Designed to seat more than nine passengers behind
the driver's seat,

Joint return after filing separate returns. If you and
your spouse elect to amend your separate returns by filing
a joint return after the due date for filing your return, the
dollar limit on the joint return is the lesser of the following
amounts.
The dollar limit (after reduction for any cost of section
179 property over $2,030,000).
The total cost of section 179 property you and your
spouse elected to expense on your separate returns.
Example. The facts are the same as in the previous
example except that Jack elected to deduct $30,000 of
the cost of section 179 property on his separate return
and his wife elected to deduct $2,000. After the due date
of their returns, they file a joint return. Their dollar limit for
the section 179 deduction is $32,000. This is the lesser of
the following amounts.
$480,000—The dollar limit less the cost of section 179
property over $2,030,000.

Equipped with a cargo area (either open or enclosed
by a cap) of at least 6 feet in interior length that is not
readily accessible from the passenger compartment,
or
That has an integral enclosure fully enclosing the
driver compartment and load carrying device, does
not have seating rearward of the driver's seat, and has
no body section protruding more than 30 inches
ahead of the leading edge of the windshield.

Married Individuals
If you are married, how you figure your section 179 deduction depends on whether you file jointly or separately. If
you file a joint return, you and your spouse are treated as
one taxpayer in determining any reduction to the dollar
limit, regardless of which of you purchased the property or
placed it in service. If you and your spouse file separate
returns, you are treated as one taxpayer for the dollar
limit, including the reduction for costs over $2,030,000.
You must allocate the dollar limit (after any reduction) between you equally, unless you both elect a different allocation. If the percentages elected by each of you do not
total 100%, 50% will be allocated to each of you.
Example. Jack Elm is married. He and his wife file
separate returns. Jack bought and placed in service
$2,030,000 of qualified farm machinery in 2017. His wife
has her own business, and she bought and placed in service $30,000 of qualified business equipment. Their combined dollar limit is $480,000. This is because they must
figure the limit as if they were one taxpayer. They reduce
the $510,000 dollar limit by the $30,000 excess of their
costs over $2,030,000.
They elect to allocate the $480,000 dollar limit as follows.
$456,000 ($480,000 x 95%) to Mr. Elm's machinery.

$32,000—The total they elected to expense on their
separate returns.

Business Income Limit
The total cost you can deduct each year after you apply
the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year.
Generally, you are considered to actively conduct a trade
or business if you meaningfully participate in the management or operations of the trade or business.
Any cost not deductible in one year under section 179
because of this limit can be carried to the next year. Special rules apply to a deduction of qualified section 179 real
property that is placed in service by you in tax years beginning before 2016 and disallowed because of the business income limit. See Special rules for qualified section
179 real property under Carryover of disallowed deduction, later.
Taxable income. In general, figure taxable income for
this purpose by totaling the net income and losses from all
trades and businesses you actively conducted during the
year. Net income or loss from a trade or business includes
the following items.
Section 1231 gains (or losses).
Interest from working capital of your trade or business.
Wages, salaries, tips, or other pay earned as an employee.
For information about section 1231 gains and losses, see
chapter 3 in Pub. 544.
In addition, figure taxable income without regard to any
of the following.

$24,000 ($480,000 x 5%) to Mrs. Elm's equipment.
If they did not make an election to allocate their costs in
this way, they would have to allocate $240,000 ($480,000
× 50%) to each of them.
Page 20

Chapter 2

Electing the Section 179 Deduction

The section 179 deduction.
The self-employment tax deduction.
Any net operating loss carryback or carryforward.
Any unreimbursed employee business expenses.

Two different taxable income limits. In addition to the
business income limit for your section 179 deduction, you
may have a taxable income limit for some other deduction.
You may have to figure the limit for this other deduction
taking into account the section 179 deduction. If so, complete the following steps.
Step

Action

Figure taxable income without the section 179
deduction or the other deduction.

Figure a hypothetical section 179 deduction
using the taxable income figured in Step 1.

Subtract the hypothetical section 179
deduction figured in Step 2 from the taxable
income figured in Step 1.

Figure a hypothetical amount for the other
deduction using the amount figured in Step 3
as taxable income.

Subtract the hypothetical other deduction
figured in Step 4 from the taxable income
figured in Step 1.

Figure your actual section 179 deduction using
the taxable income figured in Step 5.

Subtract your actual section 179 deduction
figured in Step 6 from the taxable income
figured in Step 1.

Figure your actual other deduction using the
taxable income figured in Step 7.

Example. On February 1, 2017, the XYZ corporation
purchased and placed in service qualifying section 179
property that cost $510,000. It elects to expense the entire
$510,000 cost under section 179. In June, the corporation
gave a charitable contribution of $10,000. A corporation's
limit on charitable contributions is figured after subtracting
any section 179 deduction. The business income limit for
the section 179 deduction is figured after subtracting any
allowable charitable contributions. XYZ's taxable income
figured without the section 179 deduction or the deduction
for charitable contributions is $530,000. XYZ figures its
section 179 deduction and its deduction for charitable
contributions as follows.
Step 1– Taxable income figured without either deduction is $530,000.
Step 2– Using $530,000 as taxable income, XYZ's hypothetical section 179 deduction is $510,000.
Step 3– $20,000 ($530,000 − $510,000).
Step 4– Using $20,000 (from Step 3) as taxable income, XYZ's hypothetical charitable contribution (limited to 10% of taxable income) is $2,000.

Step 7– $20,000 ($530,000 − $510,000).
Step 8– Using $20,000 (from Step 7) as taxable income, XYZ's actual charitable contribution (limited to
10% of taxable income) is $2,000.
Carryover of disallowed deduction. You can carry
over for an unlimited number of years, the cost of any
qualified section 179 real property that you placed in service in tax years beginning after 2015, and that you elected
to expense, but were unable to deduct because of the
business income limitation. This disallowed deduction
amount is shown on line 13 of Form 4562. You use the
amount you carry over to determine your section 179 deduction in the next year. Enter that amount on line 10 of
your Form 4562 for the next year.
If you place more than one property in service in a year,
you can select the properties for which all or a part of the
costs will be carried forward. Your selections must be
shown in your books and records. For this purpose, treat
section 179 costs allocated from a partnership or an S
corporation as one item of section 179 property. If you do
not make a selection, the total carryover will be allocated
equally among the properties you elected to expense for
the year.
If costs from more than one year are carried forward to
a subsequent year in which only part of the total carryover
can be deducted, you must deduct the costs being carried
forward from the earliest year first.
Special rules for qualified section 179 real property. You can carry over to 2018 a 2017 deduction attributable to qualified section 179 real property that you
placed in service in tax years beginning after 2016 and
that you elected to expense but were unable to take because of the business income limitation. See Carryover of
disallowed deduction above. However, a 2015 deduction
(any such 2014 carryover amounts not deducted in 2015,
plus any 2014 disallowed amounts) attributable to qualified section 179 real property that you elected to expense
but were unable to take because of the business income
limitation cannot be carried over. Instead, these amounts
are treated as property placed in service on the first day of
2015 for purposes of computing depreciation (including
the special depreciation allowance, if applicable). See
section 179(f) of the Internal Revenue Code, as in effect
before section 124(c)(2) of the PATH Act, for more information. Also see Notice 2013-59, section 5 of Revenue
Procedure 2015-48, and sections 2 and 3 of Revenue
Procedure 2016-48. You can find Notice 2013-59 at
www.irs.gov/irb/2013-40_IRB/ar14.html, Revenue Procedure 2015-48 at www.irs.gov/irb/2015-40_IRB/ar13.html,
and Revenue Procedure 2016-48 at www.irs.gov/irb/
2016-37_IRB/ar10.html. Also, see Election for certain
qualified section 179 real property, later, for information
on how to make this election.

Step 5– $528,000 ($530,000 − $2,000).
Step 6– Using $528,000 (from Step 5) as taxable income, XYZ figures the actual section 179 deduction.
Because the taxable income is at least $510,000, XYZ
can take a $510,000 section 179 deduction.
Chapter 2

Electing the Section 179 Deduction

Page 21

If there is a sale or other disposition of your prop-

TIP erty (including a transfer at death) before you can

use the full amount of any outstanding carryover
of your disallowed section 179 deduction, neither you nor
the new owner can deduct any of the unused amount. Instead, you must add it back to the property's basis.

Partnerships and Partners
The section 179 deduction limits apply both to the partnership and to each partner. The partnership determines its
section 179 deduction subject to the limits. It then allocates the deduction among its partners.
Each partner adds the amount allocated from partnerships (shown on Schedule K-1 (Form 1065), Partner's
Share of Income, Deductions, Credits, etc.) to his or her
nonpartnership section 179 costs and then applies the
dollar limit to this total. To determine any reduction in the
dollar limit for costs over $2,030,000, the partner does not
include any of the cost of section 179 property placed in
service by the partnership. After the dollar limit (reduced
for any nonpartnership section 179 costs over
$2,030,000) is applied, any remaining cost of the partnership and nonpartnership section 179 property is subject to
the business income limit.

qualifying section 179 property costing $55,000. He had a
net loss of $5,000 from that business for the year.
Dean does not have to include section 179 partnership
costs to figure any reduction in his dollar limit, so his total
section 179 costs for the year are not more than
$2,030,000 and his dollar limit is not reduced. His maximum section 179 deduction is $510,000. He elects to expense all of the $70,000 in section 179 deductions allocated from the partnerships ($40,000 from Beech
Partnership plus $30,000 from Cedar Partnership), plus
$55,000 of his sole proprietorship's section 179 costs, and
notes that information in his books and records. However,
his deduction is limited to his business taxable income of
$80,000 ($50,000 from Beech Partnership, plus $35,000
from Cedar Partnership minus $5,000 loss from his sole
proprietorship). He carries over $45,000 ($125,000 −
$80,000) of the elected section 179 costs to 2018. He allocates the carryover amount to the cost of section 179
property placed in service in his sole proprietorship, and
notes that allocation in his books and records.
Different tax years. For purposes of the business income limit, if the partner's tax year and that of the partnership differ, the partner's share of the partnership's taxable
income for a tax year is generally the partner's distributive
share for the partnership tax year that ends with or within
the partner's tax year.

Partnership's taxable income. For purposes of the
business income limit, figure the partnership's taxable income by adding together the net income and losses from
all trades or businesses actively conducted by the partnership during the year. See the Instructions for Form
1065 for information on how to figure partnership net income (or loss). However, figure taxable income without
regard to credits, tax-exempt income, the section 179 deduction, and guaranteed payments under section 707(c)
of the Internal Revenue Code.

Example. John and James Oak are equal partners in
Oak Partnership. Oak Partnership uses a tax year ending
January 31. John and James both use a tax year ending
December 31. For its tax year ending January 31, 2017,
Oak Partnership's taxable income from the active conduct
of its business is $80,000, of which $70,000 was earned
during 2016. John and James each include $40,000 (each
partner's entire share) of partnership taxable income in
computing their business income limit for the 2017 tax
year.

Partner's share of partnership's taxable income. For
purposes of the business income limit, the taxable income
of a partner engaged in the active conduct of one or more
of a partnership's trades or businesses includes his or her
allocable share of taxable income derived from the partnership's active conduct of any trade or business.

Adjustment of partner's basis in partnership. A partner must reduce the basis of his or her partnership interest
by the total amount of section 179 expenses allocated
from the partnership even if the partner cannot currently
deduct the total amount. If the partner disposes of his or
her partnership interest, the partner's basis for determining gain or loss is increased by any outstanding carryover
of disallowed section 179 expenses allocated from the
partnership.

Example. In 2017, Beech Partnership placed in service section 179 property with a total cost of $2,055,000.
The partnership must reduce its dollar limit by $25,000
($2,055,000 − $2,030,000). Its maximum section 179 deduction is $485,000 ($510,000 − $25,000), and it elects to
expense that amount. The partnership's taxable income
from the active conduct of all its trades or businesses for
the year was $600,000, so it can deduct the full $485,000.
It allocates $40,000 of its section 179 deduction and
$50,000 of its taxable income to Dean, one of its partners.
In addition to being a partner in Beech Partnership,
Dean is also a partner in the Cedar Partnership, which allocated to him a $30,000 section 179 deduction and
$35,000 of its taxable income from the active conduct of
its business. He also conducts a business as a sole proprietor and, in 2017, placed in service in that business
Page 22

Chapter 2

Adjustment of partnership's basis in section 179
property. The basis of a partnership's section 179 property must be reduced by the section 179 deduction elected by the partnership. This reduction of basis must be
made even if a partner cannot deduct all or part of the
section 179 deduction allocated to that partner by the
partnership because of the limits.

S Corporations
Generally, the rules that apply to a partnership and its
partners also apply to an S corporation and its shareholders. The deduction limits apply to an S corporation and to

Electing the Section 179 Deduction

each shareholder. The S corporation allocates its deduction to the shareholders who then take their section 179
deduction subject to the limits.
Figuring taxable income for an S corporation. To figure taxable income (or loss) from the active conduct by an
S corporation of any trade or business, you total the net
income and losses from all trades or businesses actively
conducted by the S corporation during the year.
To figure the net income (or loss) from a trade or business actively conducted by an S corporation, you take into
account the items from that trade or business that are
passed through to the shareholders and used in determining each shareholder's tax liability. However, you do not
take into account any credits, tax-exempt income, the
section 179 deduction, and deductions for compensation
paid to shareholder-employees. For purposes of determining the total amount of S corporation items, treat deductions and losses as negative income. In figuring the
taxable income of an S corporation, disregard any limits
on the amount of an S corporation item that must be taken
into account when figuring a shareholder's taxable income.

Other Corporations
A corporation's taxable income from its active conduct of
any trade or business is its taxable income figured with
the following changes.
1. It is figured before deducting the section 179 deduction, any net operating loss deduction, and special deductions (as reported on the corporation's income tax
return).
2. It is adjusted for items of income or deduction included in the amount figured in 1, above, not derived
from a trade or business actively conducted by the
corporation during the tax year.

An amended return for 2017 filed within the time prescribed by law. An election made on an amended return must specify the item of section 179 property to
which the election applies and the part of the cost of
each such item to be taken into account. The amended return also must include any resulting adjustments to taxable income.
You must keep records that show the specific
identification of each piece of qualifying section
RECORDS 179 property. These records must show how you
acquired the property, the person you acquired it from,
and when you placed it in service.
Election for certain qualified section 179 real property. You can elect to expense certain qualified real
property that you placed in service as section 179 property for tax years beginning in 2017. If you elect to treat
this property as section 179 property, you must elect the
application of the special rules for qualified real property
described in section 179(f) of the Internal Revenue Code.
To make the election, attach a statement indicating you
are “electing the application of section 179(f) of the Internal Revenue Code” with either of the following.
Your original 2017 tax return, whether or not you file it
timely.
An amended return for 2017 filed within the time prescribed by law. The amended return must also include
any adjustments to taxable income.

Revoking an election. An election (or any specification
made in the election) to take a section 179 deduction for
2017 can be revoked without IRS approval by filing an
amended return. The amended return must be filed within
the time prescribed by law. The amended return also must
include any resulting adjustments to taxable income.
Once made, the revocation is irrevocable.

Terms you may need to know
(see Glossary):
Listed property
Placed in service
You elect to take the section 179 deduction by completing
Part I of Form 4562.

Your original 2017 tax return, whether or not you file it
timely.

The statement should indicate your election to expense
certain qualified real property under section 179(f) on your
return. It must specify one or more of the three types of
qualified property (described under Qualified real property) to which the election applies, the cost of each such
type, and the portion of the cost of each such property to
be taken into account. Also, report this on line 6 of Form
4562.

How Do You Elect the
Deduction?

CAUTION

For property placed in service in 2017, file Form 4562
with either of the following.

If you elect the deduction for listed property (described in chapter 5), complete Part V of Form
4562 before completing Part I.

When Must You Recapture the
Deduction?
Terms you may need to know
(see Glossary):
Disposition

Chapter 2

Electing the Section 179 Deduction

Page 23

Exchange

2017 ($740.50 × 40% (business)) . . . .

Recapture

2017 — Recapture amount . . . . . . . . . . . . . . .

Recovery period

296.20

4,185.20
$ 814.80

Paul must include $814.80 in income for 2017.

Section 1245 property

If any qualified zone property placed in service
during the year ceases to be used in an empowerCAUTION ment zone by an enterprise zone business in a
later year, the benefit of the increased section 179 deduction must be reported as other income on your return.

You may have to recapture the section 179 deduction if, in
any year during the property's recovery period, the percentage of business use drops to 50% or less. In the year
the business use drops to 50% or less, you include the recapture amount as ordinary income in Part IV of Form
4797. You also increase the basis of the property by the
recapture amount. Recovery periods for property are discussed under Which Recovery Period Applies in chapter 4.
If you sell, exchange, or otherwise dispose of the
property, do not figure the recapture amount unCAUTION der the rules explained in this discussion. Instead,
use the rules for recapturing depreciation explained in
chapter 3 of Pub. 544 under Section 1245 Property. For
qualified real property (described earlier), see Notice
2013-59 for determining the portion of the gain that is attributable to section 1245 property upon the sale or other
disposition of qualified real property. You can find Notice
2013-59 at www.irs.gov/irb/2013-40_IRB/ar14.html.

If the property is listed property (described in
chapter 5), do not figure the recapture amount unCAUTION der the rules explained in this discussion when
the percentage of business use drops to 50% or less. Instead, use the rules for recapturing excess depreciation in
chapter 5 under What Is the Business-Use Requirement.

Figuring the recapture amount. To figure the amount
to recapture, take the following steps.
1. Figure the depreciation that would have been allowable on the section 179 deduction you claimed. Begin
with the year you placed the property in service and
include the year of recapture.
2. Subtract the depreciation figured in (1) from the section 179 deduction you claimed. The result is the
amount you must recapture.
Example. In January 2015, Paul Lamb, a calendar
year taxpayer, bought and placed in service section 179
property costing $10,000. The property is not listed property. The property is 3-year property. He elected a $5,000
section 179 deduction for the property and also elected
not to claim a special depreciation allowance. He used the
property only for business in 2015 and 2016. In 2017, he
used the property 40% for business and 60% for personal
use. He figures his recapture amount as follows.
Section 179 deduction claimed (2015) . . . . . . . .
Minus: Allowable depreciation using Table A-1
(instead of section 179 deduction):
2015 . . . . . . . . . . . . . . . . . . . . . . . . . $1,666.50
2016 . . . . . . . . . . . . . . . . . . . . . . . . . 2,222.50

Page 24

Chapter 3

$5,000.00

3.
Claiming the Special
Depreciation Allowance
Introduction
You can take a special depreciation allowance to recover
part of the cost of qualified property (defined next), placed
in service during the tax year. The allowance applies only
for the first year you place the property in service. For
qualified property placed in service in 2017, you may be
able to take an additional 50% or 100% special depreciation allowance, depending on the date you acquired the
qualified property. The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the
year you place the property in service.
This chapter explains what is qualified property. It also
includes rules regarding how to figure an allowance, how
to elect not to claim an allowance, and when you must recapture an allowance.
Corporations can elect to accelerate certain mini-

TIP mum tax credits in lieu of claiming the special de-

preciation allowance for eligible qualified property. See Election to Accelerate Certain Credits in Lieu of
the Special Depreciation Allowance, later.
See chapter 6 for information about getting publications
and forms.

What Is Qualified Property?
Terms you may need to know
(see Glossary):
Business/investment use
Improvement
Nonresidential real property

Claiming the Special Depreciation Allowance

Placed in service

Other bonus depreciation property to which section
168(k) of the Internal Revenue Code applies.

Residential rental property

Property for which you elected not to claim any special
depreciation allowance (discussed later).

Structural components
Your property is qualified property if it is one of the following.
Qualified reuse and recycling property.
Qualified second generation biofuel plant property.
Certain qualified property acquired before September
28, 2017.
Certain qualified property acquired after September
27, 2017.
Certain plants bearing fruits and nuts.
The following discussions provide information about
the types of qualified property listed above for which you
can take the special depreciation allowance.

Qualified Reuse and Recycling
Property
You can take a 50% special depreciation allowance for
qualified reuse and recycling property. Qualified reuse
and recycling property is any machinery or equipment (not
including buildings or real estate), along with any appurtenance, that is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials (as defined
in section 168(m)(3)(B) of the Internal Revenue Code).
Qualified reuse and recycling property also includes software necessary to operate such equipment. The property
must meet the following requirements.
The property must be depreciated under MACRS.
The property must have a useful life of at least 5
years.
The original use of the property must begin with you
after August 31, 2008.
You must have acquired the property by purchase (as
discussed under Property Acquired by Purchase in
chapter 2) after August 31, 2008, with no binding written contract for the acquisition in effect before September 1, 2008.
The property must be placed in service for use in your
trade or business after August 31, 2008.

Excepted Property
Qualified reuse and recycling property does not include
any of the following.
Any rolling stock or other equipment used to transport
reuse or recyclable materials.
Property required to be depreciated using the Alternative Depreciation System (ADS). For other property
required to be depreciated using ADS, see Required
use of ADS under Which Depreciation System (GDS
or ADS) Applies in chapter 4.
Chapter 3

Property placed in service and disposed of in the
same tax year.
Property converted from business use to personal use
in the same tax year acquired. Property converted
from personal use to business use in the same or later
tax year may be qualified reuse and recycling property.

Qualified Second Generation Biofuel
Plant Property
You can take a 50% special depreciation allowance for
qualified second generation biofuel plant property (as defined in section 40(b)(6)(E) of the Internal Revenue Code).
The property must meet the following requirements.
1. The property is used in the United States solely to
produce second generation biofuel.
2. The original use of the property must begin with you
after December 20, 2006.
3. You must have acquired the property by purchase (as
discussed under Property Acquired by Purchase in
chapter 2) after December 20, 2006, with no binding
written contract for acquisition in effect before December 21, 2006.
4. The property must be placed in service for use in your
trade or business or for the production of income before January 1, 2018.

Special Rules
Sale-leaseback. If you sold qualified second generation
biofuel plant property you placed in service after October
3, 2008, and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by
you under the leaseback.
The property will not qualify for the special allowance if
the lessee or a related person to the lessee or lessor had
a written binding contract in effect for the acquisition of the
property before December 21, 2006.
Syndicated leasing transactions. If qualified second
generation biofuel plant property is originally placed in
service by a lessor after October 3, 2008, the property is
sold within 3 months of the date it was placed in service,
and the user of the property does not change, then the
property is treated as originally placed in service by the
taxpayer no earlier than the date of the last sale.
Multiple units of property subject to the same lease will
be treated as originally placed in service no earlier than
the date of sale if the property is sold within 3 months after
the final unit is placed in service and the period between
the times the first and last units are placed in service does
not exceed 12 months.
Claiming the Special Depreciation Allowance

Page 25

Excepted Property

3. The original use of the property must begin with you.

Qualified second generation biofuel plant property does
not include any of the following.

4. It is not excepted property (explained later in Excepted property).

Property placed in service and disposed of in the
same tax year.
Property converted from business use to personal use
in the same tax year it is acquired. Property converted
from personal use to business use in the same or later
tax year may be qualified second generation biofuel
plant property.
Property required to be depreciated using the Alternative Depreciation System (ADS). For other property
required to be depreciated using ADS, see Required
use of ADS under Which Depreciation System (GDS
or ADS) Applies in chapter 1.
Property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section 103 of the Internal Revenue Code.
Property for which you elected not to claim any special
depreciation allowance (discussed later).
Property for which a deduction was taken under section 179C for certain qualified refinery property.
Other bonus depreciation property to which section
168(k) of the Internal Revenue Code applies.

Certain Qualified Property Acquired
Before September 28, 2017
You can take a 50% special depreciation deduction allowance for certain qualified property acquired before September 28, 2017, and placed in service before January 1,
2018. Certain qualified property acquired before September 28, 2017, and placed in service in 2018, is eligible for
a 40% special depreciation allowance. Your property is
qualified property if it meets the following requirements.
1. It is one of the following types of property.
a. Tangible property depreciated under MACRS with
a recovery period of 20 years or less.
b. Water utility property depreciated under MACRS.
c. Computer software that is readily available for purchase by the general public, is subject to a nonexclusive license, and has not been substantially
modified. (The cost of some computer software is
treated as part of the cost of hardware and is depreciated under MACRS.)
d. Qualified improvement property depreciated under MACRS (defined under Qualified improvement property, later).
2. The property must also be placed in service before
January 1, 2020 (or before January 1, 2021, for certain property with a long production period and for
certain aircraft). See Long Production Period Property
and Noncommercial Aircraft, later.
Page 26

Chapter 3

Qualified improvement property. Generally, this is any
improvement to an interior part of a building that is nonresidential real property. The improvement is placed in service after the date the building is first placed in service and
is section 1250 property. See chapter 3 in Pub. 544, Sales
and Other Dispositions of Assets, for the definition of section 1250 property.
However, a qualified improvement does not include
any improvement for which the expenditure is attributable
to any of the following.
The enlargement of the building.
Any elevator or escalator.
The internal structural framework of the building.

Long Production Period Property
To be qualified property, long production period property
must meet the following requirements.
It must meet the requirements in (1)-(4).
The property has a recovery period of at least 10
years or is transportation property. Transportation
property is tangible personal property used in the
trade or business of transporting persons or property.
The property is subject to section 263A of the Internal
Revenue Code.
The property has an estimated production period exceeding 1 year and an estimated production cost exceeding $1,000,000.
You must have acquired the property, or acquired the
property pursuant to a written contract entered into,
before January 1, 2020.

Noncommercial Aircraft
To be qualified property, noncommercial aircraft must
meet the following requirements.
It must meet the requirements in (2)-(4).
The aircraft must not be tangible personal property
used in the trade or business of transporting persons
or property (except for agricultural or firefighting purposes).
The aircraft must be purchased (as discussed under
Property Acquired by Purchase in chapter 2) by a purchaser who at the time of the contract for purchase,
makes a nonrefundable deposit of the lesser of 10%
of the cost or $100,000.
The aircraft must have an estimated production period
exceeding four months and a cost exceeding
$200,000.
You must have acquired the aircraft, or acquired the
aircraft pursuant to a written contract entered into,
before January 1, 2020.

Claiming the Special Depreciation Allowance

Special Rules
Sale-leaseback. If you sold qualified property you placed
in service and leased it back within 3 months after you
originally placed in service, the property is treated as originally placed in service no earlier than the date it is used by
you under the leaseback.
Syndicated leasing transactions. If qualified property
is originally placed in service by a lessor, the property is
sold within 3 months of the date it was placed in service,
and the user of the property does not change, then the
property is treated as originally placed in service by the
taxpayer no earlier than the date of the last sale.
Multiple units of property subject to the same lease will
be treated as originally placed in service no earlier than
the date of the last sale if the property is sold within 3
months after the final unit is placed in service and the period between the time the first and last units are placed in
service does not exceed 12 months.

Excepted Property
Qualified property does not include any of the following.
Property placed in service and disposed of in the
same tax year.
Property converted from business use to personal use
in the same tax year acquired. Property converted
from personal use to business use in the same or later
tax year may be qualified property.
Property required to be depreciated under the Alternative Depreciation System (ADS). This includes listed
property used 50% or less in a qualified business use.
For other property required to be depreciated using
ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies in chapter 4.
Qualified restaurant property (as defined in section
168(e)(7) of the Internal Revenue Code) that is not
qualified improvement property.
Property for which you elected not to claim any special
depreciation allowance (discussed later).
Property for which you elected to accelerate certain
credits in lieu of the special depreciation allowance
(discussed later).

Certain Qualified Property Acquired
After September 27, 2017
You can take a 100% special depreciation allowance for
property acquired and placed in service after September
27, 2017, and before January 1, 2023 (or before January
1, 2024, for certain property with a long production period
and for certain aircraft). Your property is qualified property
if it meets the following.
Tangible property depreciated under MACRS with a
recovery period of 20 years or less (including qualified
leasehold improvement property, qualified restaurant
property that is also qualified improvement property,
Chapter 3

and qualified retail improvement property acquired after September 27, 2017, and placed in service before
January 1, 2018).
Computer software defined in and depreciated under
section 167(f)(1).
Qualified improvement property defined in section
168(k)(3), depreciated under MACRS, and acquired
after September 27, 2017, and placed in service before January 1, 2018.
Qualified film, television, and live theatrical productions, as defined in sections 181(d) and (e).
Qualified property must also be placed in service before January 1, 2027 (or before January 1, 2028, for certain property with a long production period and for certain
aircraft) and can be either new property or certain used
property.
Note. For the first tax year ending after September 27,
2017, you may elect to apply a 50% special depreciation
allowance instead of the 100% special depreciation allowance for the qualified property listed above. To make the
election, attach a statement to your timely filed return (including extensions) indicating you are electing to claim a
50% special depreciation allowance for all qualified property. Once made the election cannot be revoked without
IRS consent.
The election must be made separately by each person
owning qualified property (for example, by the partnership, by the S corporation, or for each member of a consolidated group by the common parent of the group).

Certain Plants Bearing Fruits
and Nuts
You can elect to claim 50% special depreciation allowance for the adjusted basis of certain specified plants (defined later) bearing fruits and nuts planted or grafted before September 28, 2017, in the ordinary course of your
farming business (as defined in section 263A(e)(4)).
For certain specified plants bearing fruits and nuts
planted or grafted after September 27, 2017, and before
January 1, 2023, you can elect to claim 100% of the adjusted basis as a special depreciation allowance. For the
tax year ending after September 27, 2017, you may elect
to apply a 50% special depreciation allowance, instead of
the 100% special depreciation allowance. See Note
above for how to make the election.
A specified plant is:
Any tree or vine that bears fruits or nuts, and
Any other plant that will have more than one yield of
fruits or nuts and generally has a pre-productive period of more than 2 years from planting or grafting to
the time it begins bearing fruits or nuts.
Any property planted or grafted outside the United
States does not qualify as a specified plant.
Claiming the Special Depreciation Allowance

Page 27

If you elect to claim the special depreciation allowance
for any specified plant, the special depreciation allowance
applies only for the tax year in which the plant is planted or
grafted. The plant will not be treated as qualified property
eligible for the special depreciation allowance in the subsequent tax year in which it is placed in service.
To make the election, attach a statement to your timely
filed return (including extensions) for the tax year in which
you plant or graft the specified plant(s) indicating you are
electing to apply section 168(k)(5) and identifying the
specified plant(s) for which you are making the election.
The election once made cannot be revoked without IRS
consent.
See section 168(k)(5) of the Internal Revenue Code.

Election To Accelerate Certain
Credits in Lieu of the Special
Depreciation Allowance

property, certain qualified property acquired before September 28, 2017, certain qualified property acquired after
September 27, 2017, and certain plants bearing fruits and
nuts by the applicable percentage.
For qualified property other than listed property, enter
the special allowance on Form 4562, Part II, line 14. For
qualified property that is listed property, enter the special
allowance on Form 4562, Part V, line 25.
If you place qualified property in service in a short

TIP tax year, you can take the full amount of a special
depreciation allowance.

Depreciable basis. This is the property's cost or other
basis multiplied by the percentage of business/investment
use, reduced by the total amount of any credits and deductions allocable to the property.
The following are examples of some credits and deductions that reduce depreciable basis.
Any section 179 deduction.
Any deduction for removal of barriers to the disabled
and the elderly.

A corporation can elect to claim unused minimum tax
credits in lieu of claiming the special depreciation allowance for qualified property (as defined in section 168(k)(2)
of the Internal Revenue Code) placed in service during the
tax year.

Any disabled access credit, enhanced oil recovery
credit, and credit for employer-provided childcare facilities and services.

If you make an election to accelerate these credits in
lieu of claiming the special depreciation allowance for eligible property, you must not take the 50% or 100% special depreciation allowance for the property and must depreciate the basis in the property under MACRS using the
straight line method. See Which Depreciation Method Applies in chapter 4.

Any section 181 deduction.

Once made, the election cannot be revoked without
IRS consent.
For more information, see section 168(k)(4) of the Internal Revenue Code.
Additional guidance. For additional guidance on the
election to accelerate the minimum tax credit in lieu of
claiming the special depreciation allowance, see Form
8827, Credit for Prior Year Minimum Tax — Corporations,
and the related instructions.

How Much Can You Deduct?
Terms you may need to know
(see Glossary):
Adjusted basis
Basis
Placed in service
Figure the special depreciation allowance by multiplying
the depreciable basis of qualified reuse and recycling
Page 28

Chapter 3

Basis adjustment to investment credit property under
section 50(c) of the Internal Revenue Code.
For additional credits and deductions that affect basis,
see section 1016 of the Internal Revenue Code.
For information about how to determine the cost or
other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1. For a discussion of business/investment use, see Partial business or investment
use under Property Used in Your Business or Income-Producing Activity in chapter 1.
Depreciating the remaining cost. After you figure your
special depreciation allowance for your qualified property,
you can use the remaining cost to figure your regular
MACRS depreciation deduction (discussed in chapter 4).
Therefore, you must reduce the depreciable basis of the
property by the special depreciation allowance before figuring your regular MACRS depreciation deduction.
Example. On July 1, 2017, Tom Brown bought and
placed in service in his business qualified property that
cost $450,000. He did not elect to claim a section 179 deduction. He deducts 50% of the cost ($225,000) as a special depreciation allowance for 2017. He uses the remaining $225,000 of cost to figure his regular MACRS
depreciation deduction for 2017 and later years.
Like-kind exchanges and involuntary conversions. If
you acquire qualified property in a like-kind exchange or
involuntary conversion, the carryover basis of the acquired property is eligible for a special depreciation allowance. After you figure your special allowance, you can use
the remaining carryover basis to figure your regular
MACRS depreciation deduction. In the year you claim the

Claiming the Special Depreciation Allowance

allowance (the year you place in service the property received in the exchange or dispose of involuntarily converted property), you must reduce the carryover basis of the
property by the allowance before figuring your regular
MACRS depreciation deduction. See Figuring the Deduction for Property Acquired in a Nontaxable Exchange, in
chapter 4 under How Is the Depreciation Deduction Figured. The excess basis (the part of the acquired property's
basis that exceeds its carryover basis) is also eligible for a
special depreciation allowance.

How Can You Elect Not To
Claim an Allowance?
You can elect, for any class of property, not to deduct any
special depreciation allowances for all property in such
class placed in service during the tax year.
To make an election, attach a statement to your return
indicating what election you are making and the class of
property for which you are making the election.
The election must be made separately by each person
owning qualified property (for example, by the partnerships, by the S corporation, or for each member of a consolidated group by the common parent of the group).
When to make election. Generally, you must make the
election on a timely filed tax return (including extensions)
for the year in which you place the property in service.
However, if you timely filed your return for the year without making the election, you can still make the election by
filing an amended return within 6 months of the due date
of the original return (not including extensions). Attach the
election statement to the amended return. On the amended return, write “Filed pursuant to section 301.9100-2.”
Revoking an election. Once you elect not to deduct a
special depreciation allowance for a class of property, you
cannot revoke the election without IRS consent. A request
to revoke the election is a request for a letter ruling.
If you elect not to have any special depreciation
allowance apply, the property placed in service
CAUTION after 2015 will not be subject to an alternative
minimum tax adjustment for depreciation.

Recapture of allowance deducted for qualified GO
Zone property. If, in any year after the year you claim the
special depreciation allowance for qualified GO Zone
property (including specified GO Zone extension property), the property ceases to be used in the GO Zone, you
may have to recapture as ordinary income the excess
benefit you received from claiming the special depreciation allowance. For additional guidance, see Notice
2008-25 on page 484 of Internal Revenue Bulletin 2008-9
available at www.irs.gov/irb/2008-09_IRB/index.html.
Qualified cellulosic biomass ethanol plant property,
qualified cellulosic biofuel plant property, and qualified second generation biofuel plant property. If, in
any year after the year you claim the special depreciation
allowance for any qualified cellulosic biomass ethanol
plant property, qualified cellulosic biofuel plant property,
or qualified second generation biofuel plant property, the
property ceases to be qualified cellulosic biomass ethanol
plant property, qualified cellulosic biofuel plant property,
or qualified second generation biofuel plant property, you
may have to recapture as ordinary income the excess
benefit you received from claiming the special depreciation allowance.
Recapture of allowance for qualified Recovery Assistance property. If, in any year after the year you claim
the special depreciation allowance for qualified Recovery
Assistance property, the property ceases to be used in the
Kansas disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance. For additional
guidance, see Notice 2008-67 on page 307 of Internal
Revenue Bulletin 2008-32, available at www.irs.gov/irb/
2008-32_IRB/index.html.
Recapture of allowance for qualified disaster assistance property. If, in any year after the year you claim
the special depreciation allowance for qualified disaster
assistance property, the property ceases to be used in the
applicable disaster area, you may have to recapture as ordinary income the excess benefit you received from claiming the special depreciation allowance.

When Must You Recapture an
Allowance?
When you dispose of property for which you claimed a
special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation
allowance previously allowed or allowable. See When Do
You Recapture MACRS Depreciation in chapter 4 for
more information.

4.
Figuring Depreciation
Under MACRS
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.

Chapter 4

Figuring Depreciation Under MACRS

Page 29

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

ter 1.

To be sure you can use MACRS to figure depreciation for your property, see What Method Can
You Use To Depreciate Your Property in chap-

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

Residential rental property
Tangible property
Tax exempt
Your use of either the General Depreciation System
(GDS) or the Alternative Depreciation System (ADS) to
depreciate property under MACRS determines what depreciation method and recovery period you use. You generally must use GDS unless you are specifically required
by law to use ADS or you elect to use ADS.
If you placed your property in service in 2017, complete
Part III of Form 4562 to report depreciation using MACRS.
Complete section B of Part III to report depreciation using
GDS, and complete section C of Part III to report depreciation using ADS. If you placed your property in service before 2017 and are required to file Form 4562, report depreciation using either GDS or ADS on line 17 in Part III.
Required use of ADS. You must use ADS for the following property.
Listed property used 50% or less in a qualified business use. See chapter 5 for information on listed property.

You may want to see:
Publication

Any tangible property used predominantly outside the
United States during the year.

225 Farmer's Tax Guide
463 Travel, Entertainment, Gift, and Car
Expenses

Any tax-exempt use property.
Any tax-exempt bond-financed property.

544 Sales and Other Dispositions of Assets

All property used predominantly in a farming business
and placed in service in any tax year during which an
election not to apply the uniform capitalization rules to
certain farming costs is in effect.

551 Basis of Assets
587 Business Use of Your Home (Including Use by
Daycare Providers)

Any property imported from a foreign country for
which an Executive Order is in effect because the
country maintains trade restrictions or engages in
other discriminatory acts.

Form (and Instructions)
2106 Employee Business Expenses
2106-EZ Unreimbursed Employee Business
Expenses
4562 Depreciation and Amortization
See chapter 6 for information about getting publications
and forms.

Which Depreciation System
(GDS or ADS) Applies?
Terms you may need to know
(see Glossary):
Listed property

If you are required to use ADS to depreciate your
property, you cannot claim any special depreciaCAUTION tion allowance (discussed in chapter 3) for the
property.

Electing ADS. Although your property may qualify for
GDS, you can elect to use ADS. The election generally
must cover all property in the same property class that you
placed in service during the year. However, the election
for residential rental property and nonresidential real property can be made on a property-by-property basis. Once
you make this election, you can never revoke it.
You make the election by completing Form 4562, Part
III, line 20.

Nonresidential real property
Placed in service
Property class
Recovery period
Page 30

Chapter 4

Figuring Depreciation Under MACRS

Which Property Class Applies
Under GDS?

years ending after December 31, 2017. The original use of the property must begin with you after
December 31, 2017.
3. 7-year property.
a. Office furniture and fixtures (such as desks, files,
and safes).

Terms you may need to know
(see Glossary):

b. Agricultural machinery and equipment.

Class life

c. Railroad track.

Nonresidential real property

d. Any property that does not have a class life and
has not been designated by law as being in any
other class.

Placed in service
Property class

e. Certain motorsports entertainment complex property (defined later) place in service before January
1, 2018.

Recovery period
Residential rental property
Section 1245 property

f. Any natural gas gathering line placed in service after April 11, 2005. See Natural gas gathering line
and electric transmission property, later.

Section 1250 property
The following is a list of the nine property classifications
under GDS and examples of the types of property included in each class. These property classes are also listed
under column (a) in section B, Part III, of Form 4562. For
detailed information on property classes, see Appendix B,
Table of Class Lives and Recovery Periods, in this publication.

4. 10-year property.
a. Vessels, barges, tugs, and similar water transportation equipment.
b. Any single purpose agricultural or horticultural
structure.
c. Any tree or vine bearing fruits or nuts.
d. Qualified small electric meter and qualified smart
electric grid system (defined later) placed in service on or after October 3, 2008.

1. 3-year property.
a. Tractor units for over-the-road use.
b. Any race horse over 2 years old when placed in
service. (All race horses placed in service after
December 31, 2008, and before January 1, 2018,
are deemed to be 3-year property, regardless of
age.)

5. 15-year property.
a. Certain improvements made directly to land or
added to it (such as shrubbery, fences, roads,
sidewalks, and bridges).

c. Any other horse (other than a race horse) over 12
years old when placed in service.

b. Any retail motor fuels outlet (defined later), such
as a convenience store.

d. Qualified rent-to-own property (defined later).

c. Any municipal wastewater treatment plant.

2. 5-year property.

d. Any qualified leasehold improvement property
(defined later) placed in service before January 1,
2018.

a. Automobiles, taxis, buses, and trucks.
b. Computers and peripheral equipment.
c. Office machinery (such as typewriters, calculators,
and copiers).
d. Any property used in research and experimentation.
e. Breeding cattle and dairy cattle.
f. Appliances, carpets, furniture, etc., used in a residential rental real estate activity.
g. Certain geothermal, solar, and wind energy property.
h. Any machinery equipment (other than any grain
bin, cotton ginning asset, fence, or other land improvement) used in a farming business and
placed in service after December 31, 2017, in tax
Chapter 4

e. Any qualified restaurant property (defined later)
placed in service before January 1, 2018.
f. Initial clearing and grading land improvements for
gas utility property.
g. Electric transmission property (that is section 1245
property) used in the transmission at 69 or more
kilovolts of electricity placed in service after April
11, 2005. See Natural gas gathering line and electric transmission property, later.
h. Any natural gas distribution line placed in service
after April 11, 2005, and before January 1, 2011.
i. Any qualified retail improvement property placed
in service before January 1, 2018.
Figuring Depreciation Under MACRS

Page 31

j. Any telephone distribution plant and comparable
equipment used for 2-way exchange of voice and
data communications.

Rent-to-own dealer. You are a rent-to-own dealer if
you meet all the following requirements.
You regularly enter into rent-to-own contracts (defined
below) in the ordinary course of your business for the
use of consumer property.

6. 20-year property.
a. Farm buildings (other than single purpose agricultural or horticultural structures).

A substantial portion of these contracts end with the
customer returning the property before making all the
payments required to transfer ownership.

b. Municipal sewers not classified as 25-year property.
c. Initial clearing and grading land improvements for
electric utility transmission and distribution plants.
7. 25-year property. This class is water utility property,
which is either of the following.

The property is tangible personal property of a type
generally used within the home for personal use.
Rent-to-own contract. This is any lease for the use of
consumer property between a rent-to-own dealer and a
customer who is an individual which—

a. Property that is an integral part of the gathering,
treatment, or commercial distribution of water, and
that, without regard to this provision, would be
20-year property.

Is titled “Rent-to-Own Agreement,” “Lease Agreement
with Ownership Option,” or other similar language.
Provides a beginning date and a maximum period of
time, not to exceed 156 weeks or 36 months from the
beginning date, for which the contract can be in effect
(including renewals or options to extend).

b. Municipal sewers other than property placed in
service under a binding contract in effect at all
times since June 9, 1996.

Provides for regular periodic (weekly or monthly) payments that can be either level or decreasing. If the
payments are decreasing, no payment can be less
than 40% of the largest payment.

8. Residential rental property. This is any building or
structure, such as a rental home (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, 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.

Provides for total payments that generally exceed the
normal retail price of the property plus interest.
Provides for total payments that do not exceed
$10,000 for each item of property.
Provides that the customer has no legal obligation to
make all payments outlined in the contract and that, at
the end of each weekly or monthly payment period,
the customer can either continue to use the property
by making the next payment or return the property in
good working order with no further obligations and no
entitlement to a return of any prior payments.

9. Nonresidential real property. This is section 1250
property, such as an office building, store, or warehouse, that is neither residential rental property nor
property with a class life of less than 27.5 years.
Qualified rent-to-own property. Qualified rent-to-own
property is property held by a rent-to-own dealer for purposes of being subject to a rent-to-own contract. It is tangible personal property generally used in the home for
personal use. It includes computers and peripheral equipment, televisions, videocassette recorders, stereos, camcorders, appliances, furniture, washing machines and dryers, refrigerators, and other similar consumer durable
property. Consumer durable property does not include
real property, aircraft, boats, motor vehicles, or trailers.
If some of the property you rent to others under a
rent-to-own agreement is of a type that may be used by
the renters for either personal or business purposes, you
still can treat this property as qualified property as long as
it does not represent a significant portion of your leasing
property. However, if this dual-use property does represent a significant portion of your leasing property, you
must prove that this property is qualified rent-to-own property.

Page 32

Chapter 4

Provides that legal title to the property remains with
the rent-to-own dealer until the customer makes either
all the required payments or the early purchase payments required under the contract to acquire legal title.
Provides that the customer has no right to sell, sublease, mortgage, pawn, pledge, or otherwise dispose
of the property until all contract payments have been
made.
Motorsports entertainment complex. This is a racing
track facility permanently situated on land that hosts one
or more racing events for automobiles, trucks, or motorcycles during the 36-month period after the first day of the
month in which the facility is placed in service. The events
must be open to the public for the price of admission.
Qualified smart electric grid system. A qualified smart
electric grid system means any smart grid property used
as part of a system for electric distribution grid communications, monitoring, and management placed in service
after October 3, 2008, by a taxpayer who is a supplier of

Figuring Depreciation Under MACRS

electrical energy or a provider of electrical energy services. Smart grid property includes electronics and related
equipment that is capable of:
Sensing, collecting, and monitoring data of or from all
portions of a utility's electric distribution grid,
Providing real-time, two-way communications to monitor or to manage the grid, and
Providing real-time analysis of an event prediction
based on collected data that can be used to provide
electric distribution system reliability, quality, and performance.
Retail motor fuels outlet. Real property is a retail motor
fuels outlet if it is used to a substantial extent in the retail
marketing of petroleum or petroleum products (whether or
not it is also used to sell food or other convenience items)
and meets any one of the following three tests.

any subsequent owner unless it is acquired from the original lessor by reason of the lessor's death or in any of the
following types of transactions.
1. A transaction to which section 381(a) applies.
2. A mere change in the form of conducting the trade or
business so long as the property is retained in the
trade or business as qualified leasehold improvement
property and the taxpayer retains a substantial interest in the trade or business.
3. A like-kind exchange, involuntary conversion, or reacquisition of real property to the extent that the basis in
the property represents the carryover basis.
4. Certain nonrecognition transactions to the extent that
your basis in the property is determined by reference
to the transferor's or distributor's basis in the property.
Examples include the following.

It is not larger than 1,400 square feet.

a. A complete liquidation of a subsidiary.

50% or more of the gross revenues generated from
the property are derived from petroleum sales.

b. A transfer to a corporation controlled by the transferor.

50% or more of the floor space in the property is devoted to petroleum marketing sales.

c. An exchange of property by a corporation solely
for stock or securities in another corporation in a
reorganization.

A retail motor fuels outlet does not include any facility related to petroleum and natural gas trunk pipelines.
Qualified leasehold improvement property. Generally, this is any improvement to an interior part of a building, placed in service before January 1, 2018, that is nonresidential real property, if all of the following requirements
are met.
The improvement is made under or according to a
lease by the lessee (or any sublessee) or the lessor of
that part of the building.
That part of the building is to be occupied exclusively
by the lessee (or any sublessee) of that part.
The improvement is placed in service more than 3
years after the date the building was first placed in
service by any person.

Qualified restaurant property. Qualified restaurant
property is any section 1250 property that is a building, or
an improvement to a building, placed in service after December 31, 2008, and before January 1, 2018. Also, more
than 50% of the building's square footage must be devoted to preparation of meals and seating for on-premises
consumption of prepared meals.
Qualified smart electric meter. A qualified smart electric meter is any time-based meter and related communication equipment which is placed in service by a supplier
of electric energy or a provider of electric energy services
and which is capable of being used by you as part of a
system that:
Measures and records electricity usage data on a
time-differentiated basis in at least 24 separate time
segments per day.

The improvement is section 1250 property. See chapter 3 in Pub. 544, Sales and Other Dispositions of Assets, for the definition of section 1250 property.

Provides for the exchange of information between the
supplier or provider and the customer's smart electric
meter in support of time-based rates or other forms of
demand response.

However, a qualified leasehold improvement does not
include any improvement for which the expenditure is attributable to any of the following.

Provides data to the supplier or provider so that the
supplier or provider can provide energy usage information to customers electronically.

The enlargement of the building.
Any elevator or escalator.

Provides all commercial and residential customers of
such supplier or provider with net metering. Net metering means allowing a customer a credit, if any, as
complies with applicable federal and state laws and
regulations for providing electricity to the supplier or
provider.

Any structural component benefiting a common area.
The internal structural framework of the building.
Generally, a binding commitment to enter into a lease
is treated as a lease and the parties to the commitment
are treated as the lessor and lessee. However, a lease
between related persons is not treated as a lease.
In addition, an improvement made by the lessor does
not qualify as qualified leasehold improvement property to

Natural gas gathering line and electric transmission
property. Any natural gas gathering line placed in
service after April 11, 2005, is treated as 7-year property,

Chapter 4

Figuring Depreciation Under MACRS

Page 33

and electric transmission property (that is section 1245
property) used in the transmission at 69 or more kilovolts
of electricity and any natural gas distribution line placed in
service after April 11, 2005, are treated as 15-year property, if the following requirements are met.
The original use of the property must have begun with
you after April 11, 2005. Original use means the first
use to which the property is put, whether or not by
you. Therefore, property used by any person before
April 12, 2005, is not original use. Original use includes additional capital expenditures you incurred to
recondition or rebuild your property. However, original
use does not include the cost of reconditioned or rebuilt property you acquired. Property containing used
parts will not be treated as reconditioned or rebuilt if
the cost of the used parts is not more than 20% of the
total cost of the property.
The property must not be placed in service under a
binding contract in effect before April 12, 2005.
The property must not be self-constructed property
(property you manufacture, construct, or produce for
your own use), if you began the manufacture, construction, or production of the property before April 12,
2005. Property that is manufactured, constructed, or
produced for your use by another person under a written binding contract entered into by you or a related
party before the manufacture, construction, or production of the property is considered to be manufactured,
constructed, or produced by you.

What Is the Basis for
Depreciation?
Terms you may need to know
(see Glossary):
Basis
The basis for depreciation of MACRS property is the property's cost or other basis multiplied by the percentage of
business/investment use. For a discussion of business/
investment use, see Partial business or investment use
under Property Used in Your Business or Income-Producing Activity in chapter 1. Reduce that amount by any credits and deductions allocable to the property. The following
are examples of some credits and deductions that reduce
basis.
Any deduction for section 179 property.
Any deduction under section 179B of the Internal Revenue Code for capital costs to comply with Environmental Protection Agency sulfur regulations.
Any deduction under section 179C of the Internal Revenue Code for certain qualified refinery property
placed in service after August 8, 2005, and before
January 1, 2014.
Any deduction under section 179D of the Internal Revenue Code for certain energy efficient commercial
building property placed in service after December 31,
2005, and before January 1, 2018.

What Is the Placed in Service
Date?

Any deduction under section 179E of the Internal Revenue Code for qualified advanced mine safety equipment property placed in service after December 20,
2006, and before January 1, 2018.

Terms you may need to know
(see Glossary):

Any deduction for removal of barriers to the disabled
and the elderly.

Placed in service
You begin to claim depreciation when your property is
placed in service for either use in a trade or business or
the production of income. The placed in service date for
your property is the date the property is ready and available for a specific use. It is therefore not necessarily the
date it is first used. If you converted property held for personal use to use in a trade or business or for the production of income, treat the property as being placed in service on the conversion date. See Placed in Service under
When Does Depreciation Begin and End in chapter 1 for
examples illustrating when property is placed in service.

Page 34

Chapter 4

Any disabled access credit, enhanced oil recovery
credit, and credit for employer-provided childcare facilities and services.
Any special depreciation allowance.
Basis adjustment for investment credit property under
section 50(c) of the Internal Revenue Code.
For additional credits and deductions that affect basis,
see section 1016 of the Internal Revenue Code.
Enter the basis for depreciation under column (c) in
Part III of Form 4562. For information about how to determine the cost or other basis of property, see What Is the
Basis of Your Depreciable Property in chapter 1.

Figuring Depreciation Under MACRS

20 years for property placed in service before June 13, 1996,
or under a binding contract in effect before June 10, 1996.

Which Recovery Period
Applies?

31.5 years for property placed in service before May 13,
1993 (or before January 1, 1994, if the purchase or
construction of the property is under a binding contract in
effect before May 13, 1993, or if construction began before
May 13, 1993).

Terms you may need to know
(see Glossary):
Active conduct of a trade or business

The GDS recovery periods for property not listed above
can be found in Appendix B, Table of Class Lives and Recovery Periods. Residential rental property and nonresidential real property are defined earlier under Which Depreciation System (GDS or ADS) Applies.

Basis
Improvement
Listed property
Nonresidential real property

Enter the appropriate recovery period on Form 4562
under column (d) in section B of Part III, unless already
shown (for 25-year property, residential rental property,
and nonresidential real property).

Placed in service
Property class
Recovery period
Residential rental property
Section 1245 property
The recovery period of property is the number of years
over which you recover its cost or other basis. It is determined based on the depreciation system (GDS or ADS)
used.

Recovery Periods Under GDS
Under GDS, property that is not qualified Indian reservation property is depreciated over one of the following recovery periods.
Property Class

Recovery Period

3-year property . . . . . . . . . . . . . . .
5-year property . . . . . . . . . . . . . . .
7-year property . . . . . . . . . . . . . . .
10-year property . . . . . . . . . . . . . .
15-year property . . . . . . . . . . . . . .
20-year property . . . . . . . . . . . . . .
25-year property . . . . . . . . . . . . . .
Residential rental property . . . . . .
Nonresidential real property

. . . . .

3 years
5 years
7 years
10 years
15 years
20 years
25 years
27.5
years
39 years

Home changed to rental use. If you begin to rent a
home that was your personal home before 1987, you depreciate it as residential rental property over 27.5 years.

Indian Reservation Property
The recovery periods for qualified property you placed in
service on an Indian reservation after 1993 and before
2018 are shorter than those listed earlier. The following table shows these shorter recovery periods.

2
3

Property Class
4

5 years for qualified rent-to-own property placed in service
before August 6, 1997.

39 years for property that is a retail motor fuels outlet placed
in service before August 20, 1996 (31.5 years if placed in
service before May 13, 1993), unless you elected to
depreciate it over 15 years.

Office in the home. If your home is a personal-use single family residence and you begin to use part of your
home as an office, depreciate that part of your home as
nonresidential real property over 39 years (31.5 years if
you began using it for business before May 13, 1993).
However, if your home is an apartment in an apartment
building that you own and the building is residential rental
property as defined earlier under Which Depreciation System (GDS or ADS) Applies, depreciate the part used as
an office as residential rental property over 27.5 years.
See Pub. 587 for a discussion of the tests you must meet
to claim expenses, including depreciation, for the business use of your home.

3-year property . . . . . . . . . . . . . . . . .
5-year property . . . . . . . . . . . . . . . . .
7-year property . . . . . . . . . . . . . . . . .
10-year property . . . . . . . . . . . . . . . .
15-year property . . . . . . . . . . . . . . . .
20-year property . . . . . . . . . . . . . . . .
Nonresidential real property . . . . . . .

Recovery
Period
2 years
3 years
4 years
6 years
9 years
12 years
22 years

Nonresidential real property is defined earlier under
Which Property Class Applies Under GDS.
Use this chart to find the correct percentage table to
use for qualified Indian reservation property.
Chapter 4

Figuring Depreciation Under MACRS

Page 35

IF your recovery period is:

THEN use the following table in
Appendix A:

2 years

A-21

3 years

A-1, A-2, A-3, A-4, or A-5

4 years

A-22

6 years

A-23

9 years

A-14, A-15, A-16, A-17, or A-18

12 years

A-14, A-15, A-16, A-17, or A-18

22 years

A-24

Qualified property. Property eligible for the shorter recovery periods are 3-, 5-, 7-, 10-, 15-, and 20-year property and nonresidential real property. You must use this
property predominantly in the active conduct of a trade or
business within an Indian reservation. The rental of real
property that is located on an Indian reservation is treated
as the active conduct of a trade or business within an Indian reservation.
The following property is not qualified property.
1. Property used or located outside an Indian reservation on a regular basis, other than qualified infrastructure property.
2. Property acquired directly or indirectly from a related
person.
3. Property placed in service for purposes of conducting
or housing class I, II, or III gaming activities. These activities are defined in section 4 of the Indian Regulatory Act (25 U.S.C. 2703).
4. Any property you must depreciate under ADS. Determine whether property is qualified without regard to
the election to use ADS and after applying the special
rules for listed property not used predominantly for
qualified business use (discussed in chapter 5).
Note. You can make an election out of the shorter recovery period(s) above for qualified Indian reservation
property in a class of property that is placed in service in a
tax year beginning after December 31, 2015.
To make this election, attach a statement to your timely
filed return (including extensions) for the tax year in which
you place the property in service indicating the class of
property for which you are making the election and that,
for such class, you are electing not to apply section 168(j).
Once made, this election is irrevocable.
If you make this election, the property placed in
service in a tax year beginning after December
CAUTION 31, 2015, will be subject to an alternative minimum tax adjustment for depreciation.

Qualified infrastructure property. Item (1) above
does not apply to qualified infrastructure property located

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Chapter 4

outside the reservation that is used to connect with qualified infrastructure property within the reservation. Qualified infrastructure property is property that meets all the
following rules.
It is qualified property, as defined earlier, except that it
is outside the reservation.
It benefits the tribal infrastructure.
It is available to the general public.
It is placed in service in connection with the active
conduct of a trade or business within a reservation.
Infrastructure property includes, but is not limited to,
roads, power lines, water systems, railroad spurs, and
communications facilities.
Related persons. For purposes of item (2) above, see
Related persons in the discussion on property owned or
used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 for a description of related
persons.
Indian reservation. The term Indian reservation means
a reservation as defined in section 3(d) of the Indian Financing Act of 1974 (25 U.S.C. 1452(d)) or section 4(10)
of the Indian Child Welfare Act of 1978 (25 U.S.C.
1903(10)). Section 3(d) of the Indian Financing Act of
1974 defines reservation to include former Indian reservations in Oklahoma. For a definition of the term “former Indian reservations in Oklahoma,” see Notice 98-45 in Internal Revenue Bulletin 1998-35.

Recovery Periods Under ADS
The recovery periods for most property generally are longer under ADS than they are under GDS. The following table shows some of the ADS recovery periods.

Property
Rent-to-own property . . . . . . . . . . . . . . . .
Automobiles and light duty trucks . . . . . . .
Computers and peripheral equipment . . .
High technology telephone station
equipment installed on customer
premises . . . . . . . . . . . . . . . . . . . . . . . .
High technology medical equipment . . . . .
Personal property with no class life . . . . . .
Natural gas gathering lines . . . . . . . . . . . .
Single purpose agricultural and
horticultural structures . . . . . . . . . . . . . .
Any tree or vine bearing fruits or nuts . . . .
Initial clearing and grading land
improvements for gas utility property . .
Initial clearing and grading land
improvements for electric utility
transmission and distribution plants . . .
Electric transmission property used in the
transmission at 69 or more kilovolts of
electricity . . . . . . . . . . . . . . . . . . . . . . . .

Figuring Depreciation Under MACRS

Recovery
Period
4 years
5 years
5 years
5 years
5 years
12 years
14 years
15 years
20 years
20 years
25 years
30 years

Natural gas distribution lines . . . . . . . . . . .
Any qualified leasehold improvement
property . . . . . . . . . . . . . . . . . . . . . . . . .
Any qualified restaurant property . . . . . . .
Nonresidential real property . . . . . . . . . . .
Residential rental property . . . . . . . . . . . .
Section 1245 real property not listed in
Appendix B . . . . . . . . . . . . . . . . . . . . . .
Railroad grading and tunnel bore . . . . . . .

35 years
39 years
39 years
40 years
40 years

Which Convention Applies?
Terms you may need to know
(see Glossary):
Basis

40 years
50 years

Convention
Disposition

The ADS recovery periods for property not listed above
can be found in the tables in Appendix B. Rent-to-own
property, qualified leasehold improvement property, qualified restaurant property, residential rental property, and
nonresidential real property are defined earlier under
Which Property Class Applies Under GDS.
Tax-exempt use property subject to a lease. The ADS
recovery period for any property leased under a lease
agreement to a tax-exempt organization, governmental
unit, or foreign person or entity (other than a partnership)
cannot be less than 125% of the lease term.

Additions and Improvements
An addition or improvement you make to depreciable
property is treated as separate depreciable property. See
How Do You Treat Repairs and Improvements in chapter 1 for a definition of improvements. Its property class
and recovery period are the same as those that would apply to the original property if you had placed it in service at
the same time you placed the addition or improvement in
service. The recovery period begins on the later of the following dates.
The date you place the addition or improvement in
service.
The date you place in service the property to which
you made the addition or improvement.
If the improvement you make is qualified leasehold improvement property, qualified restaurant
CAUTION property, or qualified retail improvement property,
the GDS recovery period is 15 years (39 years under
ADS).

Example. You own a rental home that you have been
renting out since 1981. If you put an addition on the home
and place the addition in service this year, you would use
MACRS to figure your depreciation deduction for the addition. Under GDS, the property class for the addition is residential rental property and its recovery period is 27.5
years because the home to which the addition is made
would be residential rental property if you had placed it in
service this year.

Nonresidential real property
Placed in service
Recovery period
Residential rental property
Under MACRS, averaging conventions establish when the
recovery period begins and ends. The convention you use
determines the number of months for which you can claim
depreciation in the year you place property in service and
in the year you dispose of the property.
The mid-month convention. Use this convention for
nonresidential real property, residential rental property,
and any railroad grading or tunnel bore.
Under this convention, you treat all property placed in
service or disposed of during a month as placed in service
or disposed of at the midpoint of the month. This means
that a one-half month of depreciation is allowed for the
month the property is placed in service or disposed of.
Your use of the mid-month convention is indicated by
the “MM” already shown under column (e) in Part III of
Form 4562.
The mid-quarter convention. Use this convention if the
mid-month convention does not apply and the total depreciable bases of MACRS property you placed in service
during the last 3 months of the tax year (excluding nonresidential real property, residential rental property, any railroad grading or tunnel bore, property placed in service
and disposed of in the same year, and property that is being depreciated under a method other than MACRS) are
more than 40% of the total depreciable bases of all
MACRS property you placed in service during the entire
year.
Under this convention, you treat all property placed in
service or disposed of during any quarter of the tax year
as placed in service or disposed of at the midpoint of that
quarter. This means that 11 2 months of depreciation is allowed for the quarter the property is placed in service or
disposed of.
If you use this convention, enter “MQ” under column (e)
in Part III of Form 4562.

Chapter 4

Figuring Depreciation Under MACRS

Page 37

For purposes of determining whether the
mid-quarter convention applies, the depreciable
CAUTION basis of property you placed in service during the
tax year reflects the reduction in basis for amounts expensed under section 179 and the part of the basis of
property attributable to personal use. However, it does not
reflect any reduction in basis for any special depreciation
allowance.

The half-year convention. Use this convention if neither
the mid-quarter convention nor the mid-month convention
applies.
Under this convention, you treat all property placed in
service or disposed of during a tax year as placed in service or disposed of at the midpoint of the year. This means
that a one-half year of depreciation is allowed for the year
the property is placed in service or disposed of.
If you use this convention, enter “HY” under column (e)
in Part III of Form 4562.

Which Depreciation Method
Applies?
Terms you may need to know
(see Glossary):
Declining balance method
Listed property
Nonresidential real property
Placed in service
Property class
Recovery period
Residential rental property
Straight line method
Tax exempt
MACRS provides three depreciation methods under GDS
and one depreciation method under ADS.
The 200% declining balance method over a GDS recovery period.
The 150% declining balance method over a GDS recovery period.
The straight line method over a GDS recovery period.
The straight line method over an ADS recovery period.
For property placed in service before 1999, you
could have elected the 150% declining balance
CAUTION method using the ADS recovery periods for certain property classes. If you made this election, continue
to use the same method and recovery period for that property.

Page 38

Chapter 4

Table 4-1 lists the types of property you can depreciate
under each method. It also gives a brief explanation of the
method, including any benefits that may apply.

Depreciation Methods for Farm
Property
If you place personal property in service in a farming business after 1988, and before 2018, you generally must depreciate it under GDS using the 150% declining balance
method unless you are a farmer who must depreciate the
property under ADS using the straight line method or you
elect to depreciate the property under GDS or ADS using
the straight line method. You can depreciate real property
using the straight line method under either GDS or ADS.
Note. For 3-, 5-, 7-, or 10-year property used in a farming business and placed in service after December 31,
2017, in tax years ending after December 31, 2017, the
150% declining balance method is no longer required.
However, the 150% declining balance method will continue to apply to any 15- or 20-year property used in a
farming business to which the straight line method does
not apply or to property for which you elect the use of the
150% declining balance method.
fruits or nut trees and vines. Depreciate trees and
vines bearing fruits or nuts under GDS using the straight
line method over a recovery period of 10 years.
ADS required for some farmers. If you elect not to apply the uniform capitalization rules to any plant produced
in your farming business, you must use ADS. You must
use ADS for all property you place in service in any year
the election is in effect. See the regulations under section
263A of the Internal Revenue Code for information on the
uniform capitalization rules that apply to farm property.

Electing a Different Method
As shown in Table 4-1, you can elect a different method
for depreciation for certain types of property. You must
make the election by the due date of the return (including
extensions) for the year you placed the property in service. However, if you timely filed your return for the year
without making the election, you still can make the election by filing an amended return within 6 months of the
due date of the return (excluding extensions). Attach the
election to the amended return and write “Filed pursuant
to section 301.9100-2” on the election statement. File the
amended return at the same address you filed the original
return. Once you make the election, you cannot change it.
If you elect to use a different method for one item
in a property class, you must apply the same
CAUTION method to all property in that class placed in service during the year of the election. However, you can
make the election on a property-by-property basis for nonresidential real and residential rental property.

150% election. Instead of using the 200% declining balance method over the GDS recovery period for nonfarm

Figuring Depreciation Under MACRS

Table 4-1. Depreciation Methods
Note. The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL.

Method

Type of Property

Benefit

GDS using 200%
DB

• Nonfarm 3-, 5-, 7-, and 10-year property
• Farm 3-, 5-, 7-, and 10-year property placed in
service after December 31, 2017, in tax years
ending after December 31, 2017

• Provides a greater deduction during the
earlier recovery years
• Changes to SL when that method provides
an equal or greater deduction

GDS using 150%
DB

• All farm property (except real property)
• All 15- and 20-year property (except qualified
leasehold improvement property, qualified
restaurant property, and qualified retail
improvement property)
• Nonfarm 3-, 5-, 7-, and 10-year property

• Provides a greater deduction during the
earlier recovery years
• Changes to SL when that method provides
an equal or greater deduction1

GDS using SL

• Nonresidential real property
• Qualified leasehold improvement property
• Qualified restaurant property
• Qualified retail improvement property
• Residential rental property
• Trees or vines bearing fruits or nuts
• Water utility property
• All 3-, 5-, 7-, 10-, 15-, and 20-year property2
• Property for which you elected section 168(k)
(4)
• Qualified improvement property (as defined in
section 168(e)(6)) placed in service after
December 31, 2017

• Provides for equal yearly deductions
(except for the first and last years)

ADS using SL

• Listed property used 50% or less for business
• Property used predominantly outside the U.S.
• Tax-exempt property
• Tax-exempt bond-financed property
• Farm property used when an election not to
apply the uniform capitalization rules is in effect
• Imported property3
• Any property for which you elect to use this
method4

• Provides for equal yearly deductions
(except for the first and last years)

The MACRS percentage tables in Appendix A have the switch to the straight line method built into their rates.
See section 168(b)(5) of the Internal Revenue Code.
3
See section 168(g)(6) of the Internal Revenue Code.
4
See section 168(g)(7) of the Internal Revenue Code.
1
2

property in the 3-, 5-, 7-, and 10-year property classes,
you can elect to use the 150% declining balance method.
Make the election by entering “150 DB” under column (f)
in Part III of Form 4562.

riods are listed in Appendix B, or see the table under Recovery Periods Under ADS, earlier.
Make the election by completing line 20 in Part III of
Form 4562.

Straight line election. Instead of using either the 200%
or 150% declining balance methods over the GDS recovery period, you can elect to use the straight line method
over the GDS recovery period. Make the election by entering “S/L” under column (f) in Part III of Form 4562.

Farm property. Instead of using the 150% declining balance method over a GDS recovery period for property you
use in a farming business (other than real property), you
can elect to depreciate it using either of the following
methods.

Election of ADS. As explained earlier under Which Depreciation System (GDS or ADS) Applies, you can elect to
use ADS even though your property may come under
GDS. ADS uses the straight line method of depreciation
over fixed ADS recovery periods. Most ADS recovery pe-

Chapter 4

The straight line method over a GDS recovery period.
The straight line method over an ADS recovery period.

Figuring Depreciation Under MACRS

Page 39

How Is the Depreciation
Deduction Figured?
Terms you may need to know
(see Glossary):
Adjusted basis

2. You cannot use the percentage tables for a short tax
year. See Figuring the Deduction for a Short Tax Year
later, for information on the short tax year rules.
3. Once you start using the percentage tables for any
item of property, you generally must continue to use
them for the entire recovery period of the property.
4. You must stop using the tables if you adjust the basis
of the property for any reason other than—
a. Depreciation allowed or allowable, or

Amortization

b. An addition or improvement to that property that is
depreciated as a separate item of property.

Basis
Business/investment use
Convention
Declining balance method
Disposition
Exchange
Nonresidential real property
Placed in service
Property class
Recovery period
Straight line method
Unadjusted basis
To figure your depreciation deduction under MACRS, you
first determine the depreciation system, property class,
placed in service date, basis amount, recovery period,
convention, and depreciation method that applies to your
property. Then, you are ready to figure your depreciation
deduction. You can figure it using a percentage table provided by the IRS, or you can figure it yourself without using the table.

Using the MACRS Percentage Tables
To help you figure your deduction under MACRS, the IRS
has established percentage tables that incorporate the
applicable convention and depreciation method. These
percentage tables are in Appendix A near the end of this
publication.
Which table to use. Appendix A contains the MACRS
Percentage Table Guide, which is designed to help you
locate the correct percentage table to use for depreciating
your property. The percentage tables immediately follow
the guide.

Rules Covering the Use of the Tables
The following rules cover the use of the percentage tables.
1. You must apply the rates in the percentage tables to
your property's unadjusted basis.
Page 40

Chapter 4

Basis adjustments other than those made due to the items
listed in (4) include an increase in basis for the recapture
of a clean-fuel deduction or credit and a reduction in basis
for a casualty loss.
Basis adjustment due to recapture of clean-fuel vehicle deduction or credit. If you increase the basis of your
property because of the recapture of part or all of a deduction for clean-fuel vehicles or the credit for clean-fuel vehicle refueling property placed in service before January 1,
2006, you cannot continue to use the percentage tables.
For the year of the adjustment and the remaining recovery
period, you must figure the depreciation deduction yourself using the property's adjusted basis at the end of the
year. See Figuring the Deduction Without Using the Tables, later.
Basis adjustment due to casualty loss. If you reduce
the basis of your property because of a casualty, you cannot continue to use the percentage tables. For the year of
the adjustment and the remaining recovery period, you
must figure the depreciation yourself using the property's
adjusted basis at the end of the year. See Figuring the Deduction Without Using the Tables, later.
Example. On October 26, 2016, Sandra Elm, a calendar year taxpayer, bought and placed in service in her
business a new item of 7-year property. It cost $39,000
and she elected a section 179 deduction of $24,000. She
also took a special depreciation allowance of $7,500 [50%
of $15,000 ($39,000 − $24,000)]. Her unadjusted basis after the section 179 deduction and special depreciation allowance was $7,500 ($15,000 − $7,500). She figured her
MACRS depreciation deduction using the percentage tables. For 2016, her MACRS depreciation deduction was
$268.
In July 2017, the property was vandalized and Sandra
had a deductible casualty loss of $3,000. She must adjust
the property's basis for the casualty loss, so she can no
longer use the percentage tables. Her adjusted basis at
the end of 2017, before figuring her 2017 depreciation, is
$4,232. She figures that amount by subtracting the 2016
MACRS depreciation of $268 and the casualty loss of
$3,000 from the unadjusted basis of $7,500. She must
now figure her depreciation for 2017 without using the percentage tables.

Figuring Depreciation Under MACRS

Figuring the Unadjusted Basis of
Your Property

6. Depreciation rate (from
tables) . . . . . . . . . . . . . . . . . . . . . . . . .

You must apply the table rates to your property's unadjusted basis each year of the recovery period. Unadjusted
basis is the same basis amount you would use to figure
gain on a sale, but you figure it without reducing your original basis by any MACRS depreciation taken in earlier
years. However, you do reduce your original basis by
other amounts, including the following.

Part II
7. Cost or other basis* . . . . . . . . . . . . . $
8. Business/investment use . . . . . . . .
%
9. Multiply line 7 by line 8 . . . . . . . . . . . . . . . . . . $
10. Total claimed for section 179 deduction
and other items . . . . . . . . . . . . . . . . . . . . . . . .
11. Subtract line 10 from line 9. This is your
tentative basis for depreciation . . . . . . . . . .
12. Multiply line 11 by .50 if the 50% 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 . . . . . . . . . . . . . .
13. Subtract line 12 from line 11. This is your
basis for depreciation . . . . . . . . . . . . . . . . . . .
14. Depreciation rate (from line 6) . . . . . . . . . . .
15. Multiply line 13 by line 14. This is your
MACRS depreciation deduction . . . . . . . . .

Any amortization taken on the property.
Any section 179 deduction claimed.
Any special depreciation allowance taken on the property.
For business property you purchase during the year,
the unadjusted basis is its cost minus these and other applicable adjustments. If you trade property, your unadjusted basis in the property received is the cash paid plus the
adjusted basis of the property traded minus these adjustments.

MACRS Worksheet
You can use this worksheet to help you figure your depreciation deduction using the percentage tables. Use a separate worksheet for each item of property. Then, use the
information from this worksheet to prepare Form 4562.

CAUTION

Do not use this worksheet for automobiles. Use
the Depreciation Worksheet for Passenger Automobiles in chapter 5.

MACRS Worksheet
Keep for Your Records
Part I
1. MACRS system (GDS or
ADS) . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Property class . . . . . . . . . . . . . . . . . .
3. Date placed in service . . . . . . . . . . .
4. Recovery period . . . . . . . . . . . . . . . .
5. Method and convention . . . . . . . . . .

$
$

*If real estate, do not include cost (basis) of land.

The following example shows how to figure your
MACRS depreciation deduction using the percentage tables and the MACRS Worksheet.
Example. You bought office furniture (7-year property)
for $10,000 and placed it in service on August 11, 2017.
You use the furniture only for business. This is the only
property you placed in service this year. You did not elect
a section 179 deduction and the property is not qualified
property for purposes of claiming a special depreciation
allowance so your property's unadjusted basis is its cost,
$10,000. You use GDS and the half-year convention to
figure your depreciation. You refer to the MACRS Percentage Table Guide in Appendix A and find that you should
use Table A-1. Multiply your property's unadjusted basis
each year by the percentage for 7-year property given in
Table A-1. You figure your depreciation deduction using
the MACRS Worksheet as follows.

MACRS Worksheet

Keep for Your Records
Part I

1.
2.
3.
4.
5.
6.

MACRS system (GDS or ADS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Date placed in service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recovery period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Method and convention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation rate (from tables) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

GDS
7-year
8/11/17
7-year
200%DB/Half-Year
.1429

Part II

Chapter 4

Figuring Depreciation Under MACRS

Page 41

7.
8.
9.
10.
11.
12.

Cost or other basis* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$10,000
Business/investment use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100 %
Multiply line 7 by line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total claimed for section 179 deduction and other items . . . . . . . . . . . . . . . . . . . . . . . . .
Subtract line 10 from line 9. This is your tentative basis for depreciation . . . . . . . . . . .
Multiply line 11 by .50 if the 50% 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Subtract line 12 from line 11. This is your basis for depreciation . . . . . . . . . . . . . . . . . .
14. Depreciation rate (from line 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15. Multiply line 13 by line 14. This is your MACRS depreciation deduction . . . . . . . . . . .

$10,000
-0$10,000

-0$10,000
.1429
$1,429

*If real estate, do not include cost (basis) of land.

If there are no adjustments to the basis of the property
other than depreciation, your depreciation deduction for
each subsequent year of the recovery period will be as follows.
Year
2018
2019
2020
2021
2022
2023
2024

Basis
.
.
.
.
.
.
.

.
.
.
.
.
.
.

$10,000
10,000
10,000
10,000
10,000
10,000
10,000

Percentage Deduction
24.49%
17.49
12.49
8.93
8.92
8.93
4.46

$2,449
1,749
1,249
893
892
893
446

Examples
The following examples are provided to show you how to
use the percentage tables. In both examples, assume the
following.
You use the property only for business.
You use the calendar year as your tax year.
You use GDS for all the properties.
Example 1. You bought a building and land for
$120,000 and placed it in service on March 8. The sales
contract showed that the building cost $100,000 and the
land cost $20,000. It is nonresidential real property. The
building's unadjusted basis is its original cost, $100,000.
You refer to the MACRS Percentage Table Guide in
Appendix A and find that you should use Table A-7a.
March is the third month of your tax year, so multiply the
building's unadjusted basis, $100,000, by the percentages for the third month in Table A-7a. Your depreciation
deduction for each of the first 3 years is as follows:
Year

Basis Percentage Deduction

1st . . . . . . . . . . . . $ 100,000
2nd . . . . . . . . . . .
100,000
3rd . . . . . . . . . . .
100,000
Page 42

Chapter 4

2.033%
2.564
2.564

Example 2. During the year, you bought a machine
(7-year property) for $4,000, office furniture (7-year property) for $1,000, and a computer (5-year property) for
$5,000. You placed the machine in service in January, the
furniture in September, and the computer in October. You
do not elect a section 179 deduction and none of these
items is qualified property for purposes of claiming a special depreciation allowance.
You placed property in service during the last 3 months
of the year, so you must first determine if you have to use
the mid-quarter convention. The total bases of all property
you placed in service during the year is $10,000. The
$5,000 basis of the computer, which you placed in service
during the last 3 months (the fourth quarter) of your tax
year, is more than 40% of the total bases of all property
($10,000) you placed in service during the year. Therefore, you must use the mid-quarter convention for all three
items.
You refer to the MACRS Percentage Table Guide in
Appendix A to determine which table you should use under the mid-quarter convention. The machine is 7-year
property placed in service in the first quarter, so you use
Table A-2. The furniture is 7-year property placed in service in the third quarter, so you use Table A-4. Finally, because the computer is 5-year property placed in service in
the fourth quarter, you use Table A-6. Knowing what table
to use for each property, you figure the depreciation for
the first 2 years as follows.
Year

Property

1st
2nd

Machine
Machine

$4,000
4,000

1st
2nd

Furniture
Furniture

1,000
1,000

10.71
25.51

107
255

1st
2nd

Computer
Computer

5,000
5,000

5.00
38.00

250
1,900

$2,033
2,564
2,564

Figuring Depreciation Under MACRS

Basis

Percentage Deduction
25.00 $1,000
21.43
857

Sale or Other Disposition Before the
Recovery Period Ends
If you sell or otherwise dispose of your property before the
end of its recovery period, your depreciation deduction for
the year of the disposition will be only part of the depreciation amount for the full year. You have disposed of your
property if you have permanently withdrawn it from use in
your business or income-producing activity because of its
sale, exchange, retirement, abandonment, involuntary
conversion, or destruction. After you figure the full-year
depreciation amount, figure the deductible part using the
convention that applies to the property.
Half-year convention used. For property for which you
used a half-year convention, the depreciation deduction
for the year of the disposition is half the depreciation determined for the full year.
Mid-quarter convention used. For property for which
you used the mid-quarter convention, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter in which you disposed of the property.

Example. On July 2, 2015, you purchased and placed
in service residential rental property. The property cost
$100,000, not including the cost of land. You used Table
A-6 to figure your MACRS depreciation for this property.
You sold the property on March 2, 2017. You file your tax
return based on the calendar year.
A full year of depreciation for 2017 is $3,636. This is
$100,000 multiplied by .03636 (the percentage for the
seventh month of the third recovery year) from Table A-6 .
You then apply the mid-month convention for the 21 2
months of use in 2017. Treat the month of disposition as
one-half month of use. Multiply $3,636 by the fraction, 2.5
over 12, to get your 2017 depreciation deduction of
$757.50.

Figuring the Deduction Without Using
the Tables
Instead of using the rates in the percentage tables to figure your depreciation deduction, you can figure it yourself.
Before making the computation each year, you must reduce your adjusted basis in the property by the depreciation claimed the previous year.

CAUTION

Quarter
Percentage
First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.5%
Second . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37.5
Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62.5
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87.5
Example. On December 2, 2014, you placed in service an item of 5-year property costing $10,000. You did
not claim a section 179 deduction and the property does
not qualify for a special depreciation allowance. Your unadjusted basis for the property was $10,000. You used
the mid-quarter convention because this was the only item
of business property you placed in service in 2014 and it
was placed in service during the last 3 months of your tax
year. Your property is in the 5-year property class, so you
used Table A-5 to figure your depreciation deduction.
Your deductions for 2014, 2015, and 2016, were $500
(5% of $10,000), $3,800 (38% of $10,000), and $2,280
(22.80% of $10,000). You disposed of the property on
April 6, 2017. To determine your depreciation deduction
for 2017, first figure the deduction for the full year. This is
$1,368 (13.68% of $10,000). April is in the second quarter
of the year, so you multiply $1,368 by 37.5% to get your
depreciation deduction of $513 for 2017.
Mid-month convention used. If you dispose of residential rental or nonresidential real property, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by a fraction. The
numerator of the fraction is the number of months (including partial months) in the year that the property is considered in service. The denominator is 12.

Figuring MACRS deductions without using the tables generally will result in a slightly different
amount than using the tables.

Declining Balance Method
When using a declining balance method, you apply the
same depreciation rate each year to the adjusted basis of
your property. You must use the applicable convention for
the first tax year and you must switch to the straight line
method beginning in the first year for which it will give an
equal or greater deduction. The straight line method is explained later.
You figure depreciation for the year you place property
in service as follows.
1. Multiply your adjusted basis in the property by the declining balance rate.
2. Apply the applicable convention.
You figure depreciation for all other years (before the
year you switch to the straight line method) as follows.
1. Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years.
2. Multiply this new adjusted basis by the same declining balance rate used in earlier years.
If you dispose of property before the end of its recovery
period, see Using the Applicable Convention, later, for information on how to figure depreciation for the year you
dispose of it.
Figuring depreciation under the declining balance
method and switching to the straight line method is illustrated in Example 1, later, under Examples.

Chapter 4

Figuring Depreciation Under MACRS

Page 43

Declining balance rate. You figure your declining balance rate by dividing the specified declining balance percentage (150% or 200% changed to a decimal) by the
number of years in the property's recovery period. For example, for 3-year property depreciated using the 200%
declining balance method, divide 2.00 (200%) by 3 to get
0.6667, or a 66.67% declining balance rate. For 15-year
property depreciated using the 150% declining balance
method, divide 1.50 (150%) by 15 to get 0.10, or a 10%
declining balance rate.
The following table shows the declining balance rate for
each property class and the first year for which the
straight line method gives an equal or greater deduction.
Property
Class

Method

Declining Balance
Rate

3-year

200% DB

66.667%

3rd

5-year

200% DB

40.0

4th

7-year

200% DB

28.571

5th

10-year

200% DB

20.0

7th

15-year

150% DB

10.0

7th

20-year

150% DB

7.5

9th

Year

Straight Line Method
When using the straight line method, you apply a different
depreciation rate each year to the adjusted basis of your
property. You must use the applicable convention in the
year you place the property in service and the year you
dispose of the property.
You figure depreciation for the year you place property
in service as follows.
1. Multiply your adjusted basis in the property by the
straight line rate.
2. Apply the applicable convention.
You figure depreciation for all other years (including the
year you switch from the declining balance method to the
straight line method) as follows.
1. Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years (under
any method).

in the year you placed the property in service. If the number of years remaining is less than 1, the depreciation rate
for that tax year is 1.0 (100%).

Using the Applicable Convention
The applicable convention (discussed earlier under Which
Convention Applies) affects how you figure your depreciation deduction for the year you place your property in service and for the year you dispose of it. It determines how
much of the recovery period remains at the beginning of
each year, so it also affects the depreciation rate for property you depreciate under the straight line method. See
Straight line rate in the previous discussion. Use the applicable convention as explained in the following discussions.
Half-year convention. If this convention applies, you deduct a half-year of depreciation for the first year and the
last year that you depreciate the property. You deduct a
full year of depreciation for any other year during the recovery period.
Figure your depreciation deduction for the year you
place the property in service by dividing the depreciation
for a full year by 2. If you dispose of the property before
the end of the recovery period, figure your depreciation
deduction for the year of the disposition the same way. If
you hold the property for the entire recovery period, your
depreciation deduction for the year that includes the final
6 months of the recovery period is the amount of your unrecovered basis in the property.
Mid-quarter convention. If this convention applies, the
depreciation you can deduct for the first year you depreciate the property depends on the quarter in which you
place the property in service.
A quarter of a full 12-month tax year is a period of 3
months. The first quarter in a year begins on the first day
of the tax year. The second quarter begins on the first day
of the fourth month of the tax year. The third quarter begins on the first day of the seventh month of the tax year.
The fourth quarter begins on the first day of the tenth
month of the tax year. A calendar year is divided into the
following quarters.

3. Multiply the adjusted basis figured in (1) by the depreciation rate figured in (2).

Quarter
Months
First . . . . . . . . . . . . . .
January, February, March
Second . . . . . . . . . . . .
April, May, June
Third . . . . . . . . . . . . . .
July, August, September
Fourth . . . . . . . . . . . . . October, November, December

If you dispose of property before the end of its recovery
period, see Using the Applicable Convention, later, for information on how to figure depreciation for the year you
dispose of it.

Figure your depreciation deduction for the year you
place the property in service by multiplying the depreciation for a full year by the percentage listed below for the
quarter you place the property in service.

2. Determine the depreciation rate for the year.

Straight line rate. You determine the straight line depreciation rate for any tax year by dividing the number 1 by
the years remaining in the recovery period at the beginning of that year. When figuring the number of years remaining, you must take into account the convention used
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Chapter 4

Quarter

Percentage

First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second . . . . . . . . . . . . . . . . . . . . . . . . . . .

Figuring Depreciation Under MACRS

87.5%
62.5

Quarter
Percentage
Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37.5
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.5
If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the
year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter you
dispose of the property.
Quarter

Percentage

First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

12.5%
37.5
62.5
87.5

If you hold the property for the entire recovery period,
your depreciation deduction for the year that includes the
final quarter of the recovery period is the amount of your
unrecovered basis in the property.
Mid-month convention. If this convention applies, the
depreciation you can deduct for the first year that you depreciate the property depends on the month in which you
place the property in service. Figure your depreciation deduction for the year you place the property in service by
multiplying the depreciation for a full year by a fraction.
The numerator of the fraction is the number of full months
in the year that the property is in service plus 1 2 (or 0.5).
The denominator is 12.
If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the
year of the disposition the same way. If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final month of the recovery period is the amount of your unrecovered basis in
the property.
Example. You use the calendar year and place nonresidential real property in service in August. The property
is in service 4 full months (September, October, November, and December). Your numerator is 4.5 (4 full months
plus 0.5). You multiply the depreciation for a full year by
4.5/12, or 0.375.

Examples
The following examples show how to figure depreciation
under MACRS without using the percentage tables. Figures are rounded for purposes of the examples. Assume
for all the examples that you use a calendar year as your
tax year.
Example 1—200% DB method and half-year convention. In February, you placed in service depreciable
property with a 5-year recovery period and a basis of
$1,000. You do not elect to take the section 179 deduction
and the property does not qualify for a special depreciation allowance. You use GDS and the 200% declining balance (DB) method to figure your depreciation. When the
straight line (SL) method results in an equal or larger

deduction, you switch to the SL method. You did not place
any property in service in the last 3 months of the year, so
you must use the half-year convention.
First year. You figure the depreciation rate under the
200% DB method by dividing 2 (200%) by 5 (the number
of years in the recovery period). The result is 40%. You
multiply the adjusted basis of the property ($1,000) by the
40% DB rate. You apply the half-year convention by dividing the result ($400) by 2. Depreciation for the first year
under the 200% DB method is $200.
You figure the depreciation rate under the straight line
(SL) method by dividing 1 by 5, the number of years in the
recovery period. The result is 20%.You multiply the adjusted basis of the property ($1,000) by the 20% SL rate. You
apply the half-year convention by dividing the result
($200) by 2. Depreciation for the first year under the SL
method is $100.
The DB method provides a larger deduction, so you deduct the $200 figured under the 200% DB method.
Second year. You reduce the adjusted basis ($1,000)
by the depreciation claimed in the first year ($200). You
multiply the result ($800) by the DB rate (40%). Depreciation for the second year under the 200% DB method is
$320.
You figure the SL depreciation rate by dividing 1 by 4.5,
the number of years remaining in the recovery period.
(Based on the half-year convention, you used only half a
year of the recovery period in the first year.) You multiply
the reduced adjusted basis ($800) by the result (22.22%).
Depreciation under the SL method for the second year is
$178.
The DB method provides a larger deduction, so you deduct the $320 figured under the 200% DB method.
Third year. You reduce the adjusted basis ($800) by
the depreciation claimed in the second year ($320). You
multiply the result ($480) by the DB rate (40%). Depreciation for the third year under the 200% DB method is $192.
You figure the SL depreciation rate by dividing 1 by 3.5.
You multiply the reduced adjusted basis ($480) by the result (28.57%). Depreciation under the SL method for the
third year is $137.
The DB method provides a larger deduction, so you deduct the $192 figured under the 200% DB method.
Fourth year. You reduce the adjusted basis ($480) by
the depreciation claimed in the third year ($192). You multiply the result ($288) by the DB rate (40%). Depreciation
for the fourth year under the 200% DB method is $115.
You figure the SL depreciation rate by dividing 1 by 2.5.
You multiply the reduced adjusted basis ($288) by the result (40%). Depreciation under the SL method for the
fourth year is $115.
The SL method provides an equal deduction, so you
switch to the SL method and deduct the $115.
Fifth year. You reduce the adjusted basis ($288) by
the depreciation claimed in the fourth year ($115) to get
the reduced adjusted basis of $173. You figure the SL depreciation rate by dividing 1 by 1.5. You multiply the reduced adjusted basis ($173) by the result (66.67%). Depreciation under the SL method for the fifth year is $115.
Sixth year. You reduce the adjusted basis ($173) by
the depreciation claimed in the fifth year ($115) to get the

Chapter 4

Figuring Depreciation Under MACRS

Page 45

reduced adjusted basis of $58. There is less than one
year remaining in the recovery period, so the SL depreciation rate for the sixth year is 100%. You multiply the reduced adjusted basis ($58) by 100% to arrive at the depreciation deduction for the sixth year ($58).
Example 2—SL method and mid-month convention. In January, you bought and placed in service a
building for $100,000 that is nonresidential real property
with a recovery period of 39 years. The adjusted basis of
the building is its cost of $100,000. You use GDS, the
straight line (SL) method, and the mid-month convention
to figure your depreciation.
First year. You figure the SL depreciation rate for the
building by dividing 1 by 39 years. The result is .02564.
The depreciation for a full year is $2,564 ($100,000
× .02564). Under the mid-month convention, you treat the
property as placed in service in the middle of January.
You get 11.5 months of depreciation for the year. Expressed as a decimal, the fraction of 11.5 months divided
by 12 months is .958. Your first-year depreciation for the
building is $2,456 ($2,564 × .958).
Second year. You subtract $2,456 from $100,000 to
get your adjusted basis of $97,544 for the second year.
The SL rate is .02629. This is 1 divided by the remaining
recovery period of 38.042 years (39 years reduced by
11.5 months or .958). Your depreciation for the building
for the second year is $2,564 ($97,544 × .02629).
Third year. The adjusted basis is $94,980 ($97,544 −
$2,564). The SL rate is .027 (1 divided by 37.042 remaining years). Your depreciation for the third year is $2,564
($94,980 × .027).
Example 3—200% DB method and mid-quarter
convention. During the year, you bought and placed in
service in your business the following items.

Item

Month Placed
in Service

Safe

January

Office furniture

September

Computer (not listed property) October

Cost
$4,000
1,000
5,000

You do not elect a section 179 deduction and these items
do not qualify for a special depreciation allowance. You
use GDS and the 200% declining balance (DB) method to
figure the depreciation. The total bases of all property you
placed in service this year is $10,000. The basis of the
computer ($5,000) is more than 40% of the total bases of
all property placed in service during the year ($10,000), so
you must use the mid-quarter convention. This convention
applies to all three items of property. The safe and office
furniture are 7-year property and the computer is 5-year
property.
First and second year depreciation for safe. The
200% DB rate for 7-year property is .28571. You determine this by dividing 2.00 (200%) by 7 years. The depreciation for the safe for a full year is $1,143 ($4,000
× .28571). You placed the safe in service in the first quarter of your tax year, so you multiply $1,143 by 87.5% (the
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Chapter 4

mid-quarter percentage for the first quarter). The result,
$1,000, is your deduction for depreciation on the safe for
the first year.
For the second year, the adjusted basis of the safe is
$3,000. You figure this by subtracting the first year's depreciation ($1,000) from the basis of the safe ($4,000).
Your depreciation deduction for the second year is $857
($3,000 × .28571).
First and second year depreciation for furniture.
The furniture is also 7-year property, so you use the same
200% DB rate of .28571. You multiply the basis of the furniture ($1,000) by .28571 to get the depreciation of $286
for the full year. You placed the furniture in service in the
third quarter of your tax year, so you multiply $286 by
37.5% (the mid-quarter percentage for the third quarter).
The result, $107, is your deduction for depreciation on the
furniture for the first year.
For the second year, the adjusted basis of the furniture
is $893. You figure this by subtracting the first year's depreciation ($107) from the basis of the furniture ($1,000).
Your depreciation for the second year is $255 ($893
× .28571).
First and second year depreciation for computer.
The 200% DB rate for 5-year property is .40. You determine this by dividing 2.00 (200%) by 5 years. The depreciation for the computer for a full year is $2,000 ($5,000
× .40). You placed the computer in service in the fourth
quarter of your tax year, so you multiply the $2,000 by
12.5% (the mid-quarter percentage for the fourth quarter).
The result, $250, is your deduction for depreciation on the
computer for the first year.
For the second year, the adjusted basis of the computer is $4,750. You figure this by subtracting the first
year's depreciation ($250) from the basis of the computer
($5,000). Your depreciation deduction for the second year
is $1,900 ($4,750 × .40).
Example 4—200% DB method and half-year convention. Last year, in July, you bought and placed in
service in your business a new item of 7-year property.
This was the only item of property you placed in service
last year. The property cost $39,000 and you elected a
$24,000 section 179 deduction. You also took a special
depreciation allowance of $7,500. Your unadjusted basis
for the property is $7,500. Because you did not place any
property in service in the last 3 months of your tax year,
you used the half-year convention. You figured your deduction using the percentages in Table A-1 for 7-year
property. Last year, your depreciation was $1,072 ($7,500
× 14.29%).
In July of this year, your property was vandalized. You
had a deductible casualty loss of $3,000. You spent
$3,500 to put the property back in operational order. Your
adjusted basis at the end of this year is $6,928. You figured this by first subtracting the first year's depreciation
($1,072) and the casualty loss ($3,000) from the unadjusted basis of $7,500. To this amount ($3,428), you then
added the $3,500 repair cost.
You cannot use the table percentages to figure your
depreciation for this property for this year because of the
adjustments to basis. You must figure the deduction

Figuring Depreciation Under MACRS

yourself. You determine the DB rate by dividing 2.00
(200%) by 7 years. The result is .28571 or 28.571%. You
multiply the adjusted basis of your property ($6,928) by
the declining balance rate of .28571 to get your depreciation deduction of $1,979 for this year.

Figuring the Deduction for Property
Acquired in a Nontaxable Exchange
If your property has a carryover basis because you acquired it in a nontaxable transfer such as a like-kind exchange or involuntary conversion, you must generally figure depreciation for the property as if the transfer had not
occurred. However, see Like-kind exchanges and involuntary conversions, earlier, in chapter 3 under How Much
Can You Deduct and Property Acquired in a Like-kind Exchange or Involuntary Conversion next.

Property Acquired in a Like-kind Exchange
or Involuntary Conversion
You generally must depreciate the carryover basis of
property acquired in a like-kind exchange or involuntary
conversion over the remaining recovery period of the
property exchanged or involuntarily converted. You also
generally continue to use the same depreciation method
and convention used for the exchanged or involuntarily
converted property. This applies only to acquired property
with the same or a shorter recovery period and the same
or more accelerated depreciation method than the property exchanged or involuntarily converted. The excess basis (the part of the acquired property's basis that exceeds
its carryover basis), if any, of the acquired property is treated as newly placed in service property.
For acquired property that has a longer recovery period
or less accelerated depreciation method than the exchanged or involuntarily converted property, you generally
must depreciate the carryover basis of the acquired property as if it were placed in service in the same tax year as
the exchanged or involuntarily converted property. You
also generally continue to use the longer recovery period
and less accelerated depreciation method of the acquired
property.
If the MACRS property you acquired in the exchange or
involuntary conversion is qualified property, discussed
earlier in chapter 3 under What Is Qualified Property, you
can claim a special depreciation allowance on the carryover basis. Special rules apply to vehicles acquired in a
trade-in. For information on how to figure depreciation for
a vehicle acquired in a trade-in that is subject to the passenger automobile limits, see Deductions For Passenger
Automobiles Acquired in a Trade-in under Do the Passenger Automobile Limits Apply in chapter 5.
Election out. Instead of using the above rules, you
can elect, for depreciation purposes, to treat the adjusted
basis of the exchanged or involuntarily converted property
as if disposed of at the time of the exchange or involuntary
conversion. Treat the carryover basis and excess basis, if

any, for the acquired property as if placed in service the
later of the date you acquired it or the time of the disposition of the exchanged or involuntarily converted property.
The depreciable basis of the new property is the adjusted
basis of the exchanged or involuntarily converted property
plus any additional amount you paid for it. The election, if
made, applies to both the acquired property and the exchanged or involuntarily converted property. This election
does not affect the amount of gain or loss recognized on
the exchange or involuntary conversion.
When to make the election. You must make the
election on a timely filed return (including extensions) for
the year of replacement. The election must be made separately by each person acquiring replacement property. In
the case of a partnership, S corporation, or consolidated
group, the election is made by the partnership, by the S
corporation, or by the common parent of a consolidated
group, respectively. Once made, the election may not be
revoked without IRS consent.
For more information and special rules, see the Instructions for Form 4562.

Property Acquired in a Nontaxable Transfer
You must depreciate MACRS property acquired by a corporation or partnership in certain nontaxable transfers
over the property's remaining recovery period in the transferor's hands, as if the transfer had not occurred. You
must continue to use the same depreciation method and
convention as the transferor. You can depreciate the part
of the property's basis that exceeds its carryover basis
(the transferor's adjusted basis in the property) as newly
purchased MACRS property.
The nontaxable transfers covered by this rule include
the following.
A distribution in complete liquidation of a subsidiary.
A transfer to a corporation controlled by the transferor.
An exchange of property solely for corporate stock or
securities in a reorganization.
A contribution of property to a partnership in exchange
for a partnership interest.
A partnership distribution of property to a partner.

Figuring the Deduction for a Short
Tax Year
You cannot use the MACRS percentage tables to determine depreciation for a short tax year. A short tax year is
any tax year with less than 12 full months. This section
discusses the rules for determining the depreciation deduction for property you place in service or dispose of in a
short tax year. It also discusses the rules for determining
depreciation when you have a short tax year during the recovery period (other than the year the property is placed
in service or disposed of).

Chapter 4

Figuring Depreciation Under MACRS

Page 47

For more information on figuring depreciation for a
short tax year, see Revenue Procedure 89-15, 1989-1
C.B. 816.

Using the Applicable Convention in a Short
Tax Year
The applicable convention establishes the date property is
treated as placed in service and disposed of. Depreciation
is allowable only for that part of the tax year the property is
treated as in service. The recovery period begins on the
placed in service date determined by applying the convention. The remaining recovery period at the beginning
of the next tax year is the full recovery period less the part
for which depreciation was allowable in the first tax year.
The following discussions explain how to use the applicable convention in a short tax year.
Mid-month convention. Under the mid-month convention, you always treat your property as placed in service or
disposed of on the midpoint of the month it is placed in
service or disposed of. You apply this rule without regard
to your tax year.
Half-year convention. Under the half-year convention,
you treat property as placed in service or disposed of on
the midpoint of the tax year it is placed in service or disposed of.
First or last day of month. For a short tax year beginning on the first day of a month or ending on the last day
of a month, the tax year consists of the number of months
in the tax year. If the short tax year includes part of a
month, you generally include the full month in the number
of months in the tax year. You determine the midpoint of
the tax year by dividing the number of months in the tax
year by 2. For the half-year convention, you treat property
as placed in service or disposed of on either the first day
or the midpoint of a month.
For example, a short tax year that begins on June 20
and ends on December 31 consists of 7 months. You use
only full months for this determination, so you treat the tax
year as beginning on June 1 instead of June 20. The midpoint of the tax year is the middle of September (31 2
months from the beginning of the tax year). You treat
property as placed in service or disposed of on this midpoint.
Example. Tara Corporation, a calendar year taxpayer,
was incorporated on March 15. For purposes of the
half-year convention, it has a short tax year of 10 months,
ending on December 31, 2017. During the short tax year,
Tara placed property in service for which it uses the
half-year convention. Tara treats this property as placed in
service on the first day of the sixth month of the short tax
year, or August 1, 2017.
Not on first or last day of month. For a short tax
year not beginning on the first day of a month and not
ending on the last day of a month, the tax year consists of
the number of days in the tax year. You determine the
midpoint of the tax year by dividing the number of days in
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Chapter 4

the tax year by 2. For the half-year convention, you treat
property as placed in service or disposed of on either the
first day or the midpoint of a month. If the result of dividing
the number of days in the tax year by 2 is not the first day
or the midpoint of a month, you treat the property as
placed in service or disposed of on the nearest preceding
first day or midpoint of a month.
Mid-quarter convention. To determine if you must use
the mid-quarter convention, compare the basis of property
you place in service in the last 3 months of your tax year to
that of property you place in service during the full tax
year. The length of your tax year does not matter. If you
have a short tax year of 3 months or less, use the
mid-quarter convention for all applicable property you
place in service during that tax year.
You treat property under the mid-quarter convention as
placed in service or disposed of on the midpoint of the
quarter of the tax year in which it is placed in service or
disposed of. Divide a short tax year into 4 quarters and
determine the midpoint of each quarter.
For a short tax year of 4 or 8 full calendar months, determine quarters on the basis of whole months. The midpoint of each quarter is either the first day or the midpoint
of a month. Treat property as placed in service or disposed of on this midpoint.
To determine the midpoint of a quarter for a short tax
year of other than 4 or 8 full calendar months, complete
the following steps.
1. Determine the number of days in your short tax year.
2. Determine the number of days in each quarter by dividing the number of days in your short tax year by 4.
3. Determine the midpoint of each quarter by dividing
the number of days in each quarter by 2.
If the result of (3) gives you a midpoint of a quarter that
is on a day other than the first day or midpoint of a month,
treat the property as placed in service or disposed of on
the nearest preceding first day or midpoint of that month.
Example. Tara Corporation, a calendar year taxpayer,
was incorporated and began business on March 15. It has
a short tax year of 91 2 months, ending on December 31.
During December, it placed property in service for which it
must use the mid-quarter convention. This is a short tax
year of other than 4 or 8 full calendar months, so it must
determine the midpoint of each quarter.
1. First, it determines that its short tax year beginning
March 15 and ending December 31 consists of 292
days.
2. Next, it divides 292 by 4 to determine the length of
each quarter, 73 days.
3. Finally, it divides 73 by 2 to determine the midpoint of
each quarter, the 37th day.
The following table shows the quarters of Tara Corporation's short tax year, the midpoint of each quarter, and
the date in each quarter that Tara must treat its property
as placed in service.

Figuring Depreciation Under MACRS

Quarter

Midpoint

Placed in
Service

3/15 – 5/26

4/20

4/15

5/27 – 8/07

7/02

7/01

8/08 – 10/19

9/13

9/01

10/20 – 12/31

11/25

11/15

The last quarter of the short tax year begins on October
20, which is 73 days from December 31, the end of the tax
year. The 37th day of the last quarter is November 25,
which is the midpoint of the quarter. November 25 is not
the first day or the midpoint of November, so Tara Corporation must treat the property as placed in service in the
middle of November (the nearest preceding first day or
midpoint of that month).

Property Placed in Service in a Short
Tax Year
To figure your MACRS depreciation deduction for the
short tax year, you must first determine the depreciation
for a full tax year. You do this by multiplying your basis in
the property by the applicable depreciation rate. Then, determine the depreciation for the short tax year. Do this by
multiplying the depreciation for a full tax year by a fraction.
The numerator (top number) of the fraction is the number
of months (including parts of a month) the property is treated as in service during the tax year (applying the applicable convention). The denominator (bottom number) is 12.
See Depreciation After a Short Tax Year, later, for information on how to figure depreciation in later years.
Example 1—half-year convention. Tara Corporation, with a short tax year beginning March 15 and ending
December 31, placed in service on March 16 an item of
5-year property with a basis of $1,000. This is the only
property the corporation placed in service during the short
tax year. Tara does not elect to claim a section 179 deduction and the property does not qualify for a special depreciation allowance. The depreciation method for this
property is the 200% declining balance method. The depreciation rate is 40% and Tara applies the half-year convention.
Tara treats the property as placed in service on
August 1. The determination of this August 1 date is explained in the example illustrating the half-year convention
under Using the Applicable Convention in a Short Tax
Year, earlier. Tara is allowed 5 months of depreciation for
the short tax year that consists of 10 months. The corporation first multiplies the basis ($1,000) by 40% (the declining balance rate) to get the depreciation for a full tax
year of $400. The corporation then multiplies $400 by 5 12
to get the short tax year depreciation of $167.
Example 2—mid-quarter convention. Tara Corporation, with a short tax year beginning March 15 and ending
on December 31, placed in service on October 16 an item
of 5-year property with a basis of $1,000. Tara does not
elect to claim a section 179 deduction and the property

does not qualify for a special depreciation allowance. The
depreciation method for this property is the 200% declining balance method. The depreciation rate is 40%. The
corporation must apply the mid-quarter convention because the property was the only item placed in service
that year and it was placed in service in the last 3 months
of the tax year.
Tara treats the property as placed in service on September 1. This date is shown in the table provided in the
example illustrating the mid-quarter convention under Using the Applicable Convention in a Short Tax Year, earlier,
for property that Tara Corporation placed in service during
the quarter that begins on August 8 and ends on October
19. Under MACRS, Tara is allowed 4 months of depreciation for the short tax year that consists of 10 months. The
corporation first multiplies the basis ($1,000) by 40% to
get the depreciation for a full tax year of $400. The corporation then multiplies $400 by 4 12 to get the short tax year
depreciation of $133.

Property Placed in Service Before a Short
Tax Year
If you have a short tax year after the tax year in which you
began depreciating property, you must change the way
you figure depreciation for that property. If you were using
the percentage tables, you can no longer use them. You
must figure depreciation for the short tax year and each
later tax year as explained next.

Depreciation After a Short Tax Year
You can use either of the following methods to figure the
depreciation for years after a short tax year.
The simplified method.
The allocation method.
You must use the method you choose consistently.
Using the simplified method for a 12-month year. Under the simplified method, you figure the depreciation for a
later 12-month year in the recovery period by multiplying
the adjusted basis of your property at the beginning of the
year by the applicable depreciation rate.
Example. Assume the same facts as in Example 1 under Property Placed in Service in a Short Tax Year, earlier. The Tara Corporation claimed depreciation of $167
for its short tax year. The adjusted basis on January 1 of
the next year is $833 ($1,000 − $167). Tara's depreciation
for that next year is 40% of $833, or $333.
Using the simplified method for a short year. If a later
tax year in the recovery period is a short tax year, you figure depreciation for that year by multiplying the adjusted
basis of the property at the beginning of the tax year by
the applicable depreciation rate, and then by a fraction.
The fraction's numerator is the number of months (including parts of a month) in the tax year. Its denominator is 12.
Using the simplified method for an early disposition.
If you dispose of property in a later tax year before the end

Chapter 4

Figuring Depreciation Under MACRS

Page 49

of the recovery period, determine the depreciation for the
year of disposition by multiplying the adjusted basis of the
property at the beginning of the tax year by the applicable
depreciation rate and then multiplying the result by a fraction. The fraction's numerator is the number of months (including parts of a month) the property is treated as in service during the tax year (applying the applicable
convention). Its denominator is 12.

How Do You Use General
Asset Accounts?
Terms you may need to know
(see Glossary):
Adjusted basis

Using the allocation method for a 12-month or short
tax year. Under the allocation method, you figure the depreciation for each later tax year by allocating to that year
the depreciation attributable to the parts of the recovery
years that fall within that year. Whether your tax year is a
12-month or short tax year, you figure the depreciation by
determining which recovery years are included in that
year. For each recovery year included, multiply the depreciation attributable to that recovery year by a fraction. The
fraction's numerator is the number of months (including
parts of a month) that are included in both the tax year and
the recovery year. Its denominator is 12. The allowable
depreciation for the tax year is the sum of the depreciation
figured for each recovery year.
Example. Assume the same facts as in Example 1 under Property Placed in Service in a Short Tax Year, earlier. The Tara Corporation's first tax year after the short tax
year is a full year of 12 months, beginning January 1 and
ending December 31. The first recovery year for the
5-year property placed in service during the short tax year
extends from August 1 to July 31. Tara deducted 5
months of the first recovery year on its short-year tax return. Seven months of the first recovery year and 5
months of the second recovery year fall within the next tax
year. The depreciation for the next tax year is $333, which
is the sum of the following.
$233—The depreciation for the first recovery year
($400 × 7 12).
$100—The depreciation for the second recovery year.
This is figured by multiplying the adjusted basis of
$600 ($1,000 − $400) by 40%, then multiplying the
$240 result by 5 12.
Using the allocation method for an early disposition.
If you dispose of property before the end of the recovery
period in a later tax year, determine the depreciation for
the year of disposition by multiplying the depreciation figured for each recovery year or part of a recovery year included in the tax year by a fraction. The numerator of the
fraction is the number of months (including parts of
months) the property is treated as in service in the tax
year (applying the applicable convention). The denominator is 12. If there is more than one recovery year in the tax
year, you add together the depreciation for each recovery
year.

Amortization
Amount realized
Basis
Convention
Disposition
Exchange
Placed in service
Recovery period
Section 1245 property
Unadjusted basis
To make it easier to figure MACRS depreciation, you can
group separate properties into one or more general asset
accounts (GAAs). You can then depreciate all the properties in each account as a single item of property.
Property you cannot include. You cannot include property in a GAA if you use it in both a personal activity and a
trade or business (or for the production of income) in the
year in which you first place it in service. If property you included in a GAA is later used in a personal activity, see
Terminating GAA Treatment, later.
Property generating foreign source income. For information on the GAA treatment of property that generates
foreign source income, see sections 1.168(i)-1(c)(1)(ii)
and (f) of the regulations.
Change in use. Special rules apply to figuring depreciation for property in a GAA for which the use changes during the tax year. Examples include a change in use resulting in a shorter recovery period and/or more accelerated
depreciation method or a change in use resulting in a longer recovery period and/or a less accelerated depreciation method. See sections 1.168(i)-1(h) and 1.168(i)-4 of
the regulations.

Grouping Property
Each GAA must include only property you placed in service in the same tax year and that has the following in common.
Recovery period.
Depreciation method.
Convention.

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Chapter 4

Figuring Depreciation Under MACRS

The following rules also apply when you establish a
GAA.
Mid-quarter convention. Property subject to the
mid-quarter convention can only be grouped into a
GAA with property placed in service in the same quarter of the tax year.
Mid-month convention. Property subject to the
mid-month convention can only be grouped into a
GAA with property placed in service in the same
month of the tax year.

Any amount realized on the disposition is treated as
ordinary income, up to the limit discussed later under
Treatment of amount realized.
However, these rules do not apply to any disposition
described later under Terminating GAA Treatment.
Disposition. Property in a GAA is considered disposed
of when you do any of the following.
Permanently withdraw it from use in your trade or
business or from the production of income.
Transfer it to a supplies, scrap, or similar account.

Passenger automobiles. Passenger automobiles
subject to the limits on passenger automobile depreciation must be grouped into a separate GAA.
See section 1.168(i)-1(c)(2)(ii) of the regulations for additional rules that apply when you establish a GAA.

Figuring Depreciation for a GAA
After you have set up a GAA, you generally figure the
MACRS depreciation for it by using the applicable depreciation method, recovery period, and convention for the
property in the GAA. For each GAA, record the depreciation allowance in a separate depreciation reserve account.
Example. Make & Sell, a calendar year corporation,
set up a GAA for 10 machines. The machines cost a total
of $10,000 and were placed in service in June 2017. One
of the machines cost $8,200 and the rest cost a total of
$1,800. This GAA is depreciated under the 200% declining balance method with a 5-year recovery period and a
half-year convention. Make & Sell did not claim the section 179 deduction on the machines and the machines did
not qualify for a special depreciation allowance. The depreciation allowance for 2017 is $2,000 [($10,000 × 40%)
÷ 2]. As of January 1, 2018, the depreciation reserve account is $2,000.
Passenger automobiles. To figure depreciation on passenger automobiles in a GAA, apply the deduction limits
discussed in chapter 5 under Do the Passenger Automobile Limits Apply. Multiply the amount determined using
these limits by the number of automobiles originally included in the account, reduced by the total number of automobiles removed from the GAA as discussed in Terminating GAA Treatment, later.

Disposing of GAA Property

Sell, exchange, retire, physically abandon, or destroy
it.
The retirement of a structural component of real property
is not a disposition unless it is a partial disposition. See
section 1.168(i)-1(e)(1) of the regulations.
Treatment of amount realized. When you dispose of
property in a GAA, you must recognize any amount realized from the disposition as ordinary income, up to a limit.
The limit is:
1. The unadjusted depreciable basis of the GAA, plus
2. Any expensed costs for property in the GAA that are
subject to recapture as depreciation (not including
any expensed costs for property that you removed
from the GAA under the rules discussed later under
Terminating GAA Treatment), minus
3. Any amount previously recognized as ordinary income upon the disposition of other property from the
GAA.
Unadjusted depreciable basis. The unadjusted depreciable basis of a GAA is the total of the unadjusted depreciable bases of all the property in the GAA. The unadjusted depreciable basis of an item of property in a GAA is
the amount you would use to figure gain or loss on its
sale, but figured without reducing your original basis by
any depreciation allowed or allowable in earlier years.
However, you do reduce your original basis by other
amounts, including any amortization deduction, section
179 deduction, special depreciation allowance, and electric vehicle credit.
Expensed costs. Expensed costs that are subject to
recapture as depreciation include the following.
1. The section 179 deduction.
2. Amortization deductions for the following.
a. Pollution control facilities.

When you dispose of property included in a GAA, the following rules generally apply.
Neither the unadjusted depreciable basis (defined
later) nor the depreciation reserve account of the GAA
is affected. You continue to depreciate the account as
if the disposition had not occurred.
The property is treated as having an adjusted basis of
zero, so you cannot realize a loss on the disposition. If
the property is transferred to a supplies, scrap, or similar account, its basis in that account is zero.

b. Removal of barriers for the elderly and disabled.
c. Tertiary injectants.
d. Reforestation expenses.
Example 1. The facts are the same as in the example
under Figuring Depreciation for a GAA, earlier. In February 2018, Make & Sell sells the machine that cost $8,200
to an unrelated person for $9,000. The machine is treated
as having an adjusted basis of zero.

Chapter 4

Figuring Depreciation Under MACRS

Page 51

On its 2018 tax return, Make & Sell recognizes the
$9,000 amount realized as ordinary income because it is
not more than the GAA's unadjusted depreciable basis
($10,000) plus any expensed cost (for example, the section 179 deduction) for property in the GAA ($0), minus
any amounts previously recognized as ordinary income
because of dispositions of other property from the GAA
($0).
The unadjusted depreciable basis and depreciation reserve of the GAA are not affected by the sale of the machine. The depreciation allowance for the GAA in 2018 is
$3,200 [($10,000 − $2,000) × 40%].
Example 2. Assume the same facts as in Example 1.
In June 2019, Make & Sell sells seven machines to an unrelated person for a total of $1,100. These machines are
treated as having an adjusted basis of zero.
On its 2019 tax return, Make & Sell recognizes $1,000
as ordinary income. This is the GAA's unadjusted depreciable basis ($10,000) plus the expensed costs ($0), minus
the amount previously recognized as ordinary income
($9,000). The remaining amount realized of $100 ($1,100
− $1,000) is section 1231 gain (discussed in chapter 3 of
Pub. 544).
The unadjusted depreciable basis and depreciation reserve of the GAA are not affected by the disposition of the
machines. The depreciation allowance for the GAA in
2019 is $1,920 [($10,000 − $5,200) × 40%].

2. Reduce the depreciation reserve account by the depreciation allowed or allowable for the property (computed in the same way as computed for the GAA) as
of the end of the tax year immediately preceding the
year in which the disposition, change in use, or recapture event occurs.
These adjustments have no effect on the recognition and
character of prior dispositions subject to the rules discussed earlier under Disposing of GAA Property.
Nonrecognition transactions. If you dispose of GAA
property in a nonrecognition transaction, you must remove
it from the GAA. The following are nonrecognition transactions.
The receipt by one corporation of property distributed
in complete liquidation of another corporation.
The transfer of property to a corporation solely in exchange for stock in that corporation if the transferor is
in control of the corporation immediately after the exchange.
The transfer of property by a corporation that is a party
to a reorganization in exchange solely for stock and
securities in another corporation that is also a party to
the reorganization.
The contribution of property to a partnership in exchange for an interest in the partnership.

Terminating GAA Treatment

The distribution of property (including money) from a
partnership to a partner.

You must remove the following property from a GAA.

Any transaction between members of the same affiliated group during any year for which the group makes
a consolidated return.

Property held by a partnership that terminates under
section 708(b)(1)(B).
Property you dispose of in a nonrecognition transaction or an abusive transaction.
Property you dispose of in a qualifying disposition or in
a disposition of all the property in the GAA, if you
choose to terminate GAA treatment.
Property you dispose of in a like-kind exchange or an
involuntary conversion.

Rules for recipient (transferee). The recipient of the
property (the person to whom it is transferred) must include your (the transferor's) adjusted basis in the property
in a GAA. If you transferred either all of the property, the
last item of property, or the remaining portion of the last
item of property, in a GAA, the recipient’s basis in the
property is the result of the following.
The adjusted depreciable basis of the GAA as of the
beginning of your tax year in which the transaction
takes place, minus

Property you change to personal use.
Property for which you must recapture any allowable
credit or deduction, such as the investment credit, the
credit for qualified electric vehicles, the section 179
deduction, or the deduction for clean-fuel vehicles and
clean-fuel vehicle refueling property placed in service
before January 1, 2006.
If you remove property from a GAA, you must make the
following adjustments.
1. Reduce the unadjusted depreciable basis of the GAA
by the unadjusted depreciable basis of the property
as of the first day of the tax year in which the disposition, change in use, partnership technical termination,
or recapture event occurs. You can use any reasonable method that is consistently applied to determine
the unadjusted depreciable basis of the property you
remove from a GAA.
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Chapter 4

The depreciation allowable to you for the year of the
transfer.
For this purpose, the adjusted depreciable basis of a
GAA is the unadjusted depreciable basis of the GAA minus any depreciation allowed or allowable for the GAA.
Abusive transactions. If you dispose of GAA property in
an abusive transaction, you must remove it from the GAA.
A disposition is an abusive transaction if it is not a nonrecognition transaction (described earlier) or a like-kind exchange or involuntary conversion and a main purpose for
the disposition is to get a tax benefit or a result that would
not be available without the use of a GAA. Examples of
abusive transactions include the following.
1. A transaction with a main purpose of shifting income
or deductions among taxpayers in a way that would

Figuring Depreciation Under MACRS

not be possible without choosing to use a GAA to take
advantage of differing effective tax rates.
2. A choice to use a GAA with a main purpose of disposing of property from the GAA so that you can use an
expiring net operating loss or credit. For example, if
you have a net operating loss carryover or a credit
carryover, the following transactions will be considered abusive transactions unless there is strong evidence to the contrary.
a. A transfer of GAA property to a related person.
b. A transfer of GAA property under an agreement
where the property continues to be used, or is
available for use, by you.
Figuring gain or loss. You must determine the gain,
loss, or other deduction due to an abusive transaction by
taking into account the property's adjusted basis. The adjusted basis of the property at the time of the disposition is
the result of the following.
The unadjusted depreciable basis of the property, minus
The depreciation allowed or allowable for the property
figured by using the depreciation method, recovery
period, and convention that applied to the GAA in
which the property was included.
If there is a gain, the amount subject to recapture as ordinary income is the smaller of the following:
1. The depreciation allowed or allowable for the property, including any expensed cost (such as section
179 deductions) or the special depreciation allowance
for the property.
2. The result of the following:
a. The original unadjusted depreciable basis of the
GAA (plus, for section 1245 property originally included in the GAA, any expensed cost), minus
b. The total gain previously recognized as ordinary
income on the disposition of property from the
GAA.
Qualifying dispositions. If you dispose of GAA property
in a qualifying disposition, you can choose to remove the
property from the GAA. A qualifying disposition is one that
does not involve all the property, or the last item of property, remaining in a GAA and that is described by any of
the following.
1. A disposition that is a direct result of fire, storm, shipwreck, other casualty, or theft.
2. A charitable contribution for which a deduction is allowed.
3. A disposition that is a direct result of a cessation, termination, or disposition of a business, manufacturing
or other income-producing process, operation, facility,
plant, or other unit (other than by transfer to a supplies, scrap, or similar account).

4. A nontaxable transaction other than a nonrecognition
transaction (described earlier), a like-kind exchange
or involuntary conversion, a technical termination of a
partnership, or a transaction that is nontaxable only
because it is a disposition from a GAA.
If you choose to remove the property from the GAA, figure your gain, loss, or other deduction resulting from the
disposition in the manner described earlier under Abusive
transactions.
Like-kind exchanges and involuntary conversions. If
you dispose of GAA property as a result of a like-kind exchange or involuntary conversion, you must remove from
the GAA the property that you transferred. See chapter 1
of Pub. 544 for information on these transactions. Figure
your gain, loss, or other deduction resulting from the disposition in the manner described earlier under Abusive
transactions.
Example. Sankofa, a calendar-year corporation, maintains one GAA for 12 machines. Each machine costs
$15,000 and was placed in service in 2015. Of the 12 machines, nine cost a total of $135,000 and are used in Sankofa's New York plant and three machines cost $45,000
and are used in Sankofa's New Jersey plant. Assume this
GAA uses the 200% declining balance depreciation
method, a 5-year recovery period, and a half-year convention. Sankofa does not claim the section 179 deduction
and the machines do not qualify for a special depreciation
allowance. As of January 1, 2017, the depreciation reserve account for the GAA is $93,600.
In May 2017, Sankofa sells its entire manufacturing
plant in New Jersey to an unrelated person. The sales
proceeds allocated to each of the three machines at the
New Jersey plant is $5,000. This transaction is a qualifying disposition, so Sankofa chooses to remove the three
machines from the GAA and figure the gain, loss, or other
deduction by taking into account their adjusted bases.
For Sankofa's 2017 return, the depreciation allowance
for the GAA is figured as follows. As of December 31,
2016, the depreciation allowed or allowable for the three
machines at the New Jersey plant is $23,400. As of January 1, 2017, the unadjusted depreciable basis of the GAA
is reduced from $180,000 to $135,000 ($180,000 minus
the $45,000 unadjusted depreciable bases of the three
machines), and the depreciation reserve account is decreased from $93,600 to $70,200 ($93,600 minus
$23,400 depreciation allowed or allowable for the three
machines as of December 31, 2016). The depreciation allowance for the GAA in 2017 is $25,920 [($135,000 −
$70,200) × 40%].
For Sankofa's 2017 return, gain or loss for each of the
three machines at the New Jersey plant is determined as
follows. The depreciation allowed or allowable in 2017 for
each machine is $1,440 [(($15,000 − $7,800) × 40%) ÷ 2].
The adjusted basis of each machine is $5,760 (the adjusted depreciable basis of $7,200 removed from the account less the $1,440 depreciation allowed or allowable in
2017). As a result, the loss recognized in 2017 for each
machine is $760 ($5,000 − $5,760). This loss is subject to

Chapter 4

Figuring Depreciation Under MACRS

Page 53

section 1231 treatment. See chapter 3 of Pub. 544 for information on section 1231 losses.
Disposition of all property in a GAA. If you dispose of
all the property, or the last item of property, in a GAA, you
can choose to end the GAA. If you make this choice, you
figure the gain or loss by comparing the adjusted depreciable basis of the GAA with the amount realized.
If there is a gain, the amount subject to recapture as ordinary income is limited to the result of the following.
The depreciation allowed or allowable for the GAA, including any expensed cost (such as section 179 deductions or the additional depreciation allowed or allowable for the GAA), minus
The total gain previously recognized as ordinary income on the disposition of property from the GAA.
Like-kind exchanges and involuntary conversions.
If you dispose of all the property or the last item of property in a GAA as a result of a like-kind exchange or involuntary conversion, the GAA terminates. You must figure
the gain or loss in the manner described above under Disposition of all property in a GAA.
Example. Duforcelf, a calendar-year corporation,
maintains a GAA for 1,000 calculators that cost a total of
$60,000 and were placed in service in 2014. Assume this
GAA is depreciated under the 200% declining balance
method, has a recovery period of 5 years, and uses a
half-year convention. Duforcelf does not claim the section
179 deduction and the calculators do not qualify for a special depreciation allowance. In 2016, Duforcelf sells 200 of
the calculators to an unrelated person for $10,000. The
$10,000 is recognized as ordinary income.
In March 2017, Duforcelf sells the remaining calculators in the GAA to an unrelated person for $35,000. Duforcelf decides to end the GAA.
On the date of the disposition, the adjusted depreciable
basis of the account is $23,040 (unadjusted depreciable
basis of $60,000 minus the depreciation allowed or allowable of $36,960). In 2017, Duforcelf recognizes a gain of
$11,960. This is the amount realized of $35,000 minus the
adjusted depreciable basis of $23,040. The gain subject
to recapture as ordinary income is limited to the depreciation allowed or allowable minus the amounts previously
recognized as ordinary income ($36,960 − $10,000 =
$26,960). Therefore, the entire gain of $11,960 is recaptured as ordinary income.

Electing To Use a GAA
An election to include property in a GAA is made separately by each owner of the property. This means that an
election to include property in a GAA must be made by
each member of a consolidated group and at the partnership or S corporation level (and not by each partner or
shareholder separately).

When to make the election. You must make the election on a timely filed tax return (including extensions) for
the year in which you place in service the property included in the GAA. However, if you timely filed your return for
the year without making the election, you still can make
the election by filing an amended return within 6 months of
the due date of the return (excluding extensions). Attach
the election to the amended return and write “Filed pursuant to section 301.9100-2” on the election statement.
You must maintain records that identify the property included in each GAA, that establish the unRECORDS adjusted depreciable basis and depreciation reserve of the GAA, and that reflect the amount realized
during the year upon dispositions from each GAA. However, see chapter 2 for the recordkeeping requirements
for section 179 property.
Revoking an election. You can revoke an election to
use a GAA only in the following situations.
You include in the GAA property that generates foreign source income, both United States and foreign
source income, or combined gross income of an FSC,
a DISC, or a possessions corporation and its related
supplier, and that inclusion results in a substantial distortion of income.
You remove property from the GAA as described under Terminating GAA Treatment, earlier.

When Do You Recapture
MACRS Depreciation?
Terms you may need to know
(see Glossary):
Disposition
Nonresidential real property
Recapture
Residential rental property
When you dispose of property that you depreciated using
MACRS, any gain on the disposition generally is recaptured (included in income) as ordinary income up to the
amount of the depreciation previously allowed or allowable for the property. Depreciation, for this purpose, includes the following.

How to make the election. Make the election by completing line 18 of Form 4562.

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Chapter 4

Figuring Depreciation Under MACRS

Any section 179 deduction claimed on the property.
Any deduction under section 179B of the Internal Revenue Code for capital costs to comply with Environmental Protection Agency sulfur regulations.
Any deduction under section 179C of the Internal Revenue Code for certain qualified refinery property
placed in service after August 8, 2005, and before
January 1, 2014.

Any deduction under section 179D of the Internal Revenue Code for certain energy efficient commercial
building property placed in service after December 31,
2005, and before January 1, 2017.

previous years. A similar inclusion amount applies to
certain leased property.
Passenger automobile limits and rules. Annual
limits apply to depreciation deductions (including section 179 deductions and any special depreciation allowance) for certain passenger automobiles. You can
continue to deduct depreciation for the unrecovered
basis resulting from these limits after the end of the recovery period.

Any deduction under section 179E of the Internal Revenue Code for qualified advanced mine safety equipment property placed in service after December 20,
2006, and before January 1, 2017.
Any deduction under section 190 of the Internal Revenue Code for removal of barriers to the disabled and
the elderly.
Any deduction under section 193 of the Internal Revenue Code for tertiary injectants.
Any special depreciation allowance previously allowed or allowable for the property (unless you elected not to claim it).
There is no recapture for residential rental and nonresidential real property unless that property is qualified property for which you claimed a special depreciation allowance. For more information on depreciation recapture, see
Pub. 544.

This chapter defines listed property and explains the
special rules and depreciation deduction limits that apply,
including the special inclusion amount rule for leased
property. It also discusses the recordkeeping rules for listed property and explains how to report information about
the property on your tax return.

Useful Items

You may want to see:
Publication
463 Travel, Entertainment, Gift, and Car Expenses
535 Business Expenses
587 Business Use of Your Home (Including Use by
Daycare Providers)
Form (and Instructions)

2106 Employee Business Expenses
2106-EZ Unreimbursed Employee Business
Expenses

Additional Rules for
Listed Property

4562 Depreciation and Amortization
4797 Sales of Business Property
See chapter 6 for information about getting publications
and forms.

Introduction
This chapter discusses the deduction limits and other special rules that apply to certain listed property. Listed property includes cars and other property used for transportation, property used for entertainment, and certain
computers.
Deductions for listed property (other than certain
leased property) are subject to the following special rules
and limits.

What Is Listed Property?
Terms you may need to know
(see Glossary):
Capitalized
Commuting

Deduction for employees. If your use of the property
is not for your employer's convenience or is not required as a condition of your employment, you cannot
deduct depreciation or rent expenses for your use of
the property as an employee.
Business-use requirement. If the property is not
used predominantly (more than 50%) for qualified
business use, you cannot claim the section 179 deduction or a special depreciation allowance. In addition, you must figure any depreciation deduction under the Modified Accelerated Cost Recovery System
(MACRS) using the straight line method over the ADS
recovery period. You may also have to recapture (include in income) any excess depreciation claimed in

Improvement
Recovery period
Straight line method
Listed property is any of the following.

Chapter 5

Passenger automobiles (as defined later).
Any other property used for transportation, unless it is
an excepted vehicle.
Property generally used for entertainment, recreation,
or amusement (including photographic, phonographic,
communication, and video-recording equipment).
Additional Rules for Listed Property

Page 55

Computers and related peripheral equipment placed
in service by you before January 1, 2018, unless used
only at a regular business establishment and owned
or leased by the person operating the establishment.
A regular business establishment includes a portion of
a dwelling unit that is used both regularly and exclusively for business as discussed in Pub. 587.
Improvements to listed property. An improvement
made to listed property that must be capitalized is treated
as a new item of depreciable property. The recovery period and method of depreciation that apply to the listed
property as a whole also apply to the improvement. For
example, if you must depreciate the listed property using
the straight line method, you also must depreciate the improvement using the straight line method.

Other property used for transportation includes trucks,
buses, boats, airplanes, motorcycles, and any other vehicles used to transport persons or goods.
Excepted vehicles. Other property used for transportation does not include the following qualified nonpersonal
use vehicles (defined earlier under Passenger Automobiles).
Clearly marked police and fire vehicles.
Unmarked vehicles used by law enforcement officers
if the use is officially authorized.
Ambulances used as such and hearses used as such.
Any vehicle with a loaded gross vehicle weight of over
14,000 pounds that is designed to carry cargo.
Bucket trucks (cherry pickers), cement mixers, dump
trucks (including garbage trucks), flatbed trucks, and
refrigerated trucks.

Passenger Automobiles
A passenger automobile is any four-wheeled vehicle
made primarily for use on public streets, roads, and highways and rated at 6,000 pounds or less of unloaded gross
vehicle weight (6,000 pounds or less of gross vehicle
weight for trucks and vans). It includes any part, component, or other item physically attached to the automobile
at the time of purchase or usually included in the purchase
price of an automobile.

Combines, cranes and derricks, and forklifts.
Delivery trucks with seating only for the driver, or only
for the driver plus a folding jump seat.
Qualified moving vans.
Qualified specialized utility repair trucks.
School buses used in transporting students and employees of schools.

The following vehicles are not considered passenger
automobiles for these purposes.
An ambulance, hearse, or combination ambulance-hearse used directly in a trade or business.
A vehicle used directly in the trade or business of
transporting persons or property for pay or hire.
A truck or van that is a qualified nonpersonal use vehicle.

Other buses with a capacity of at least 20 passengers
that are used as passenger buses.
Tractors and other special purpose farm vehicles.
Clearly marked police and fire vehicle. A clearly
marked police or fire vehicle is a vehicle that meets all the
following requirements.
It is owned or leased by a governmental unit or an
agency or instrumentality of a governmental unit.

Qualified nonpersonal use vehicles. Qualified nonpersonal use vehicles are vehicles that by their nature are not
likely to be used more than a minimal amount for personal
purposes. They include the trucks and vans listed as excepted vehicles under Other Property Used for Transportation, next. They also include trucks and vans that have
been specially modified so that they are not likely to be
used more than a minimal amount for personal purposes,
such as by installation of permanent shelving and painting
the vehicle to display advertising or the company's name.
For a detailed discussion of passenger automobiles, including leased passenger automobiles, see Pub. 463.

Other Property Used
for Transportation
Although vehicles used to transport persons or
property for pay or hire and vehicles rated at more
CAUTION than the 6,000-pound threshold are not passenger automobiles, they are still “other property used for
transportation” and are subject to the special rules for listed property.

It is required to be used for commuting by a police officer or fire fighter who, when not on a regular shift, is
on call at all times.
It is prohibited from being used for personal use (other
than commuting) outside the limit of the police officer's
arrest powers or the fire fighter's obligation to respond
to an emergency.
It is clearly marked with painted insignia or words that
make it readily apparent that it is a police or fire vehicle. A marking on a license plate is not a clear marking
for these purposes.
Qualified moving van. A qualified moving van is any
truck or van used by a professional moving company for
moving household or business goods if the following requirements are met.

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No personal use of the van is allowed other than for
travel to and from a move site or for minor personal
use, such as a stop for lunch on the way from one
move site to another.
Personal use for travel to and from a move site happens no more than five times a month on average.

Personal use is limited to situations in which it is more
convenient to the employer, because of the location of
the employee's residence in relation to the location of
the move site, for the van not to be returned to the employer's business location.
Qualified specialized utility repair truck. A truck is
a qualified specialized utility repair truck if it is not a van or
pickup truck and all the following apply.
The truck was specifically designed for and is used to
carry heavy tools, testing equipment, or parts.
Shelves, racks, or other permanent interior construction has been installed to carry and store the tools,
equipment, or parts and would make it unlikely that
the truck would be used, other than minimally, for personal purposes.
The employer requires the employee to drive the truck
home in order to be able to respond in emergency situations for purposes of restoring or maintaining electricity, gas, telephone, water, sewer, or steam utility
services.

Computers and Related
Peripheral Equipment
A computer is a programmable, electronically activated
device capable of accepting information, applying prescribed processes to the information, and supplying the results of those processes with or without human intervention. It consists of a central processing unit with extensive
storage, logic, arithmetic, and control capabilities.
Related peripheral equipment is any auxiliary machine
which is designed to be controlled by the central processing unit of a computer.
The following are neither computers nor related peripheral equipment.
Any equipment that is an integral part of other property
that is not a computer.
Typewriters, calculators, adding and accounting machines, copiers, duplicating equipment, and similar
equipment.
Equipment of a kind used primarily for the user's
amusement or entertainment, such as video games.

Can Employees Claim
a Deduction?
If you are an employee, you can claim a depreciation deduction for the use of your listed property (whether owned
or rented) in performing services as an employee only if
your use is a business use. The use of your property in
performing services as an employee is a business use
only if both the following requirements are met.
The use is for your employer's convenience.

The use is required as a condition of your employment.
If these requirements are not met, you cannot deduct
depreciation (including the section 179 deduction) or rent
expenses for your use of the property as an employee.
Employer's convenience. Whether the use of listed
property is for your employer's convenience must be determined from all the facts. The use is for your employer's
convenience if it is for a substantial business reason of the
employer. The use of listed property during your regular
working hours to carry on your employer's business generally is for the employer's convenience.
Condition of employment. Whether the use of listed
property is a condition of your employment depends on all
the facts and circumstances. The use of property must be
required for you to perform your duties properly. Your employer does not have to require explicitly that you use the
property. However, a mere statement by the employer
that the use of the property is a condition of your employment is not sufficient.
Example 1. Virginia Sycamore is employed as a courier with We Deliver, which provides local courier services.
She owns and uses a motorcycle to deliver packages to
downtown offices. We Deliver explicitly requires all delivery persons to own a car or motorcycle for use in their employment. Virginia's use of the motorcycle is for the convenience of We Deliver and is required as a condition of
employment.
Example 2. Bill Nelson is an inspector for Uplift, a construction company with many sites in the local area. He
must travel to these sites on a regular basis. Uplift does
not furnish an automobile or explicitly require him to use
his own automobile. However, it pays him for any costs he
incurs in traveling to the various sites. The use of his own
automobile or a rental automobile is for the convenience
of Uplift and is required as a condition of employment.
Example 3. Assume the same facts as in Example 2,
except that Uplift furnishes a car to Bill, who chooses to
use his own car and receive payment for using it. The use
of his own car is neither for the convenience of Uplift nor
required as a condition of employment.
Example 4. Marilyn Lee is a pilot for Y Company, a
small charter airline. Y requires pilots to obtain 80 hours of
flight time annually in addition to flight time spent with the
airline. Pilots usually can obtain these hours by flying with
the Air Force Reserve or by flying part-time with another
airline. Marilyn owns her own airplane. The use of her airplane to obtain the required flight hours is neither for the
convenience of the employer nor required as a condition
of employment.
Example 5. David Rule is employed as an engineer
with Zip, an engineering contracting firm. He occasionally
takes work home at night rather than work late in the office. He owns and uses a home computer which is virtually identical to the office model. His use of the computer

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is neither for the convenience of his employer nor required
as a condition of employment.

What Is the Business-Use
Requirement?
Terms you may need to know
(see Glossary):
Adjusted basis
Business/investment use
Capitalized
Commuting
Declining balance method
Fair market value (FMV)
Nonresidential real property
Placed in service
Recapture
Recovery period
Straight line method

Being required to use the straight line method for
an item of listed property not used predominantly
CAUTION for qualified business use is not the same as
electing the straight line method. It does not mean that
you have to use the straight line method for other property
in the same class as the item of listed property.

Exception for leased property. The business-use requirement generally does not apply to any listed property
leased or held for leasing by anyone regularly engaged in
the business of leasing listed property.
You are considered regularly engaged in the business
of leasing listed property only if you enter into contracts for
the leasing of listed property with some frequency over a
continuous period of time. This determination is made on
the basis of the facts and circumstances in each case and
takes into account the nature of your business in its entirety. Occasional or incidental leasing activity is insufficient. For example, if you lease only one passenger automobile during a tax year, you are not regularly engaged in
the business of leasing automobiles. An employer who allows an employee to use the employer's property for personal purposes and charges the employee for the use is
not regularly engaged in the business of leasing the property used by the employee.

How To Allocate Use

You can claim the section 179 deduction and a special
depreciation allowance for listed property and depreciate
listed property using GDS and a declining balance
method if the property meets the business-use requirement. To meet this requirement, listed property must be
used predominantly (more than 50% of its total use) for
qualified business use. If this requirement is not met, the
following rules apply.
Property not used predominantly for qualified business use during the year it is placed in service does
not qualify for the section 179 deduction.
Property not used predominantly for qualified business use during the year it is placed in service does
not qualify for a special depreciation allowance.
Any depreciation deduction under MACRS for property not used predominantly for qualified business use
during any year must be figured using the straight line
method over the ADS recovery period. This rule applies each year of the recovery period.

To determine whether the business-use requirement is
met, you must allocate the use of any item of listed property used for more than one purpose during the year
among its various uses.
For passenger automobiles and other means of transportation, allocate the property's use on the basis of mileage. You determine the percentage of qualified business
use by dividing the number of miles you drove the vehicle
for business purposes during the year by the total number
of miles you drove the vehicle for all purposes (including
business miles) during the year.
For other listed property, allocate the property's use on
the basis of the most appropriate unit of time the property
is actually used (rather than merely being available for
use). For example, you can determine the percentage of
business use of a computer by dividing the number of
hours you used the computer for business purposes during the year by the total number of hours you used the
computer for all purposes (including business use) during
the year.

Excess depreciation on property previously used predominantly for qualified business use must be recaptured (included in income) in the first year in which it is
no longer used predominantly for qualified business
use.

Entertainment use. Treat the use of listed property for
entertainment, recreation, or amusement purposes as a
business use only to the extent you can deduct expenses
(other than interest and property tax expenses) due to its
use as an ordinary and necessary business expense.

A lessee must add an inclusion amount to income in
the first year in which the leased property is not used
predominantly for qualified business use.

Commuting use. The use of an automobile for commuting is not business use, regardless of whether work is performed during the trip. For example, a business telephone
call made on a car telephone while commuting to work
does not change the character of the trip from commuting
to business. This is also true for a business meeting held

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in a car while commuting to work. Similarly, a business
call made on an otherwise personal trip does not change
the character of a trip from personal to business. The fact
that an automobile is used to display material that advertises the owner's or user's trade or business does not convert an otherwise personal use into business use.
Use of your automobile by another person. If someone else uses your automobile, do not treat that use as
business use unless one of the following conditions applies.
1. That use is directly connected with your business.
2. You properly report the value of the use as income to
the other person and withhold tax on the income
where required.
3. You are paid a fair market rent.
Treat any payment to you for the use of the automobile as
a rent payment for purposes of item (3).
Employee deductions. If you are an employee, do not
treat your use of listed property as business use unless it
is for your employer's convenience and is required as a
condition of your employment. See Can Employees Claim
a Deduction, earlier.

Qualified Business Use
Qualified business use of listed property is any use of the
property in your trade or business. However, it does not
include the following uses.
The leasing of property to any 5% owner or related
person (to the extent the property is used by a 5%
owner or person related to the owner or lessee of the
property).
The use of property as pay for the services of a 5%
owner or related person.
The use of property as pay for services of any person
(other than a 5% owner or related person), unless the
value of the use is included in that person's gross income and income tax is withheld on that amount
where required.

CAUTION

Property does not stop being used predominantly
for qualified business use because of a transfer at
death.

Exception for leasing or compensatory use of aircraft. Treat the leasing of any aircraft by a 5% owner or
related person, or the compensatory use of any aircraft,
as a qualified business use if at least 25% of the total use
of the aircraft during the year is for a qualified business
use.
5% owner. For a business entity that is not a corporation,
a 5% owner is any person who owns more than 5% of the
capital or profits interest in the business.

For a corporation, a 5% owner is any person who owns,
or is considered to own, either of the following.
More than 5% of the outstanding stock of the corporation.
Stock possessing more than 5% of the total combined
voting power of all stock in the corporation.
Related persons. For a description of related persons,
see Related persons in the discussion on property owned
or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1. For this purpose,
however, treat as related persons only the relationships
listed in items (1) through (10) of that discussion and substitute “50%” for “10%” each place it appears.
Examples. The following examples illustrate whether the
use of business property is qualified business use.
Example 1. John Maple is the sole proprietor of a
plumbing contracting business. John employs his brother,
Richard, in the business. As part of Richard's pay, he is allowed to use one of the company automobiles for personal use. The company includes the value of the personal use of the automobile in Richard's gross income
and properly withholds tax on it. The use of the automobile is pay for the performance of services by a related
person, so it is not a qualified business use.
Example 2. John, in Example 1, allows unrelated employees to use company automobiles for personal purposes. He does not include the value of the personal use of
the company automobiles as part of their compensation
and he does not withhold tax on the value of the use of the
automobiles. This use of company automobiles by employees is not a qualified business use.
Example 3. James Company Inc. owns several automobiles that its employees use for business purposes.
The employees also are allowed to take the automobiles
home at night. The fair market value of each employee's
use of an automobile for any personal purpose, such as
commuting to and from work, is reported as income to the
employee and James Company withholds tax on it. This
use of company automobiles by employees, even for personal purposes, is a qualified business use for the company.

Investment Use
The use of property to produce income in a nonbusiness
activity (investment use) is not a qualified business use.
However, you can treat the investment use as business
use to figure the depreciation deduction for the property in
a given year.
Example 1. Sarah Bradley uses a home computer
50% of the time to manage her investments. She also
uses the computer 40% of the time in her part-time consumer research business. Sarah's home computer is listed property because it is not used at a regular business
establishment. She does not use the computer predominantly for qualified business use. Therefore, she cannot

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elect a section 179 deduction or claim a special depreciation allowance for the computer. She must depreciate it
using the straight line method over the ADS recovery period. Her combined business/investment use for determining her depreciation deduction is 90%.
Example 2. If Sarah uses her computer 30% of the
time to manage her investments and 60% of the time in
her consumer research business, it is used predominantly
for qualified business use. She can elect a section 179 deduction and, if she does not deduct all the computer's
cost, she can claim a special depreciation allowance and
depreciate the computer using the 200% declining balance method over the GDS recovery period. Her combined business/investment use for determining her depreciation deduction is 90%.

Recapture of Excess Depreciation
If you used listed property more than 50% in a qualified
business use in the year you placed it in service, you must
recapture (include in income) excess depreciation in the
first year you use it 50% or less. You also increase the adjusted basis of your property by the same amount.
Excess depreciation is:
1. The depreciation allowable for the property (including
any section 179 deduction and special depreciation
allowance claimed) for years before the first year you
do not use the property predominantly for qualified
business use, minus
2. The depreciation that would have been allowable for
those years if you had not used the property predominantly for qualified business use in the year you
placed it in service.
To determine the amount in (2) above, you must refigure
the depreciation using the straight line method and the
ADS recovery period.
Example. In June 2013, Ellen Rye purchased and
placed in service a pickup truck that cost $18,000. She
used it only for qualified business use for 2013 through
2016. Ellen claimed a section 179 deduction of $10,000
based on the purchase of the truck. She began depreciating it using the 200% DB method over a 5-year GDS recovery period. The pickup truck's gross vehicle weight
was over 6,000 pounds, so it was not subject to the passenger automobile limits discussed later under Do the
Passenger Automobile Limits Apply. During 2017, she
used the truck 50% for business and 50% for personal
purposes. She includes $4,018 excess depreciation in her
gross income for 2017. The excess depreciation is determined as follows.
Total section 179 deduction ($10,000) and
depreciation claimed ($6,618) for 2013 through
2016. (Depreciation is from Table A-1.) . . . . . . .
Minus: Depreciation allowable (Table
A-8):
2013 – 10% of $18,000 . . . . . . . . . . . $1,800

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$16,618

2014 – 20% of $18,000 . . . . . . . . . . .
2015 – 20% of $18,000 . . . . . . . . . . .
2016 – 20% of $18,000 . . . . . . . . . . .

3,600
3,600
3,600

12,600

Excess depreciation. . . . . . . . . . . . . . . . . . . . .

$4,018

If Ellen's use of the truck does not change to 50% for
business and 50% for personal purposes until 2019, there
will be no excess depreciation. The total depreciation allowable using Table A-8 through 2019 will be $18,000,
which equals the total of the section 179 deduction and
depreciation she will have claimed.
Where to figure and report recapture. Use Form 4797,
Part IV, to figure the recapture amount. Report the recapture amount as other income on the same form or schedule on which you took the depreciation deduction. For example, report the recapture amount as other income on
Schedule C (Form 1040) if you took the depreciation deduction on Schedule C. If you took the depreciation deduction on Form 2106, report the recapture amount as
other income on Form 1040, line 21.

Lessee's Inclusion Amount
If you use leased listed property other than a passenger
automobile for business/investment use, you must include
an amount in your income in the first year your qualified
business-use percentage is 50% or less. Your qualified
business-use percentage is the part of the property's total
use that is qualified business use (defined earlier). For the
inclusion amount rules for a leased passenger automobile, see Leasing a Car in chapter 4 of Pub. 463.
The inclusion amount is the sum of Amount A and
Amount B, described next. However, see the special rules
for the inclusion amount, later, if your lease begins in the
last 9 months of your tax year or is for less than one year.
Amount A. Amount A is:
1. The fair market value of the property, multiplied by
2. The business/investment use for the first tax year the
qualified business-use percentage is 50% or less,
multiplied by
3. The applicable percentage from Table A-19 in Appendix A.
The fair market value of the property is the value on the
first day of the lease term. If the capitalized cost of an item
of listed property is specified in the lease agreement, you
must treat that amount as the fair market value.
Amount B. Amount B is:
1. The fair market value of the property, multiplied by
2. The average of the business/investment use for all tax
years the property was leased that precede the first
tax year the qualified business-use percentage is
50% or less, multiplied by
3. The applicable percentage from Table A-20 in Appendix A.

Additional Rules for Listed Property

Maximum inclusion amount. The inclusion amount
cannot be more than the sum of the deductible amounts of
rent for the tax year in which the lessee must include the
amount in gross income.
Inclusion amount worksheet. The following worksheet
is provided to help you figure the inclusion amount for
leased listed property.

Inclusion Amount Worksheet
for Leased Listed Property
Keep for Your Records

Inclusion Amount Worksheet
for Leased Listed Property
Keep for Your Records
1. Fair market value . . . . . . . . . . . . . . . . . . . . . $3,000
2. Business/investment use for first year
40 %
business use is 50% or less . . . . . . . . . . .
3. Multiply line 1 by line 2. . . . . . . . . . . . . . . . 1,200
4. Rate (%) from Table A-19 . . . . . . . . . . . . .
5. Multiply line 3 by line 4. This is Amount
A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Fair market value . . . . . . . . . . . . . . . . . . . . .
7. Average business/investment use for
years property leased before the first
year business use is 50% or less . . . . . .
8. Multiply line 6 by line 7 . . . . . . . . . . . . . . . .
9. Rate (%) from Table A-20 . . . . . . . . . . . . .
10. Multiply line 8 by line 9. This is Amount
B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Add line 5 and line 10. This is your
inclusion amount. Enter here and as
other income on the form or schedule
on which you originally took the
deduction (for example, Schedule C or F
(Form 1040), Form 1040, Form 1120,
etc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1. Fair market value . . . . . . . . . . . . . . . . . . . . . . .
2. Business/investment use for first year
business use is 50% or less . . . . . . . . . . . . .
3. Multiply line 1 by line 2. . . . . . . . . . . . . . . . . .
4. Rate (%) from Table A-19 . . . . . . . . . . . . . . .
5. Multiply line 3 by line 4. This is Amount
A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Fair market value . . . . . . . . . . . . . . . . . . . . . . .
7. Average business/investment use for
years property leased before the first year
business use is 50% or less . . . . . . . . . . . . .
8. Multiply line 6 by line 7 . . . . . . . . . . . . . . . . . .
9. Rate (%) from Table A-20 . . . . . . . . . . . . . . .
10. Multiply line 8 by line 9. This is Amount
B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Add line 5 and line 10. This is your
inclusion amount. Enter here and as other
income on the form or schedule on which
you originally took the deduction (for
example, Schedule C or F (Form 1040),
Form 1040, Form 1120, etc.) . . . . . . . . . . . .

−19.8 %
−238
3,000
70 %
2,100
22.0 %
462

$224

Lease beginning in the last 9 months of your tax
year. The inclusion amount is subject to a special rule if
all the following apply.
The lease term begins within 9 months before the
close of your tax year.

Example. On February 1, 2015, Larry House, a calendar year taxpayer, leased and placed in service a computer with a fair market value of $3,000. The lease is for a
period of 5 years. Larry does not use the computer at a
regular business establishment, so it is listed property. His
business use of the property (all of which is qualified business use) is 80% in 2015, 60% in 2016, and 40% in 2017.
He must add an inclusion amount to gross income for
2017, the first tax year his qualified business-use percentage is 50% or less. The computer has a 5-year recovery
period under both GDS and ADS. 2017 is the third tax
year of the lease, so the applicable percentage from Table
A-19 is −19.8%. The applicable percentage from Table
A-20 is 22%. Larry's deductible rent for the computer for
2017 is $800.
Larry uses the Inclusion amount worksheet to figure the
amount he must include in income for 2017. His inclusion
amount is $224, which is the sum of −$238 (Amount A)
and $462 (Amount B).

You do not use the property predominantly (more than
50%) for qualified business use during that part of the
tax year.
The lease term continues into your next tax year.
Under this special rule, add the inclusion amount to income in the next tax year. Figure the inclusion amount by
taking into account the average of the business/investment use for both tax years (line 2 of the Inclusion Amount
Worksheet for Leased Listed Property) and the applicable
percentage for the tax year the lease term begins. Skip
lines 6 through 9 of the worksheet and enter zero on
line 10.
Example 1. On August 1, 2016, Julie Rule, a calendar
year taxpayer, leased and placed in service an item of listed property. The property is 5-year property with a fair
market value of $10,000. Her property has a recovery period of 5 years under ADS. The lease is for 5 years. Her
business use of the property was 50% in 2016 and 90% in
2017. She paid rent of $3,600 for 2016, of which $3,240 is
deductible. She must include $147 in income in 2017. The
$147 is the sum of Amount A and Amount B. Amount A is
$147 ($10,000 × 70% × 2.1%), the product of the fair

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market value, the average business use for 2016 and
2017, and the applicable percentage for year one from
Table A-19. Amount B is zero.
Lease for less than one year. A special rule for the inclusion amount applies if the lease term is less than one
year and you do not use the property predominantly (more
than 50%) for qualified business use. The amount included in income is the inclusion amount (figured as described in the preceding discussions) multiplied by a fraction.
The numerator of the fraction is the number of days in the
lease term and the denominator is 365 (or 366 for leap
years).
The lease term for listed property other than residential
rental or nonresidential real property includes options to
renew. If you have two or more successive leases that are
part of the same transaction (or a series of related transactions) for the same or substantially similar property,
treat them as one lease.
Example 2. On October 1, 2016, John Joyce, a calendar year taxpayer, leased and placed in service an item of
listed property that is 3-year property. This property had a
fair market value of $15,000 and a recovery period of 5
years under ADS. The lease term was 6 months (ending
on March 31, 2017), during which he used the property
45% in business. He must include $71 in income in 2017.
The $71 is the sum of Amount A and Amount B. Amount A
is $71 ($15,000 × 45% × 2.1% × 183/365), the product of
the fair market value, the average business use for both
years, and the applicable percentage for year one from
Table A-19, prorated for the length of the lease. Amount B
is zero.

for a passenger automobile (defined earlier) each year is
limited.
This section describes the maximum depreciation deduction amounts for 2017 and explains how to deduct, after the recovery period, the unrecovered basis of your
property that results from applying the passenger automobile limit.
Exception for leased cars. The passenger automobile
limits generally do not apply to passenger automobiles
leased or held for leasing by anyone regularly engaged in
the business of leasing passenger automobiles. For information on when you are considered regularly engaged in
the business of leasing listed property, including passenger automobiles, see Exception for leased property, earlier, under What Is the Business-Use Requirement.

Maximum Depreciation Deduction
The passenger automobile limits are the maximum depreciation amounts you can deduct for a passenger automobile. They are based on the date you placed the automobile in service.

Passenger Automobiles
The maximum deduction amounts for most passenger automobiles are shown in the following table.
Maximum Depreciation Deduction
for Passenger Automobiles

Where to report inclusion amount. Report the inclusion amount figured as described in the preceding discussions as other income on the same form or schedule on
which you took the deduction for your rental costs. For example, report the inclusion amount as other income on
Schedule C (Form 1040) if you took the deduction on
Schedule C. If you took the deduction for rental costs on
Form 2106, report the inclusion amount as other income
on Form 1040, line 21.

Do the Passenger Automobile
Limits Apply?
Terms you may need to know
(see Glossary):
Basis
Convention
Recovery period
The depreciation deduction, including the section 179 deduction and special depreciation allowance, you can claim
Chapter 5

1st
Year

2017

$11,1601

$5,100

$3,050

$1,875

2016

11,1601

5,100

3,050

1,875

2015

11,1602

5,100

3,050

1,875

2014

11,160

5,100

3,050

1,875

2013

11,1603

5,100

3,050

1,875

2012

11,160

5,100

3,050

1,875

2011

11,0604

4,900

2,950

1,775

2010

11,0604

4,900

2,950

1,775

2009

10,960

4,800

2,850

1,775

2008

10,9605

4,800

2,850

1,775

2007

3,060

4,900

2,850

1,775

2006

2,960

4,800

2,850

1,775

2nd
Year

3rd
Year

4th &
Later
Years

If you elected not to claim any special depreciation
allowance or the vehicle is not qualified property, the
maximum deduction is $3,160.
1

Placed in service

Page 62

Date
Placed
In Service

Additional Rules for Listed Property

Maximum Depreciation Deduction
for Electric Vehicles

If you elected not to claim any special depreciation
allowance or the vehicle is not qualified property, the
maximum deduction is $3,160. Also, if you placed in service
the vehicle in a tax year beginning in 2015 and ending in
2016, and you elected to accelerate certain credits in lieu of
the special depreciation for that tax year, the maximum
deduction is $3,160.
2

Date
Placed
In Service

If you elected not to claim any special depreciation
allowance or the vehicle is not qualified property, the
maximum deduction is $3,160.
3

If you elected not to claim any special depreciation
allowance or the vehicle is not qualified property, the
maximum deduction is $3,060.
4

5
If you elected not to claim any special depreciation
allowance for the vehicle or the vehicle is not qualified
property, the maximum deduction is $2,960.

1st
Year

2nd
Year

3rd
Year

4th &
Later
Years

2006

$8,980

$14,400

$8,650

$5,225

2005

8,880

14,200

8,450

5,125

2004

31,8301

14,300

8,550

5,125

5/06/2003–
12/31/2003

32,030

14,600

8,750

5,225

1/01/2003–
5/05/2003

22,8803

14,600

8,750

5,225

If you elected not to claim any special depreciation allowance
for the vehicle or the vehicle is not qualified property, or the
vehicle is qualified Liberty Zone property, the maximum
deduction is $8,880.
1

If your business/investment use of the automobile
is less than 100%, you must reduce the maximum
CAUTION deduction amount by multiplying the maximum
amount by the percentage of business/investment use determined on an annual basis during the tax year.

If you have a short tax year, you must reduce the
maximum deduction amount by multiplying the
CAUTION maximum amount by a fraction. The numerator of
the fraction is the number of months and partial months in
the short tax year and the denominator is 12.

Example. On April 15, 2017, Virginia Hart bought and
placed in service a new car for $14,500. She used the car
only in her business. She files her tax return based on the
calendar year. She does not elect a section 179 deduction
and elected not to claim any special depreciation allowance for the car. Under MACRS, a car is 5-year property.
Since she placed her car in service on April 15 and used it
only for business, she uses the percentages in Table A-1
to figure her MACRS depreciation on the car. Virginia multiplies the $14,500 unadjusted basis of her car by 0.20 to
get her MACRS depreciation of $2,900 for 2017. This
$2,900 is below the maximum depreciation deduction of
$3,160 for passenger automobiles placed in service in
2017. She can deduct the full $2,900.

2
If you acquired the vehicle before 5/06/03, the maximum
deduction is $22,880. If you elected not to claim any special
depreciation allowance for the vehicle, the vehicle is not qualified
property, or the vehicle is qualified Liberty Zone property, the
maximum deduction is $9,080.

If you elected not to claim any special depreciation allowance
for the vehicle, the vehicle is not qualified property, or the vehicle
is qualified Liberty Zone property, the maximum deduction is
$9,080.
3

Trucks and Vans
The maximum depreciation deductions for trucks and
vans placed in service after 2002 are higher than those for
other passenger automobiles. The maximum deduction
amounts for trucks and vans are shown in the following table.

Electric Vehicles
The maximum depreciation deductions for passenger automobiles that are produced to run primarily on electricity
are higher than those for other automobiles. The maximum deduction amounts for electric vehicles placed in
service after August 5, 1997, and before January 1, 2007,
are shown in the following table. Owners of electric vehicles placed in service after December 31, 2006, should
use the table of maximum deduction amounts in the previous section titled Passenger Automobiles for electric vehicles classified as passenger automobiles or use the table
of maximum deduction amounts for trucks and vans, later,
for electric vehicles classified as trucks and vans.
Chapter 5

Maximum Depreciation Deduction
for Trucks and Vans
Date
Placed
In Service

1st
Year

2017

4th &
Later
Years

2nd
Year

3rd
Year

$11,5601

$5,700

$3,450

$2,075

2016

11,560

5,700

3,350

2,075

2015

11,4602

5,600

3,350

1,975

2014

11,460

5,500

3,350

1,975

2013

11,3604

5,400

3,250

1,975

2012

11,3604

5,300

3,150

1,875

2011

11,260

5,200

3,150

1,875

2010

11,1606

5,100

3,050

1,875

2009

11,0607

4,900

2,950

1,775

2008

11,160

5,100

3,050

1,875

Additional Rules for Listed Property

Page 63

2007

3,260

5,200

3,050

1,875

2006

3,260

5,200

3,150

1,875

If you elected not to claim any special depreciation
allowance or the vehicle is not qualified property, the
maximum deduction is $3,560.
1

2
If you elected not to claim any special depreciation
allowance or the vehicle is not qualified property, the
maximum deduction is $3,460. Also, if you placed in service
the vehicle in a tax year beginning in 2015 and ending in
2016, and you elected to accelerate certain credits in lieu of
the special depreciation for that tax year, the maximum
deduction is $3,460.

7. Maximum depreciation
deduction for this year from the
appropriate table . . . . . . . . . . . .
8. Business/investment-use
percentage . . . . . . . . . . . . . . . . .
9. Multiply line 7 by line 8. This is
your adjusted maximum
depreciation deduction . . . . . .
10. Section 179 deduction claimed
this year (not more than line 9).
Enter -0- if this is not the year
you placed the car in
service . . . . . . . . . . . . . . . . . . . . .

If you elected not to claim any special depreciation
allowance or the vehicle is not qualified property, the
maximum deduction is $3,460.

Note.
1) If line 10 is equal to line 9, stop here. Your
combined section 179 and depreciation
deduction (including your special depreciation
allowance) is limited to the amount on line 9.
2) If line 10 is less than line 9, complete Part II.

If you elected not to claim any special depreciation
allowance or the vehicle is not qualified property, the
maximum deduction is $3,360.
4

5
If you elected not to claim any special depreciation
allowance or the vehicle is not qualified property, the
maximum deduction is $3,260.

11.

If you elected not to claim any special depreciation
allowance or the vehicle is not qualified property, the
maximum deduction is $3,160.
6

If you elect not to claim any special depreciation allowance
for the vehicle or the vehicle is not qualified property, the
maximum deduction is $3,060.
7

If you elected not to claim any special depreciation
allowance for the vehicle or the vehicle is not qualified
property, the maximum deduction is $3,160.

12.

13.

Depreciation Worksheet for
Passenger Automobiles

14.

You can use the following worksheet to figure your depreciation deduction using the percentage tables. Then use
the information from this worksheet to prepare Form 4562.

15.

Depreciation Worksheet for
Passenger Automobiles
Keep for Your Records
Part I
1. MACRS system (GDS or
ADS) . . . . . . . . . . . . . . . . . . . . . . .
2. Property class . . . . . . . . . . . . . .
3. Date placed in service . . . . . . .
4. Recovery period . . . . . . . . . . . .
5. Method and convention . . . . . .
6. Depreciation rate (from
tables) . . . . . . . . . . . . . . . . . . . . .

Page 64

Chapter 5

Additional Rules for Listed Property

16.

Part II
Subtract line 10 from line 9.
This is the limit on the amount
you can deduct for
depreciation (including any
special depreciation
allowance ) . . . . . . . . . . . . . . . . .
Cost or other basis (reduced
by any alternative motor
vehicle credit1 or credit for
electric vehicles2) . . . . . . . . . . .
Multiply line 12 by line 8. This
is your business/investment
cost . . . . . . . . . . . . . . . . . . . . . . . .
Section 179 deduction claimed
in the year you placed the car
in service . . . . . . . . . . . . . . . . . . .
Subtract line 14 from line 13.
This is your tentative basis for
depreciation . . . . . . . . . . . . . . . .
Multiply line 15 by the
applicable percentage if the
special depreciation allowance
applies. This is your special
depreciation allowance.
Enter -0- if this is not the year
you placed the car in service,
the car is not qualified property,
or you elected not to claim a
special depreciation
allowance . . . . . . . . . . . . . . . . . .

Example. In May 2011, you bought and placed in
service a car costing $31,500. The car was 5-year property under GDS (MACRS). You did not elect a section 179
deduction and elected not to claim any special depreciation allowance for the car. You used the car exclusively for
business during the recovery period (2011 through 2016).
You figured your depreciation as shown below.

Note.
1) If line 16 is equal to line 11, stop here. Your
depreciation deduction (including your special
depreciation allowance) is limited to the amount on
line 11.
2) If line 16 is less than line 11, complete Part III.
Part III
17. Subtract line 16 from line 11.
This is the limit on the amount
you can deduct for MACRS
depreciation . . . . . . . . . . . . . . . .
18. Subtract line 16 from line 15.
This is your basis for
depreciation . . . . . . . . . . . . . . . .
19. Multiply line 18 by line 6. This
is your tentative MACRS
depreciation deduction . . . . . .
20. Enter the lesser of line 17 or
line 19. This is your MACRS
depreciation deduction . . . . . .

Year
2011
2012
2013
2014
2015
2016
Total

1
When figuring the amount to enter on line 12, do not reduce
your cost or other basis by any section 179 deduction you
claimed for your car.
2
Reduce the basis by the lesser of $4,000 or 10% of the cost
of the vehicle even if the credit is less than that amount.

Deductions After the
Recovery Period
If the depreciation deductions for your automobile are reduced under the passenger automobile limits, you will
have unrecovered basis in your automobile at the end of
the recovery period. If you continue to use the automobile
for business, you can deduct that unrecovered basis after
the recovery period ends. You can claim a depreciation
deduction in each succeeding tax year until you recover
your full basis in the car. The maximum amount you can
deduct each year is determined by the date you placed
the car in service and your business/investment-use percentage. See Maximum Depreciation Deduction, earlier.
Unrecovered basis is the cost or other basis of the passenger automobile reduced by any clean-fuel vehicle deduction, electric vehicle credit, depreciation, and section
179 deductions that would have been allowable if you had
used the car 100% for business and investment use and
the passenger automobile limits had not applied.
You cannot claim a depreciation deduction for listed property other than passenger automobiles
CAUTION after the recovery period ends. There is no unrecovered basis at the end of the recovery period because
you are considered to have used this property 100% for
business and investment purposes during all of the recovery period.

Percentage Amount
20.0%
32.0
19.2
11.52
11.52
5.76

$6,300
10,080
6,048
3,629
3,629
1,814

Limit

Allowed

$3,060
4,900
2,950
1,775
1,775
1,775

$3,060
4,900
2,950
1,775
1,775
1,775
$16,235

. . . . . . . . . . . . . . . . . . . . . . . . . . .

At the end of 2016, you had an unrecovered basis of
$15,265 ($31,500 − $16,235). If in 2017 and later years
you continue to use the car 100% for business, you can
deduct each year the lesser of $1,775 or your remaining
unrecovered basis.
If your business use of the car had been less than
100% during any year, your depreciation deduction would
have been less than the maximum amount allowable for
that year. However, in figuring your unrecovered basis in
the car, you would still reduce your basis by the maximum
amount allowable as if the business use had been 100%.
For example, if you had used your car 60% for business
instead of 100%, your allowable depreciation deductions
would have been $9,159 ($15,265 × 60%), but you still
would have to reduce your basis by $15,265 to determine
your unrecovered basis.

Deductions for Passenger
Automobiles Acquired in a Trade-in
If you acquire a passenger automobile in a trade-in, depreciate the carryover basis separately as if the trade-in
did not occur. Depreciate the part of the new automobile's
basis that exceeds its carryover basis (excess basis) as if
it were newly placed in service property. This excess basis is the additional cash paid for the new automobile in
the trade-in.
The depreciation figured for the two components of the
basis (carryover basis and excess basis) is subject to a
single passenger automobile limit. Special rules apply in
determining the passenger automobile limits. These rules
and examples are discussed in section 1.168(i)-6(d)(3) of
the regulations.
Instead of figuring depreciation for the carryover basis
and the excess basis separately, you can elect to treat the
old automobile as disposed of and both of the basis components for the new automobile as if placed in service at
the time of the trade-in. For more information, including
how to make this election, see Election out under Property
Acquired in a Like-Kind Exchange or Involuntary Conversion in chapter 4 and sections 1.168(i)-6(i) and
1.168(i)-6(j) of the regulations.

Chapter 5

Additional Rules for Listed Property

Page 65

What Records Must Be Kept?

generally is considered a timely record if, in the regular
course of business:
The statement is given by an employee to the employer, or

Terms you may need to know
(see Glossary):
Business/investment use
Circumstantial evidence
Documentary evidence
You cannot take any depreciation or section 179 deduction for the use of listed property unless you can prove
your business/investment use with adequate records or
with sufficient evidence to support your own statements.
For listed property, you must keep records for as long as
any recapture can still occur. Recapture can occur in any
tax year of the recovery period.

Adequate Records
To meet the adequate records requirement, you
must maintain an account book, diary, log, stateRECORDS ment of expense, trip sheet, or similar record or
other documentary evidence that, together with the receipt, is sufficient to establish each element of an expenditure or use. You do not have to record information in an
account book, diary, or similar record if the information is
already shown on the receipt. However, your records
should back up your receipts in an orderly manner.
Elements of expenditure or use. Your records or other
documentary evidence must support all the following.
The amount of each separate expenditure, such as
the cost of acquiring the item, maintenance and repair
costs, capital improvement costs, lease payments,
and any other expenses.
The amount of each business and investment use
(based on an appropriate measure, such as mileage
for vehicles and time for other listed property), and the
total use of the property for the tax year.
The date of the expenditure or use.
The business or investment purpose for the expenditure or use.
Written documents of your expenditure or use are generally better evidence than oral statements alone. You do
not have to keep a daily log. However, some type of record containing the elements of an expenditure or the
business or investment use of listed property made at or
near the time of the expenditure or use and backed up by
other documents is preferable to a statement you prepare
later.
Timeliness. You must record the elements of an expenditure or use at the time you have full knowledge of the elements. An expense account statement made from an account book, diary, or similar record prepared or
maintained at or near the time of the expenditure or use
Page 66

Chapter 5

The statement is given by an independent contractor
to the client or customer.
For example, a log maintained on a weekly basis, that
accounts for use during the week, will be considered a record made at or near the time of use.
Business purpose supported. Generally, an adequate
record of business purpose must be in the form of a written statement. However, the amount of detail necessary
to establish a business purpose depends on the facts and
circumstances of each case. A written explanation of the
business purpose will not be required if the purpose can
be determined from the surrounding facts and circumstances. For example, a salesperson visiting customers on an
established sales route will not normally need a written explanation of the business purpose of his or her travel.
Business use supported. An adequate record contains
enough information on each element of every business or
investment use. The amount of detail required to support
the use depends on the facts and circumstances. For example, a taxpayer who uses a truck for both business and
personal purposes and whose only business use of the
truck is to make customer deliveries on an established
route can satisfy the requirement by recording the length
of the route, including the total number of miles driven during the tax year and the date of each trip at or near the
time of the trips.
Although you generally must prepare an adequate written record, you can prepare a record of the business use
of listed property in a computer memory device that uses
a logging program.
Separate or combined expenditures or uses. Each
use by you normally is considered a separate use. However, you can combine repeated uses as a single item.
Record each expenditure as a separate item. Do not
combine it with other expenditures. If you choose, however, you can combine amounts you spent for the use of
listed property during a tax year, such as for gasoline or
automobile repairs. If you combine these expenses, you
do not need to support the business purpose of each expense. Instead, you can divide the expenses based on the
total business use of the listed property.
You can account for uses that can be considered part
of a single use, such as a round trip or uninterrupted business use, by a single record. For example, you can account for the use of a truck to make deliveries at several
locations that begin and end at the business premises and
can include a stop at the business in between deliveries
by a single record of miles driven. You can account for the
use of a passenger automobile by a salesperson for a
business trip away from home over a period of time by a
single record of miles traveled. Minimal personal use
(such as a stop for lunch between two business stops) is
not an interruption of business use.

Additional Rules for Listed Property

Confidential information. If any of the information on
the elements of an expenditure or use is confidential, you
do not need to include it in the account book or similar record if you record it at or near the time of the expenditure
or use. You must keep it elsewhere and make it available
as support to the IRS director for your area on request.
Substantial compliance. If you have not fully supported
a particular element of an expenditure or use, but have
complied with the adequate records requirement for the
expenditure or use to the satisfaction of the IRS director
for your area, you can establish this element by any evidence the IRS director for your area deems adequate.
If you fail to establish to the satisfaction of the IRS director for your area that you have substantially complied
with the adequate records requirement for an element of
an expenditure or use, you must establish the element as
follows.
By your own oral or written statement containing detailed information as to the element.
By other evidence sufficient to establish the element.
If the element is the cost or amount, time, place, or date
of an expenditure or use, its supporting evidence must be
direct evidence, such as oral testimony by witnesses or a
written statement setting forth detailed information about
the element or the documentary evidence. If the element
is the business purpose of an expenditure, its supporting
evidence can be circumstantial evidence.
Sampling. You can maintain an adequate record for part
of a tax year and use that record to support your business
and investment use of listed property for the entire tax
year if it can be shown by other evidence that the periods
for which you maintain an adequate record are representative of the use throughout the year.
Example 1. Denise Williams, a sole proprietor and calendar year taxpayer, operates an interior decorating business out of her home. She uses her automobile for local
business visits to the homes or offices of clients, for meetings with suppliers and subcontractors, and to pick up and
deliver items to clients. There is no other business use of
the automobile, but she and family members also use it for
personal purposes. She maintains adequate records for
the first 3 months of the year showing that 75% of the automobile use was for business. Subcontractor invoices
and paid bills show that her business continued at approximately the same rate for the rest of the year. If there is no
change in circumstances, such as the purchase of a second car for exclusive use in her business, the determination that her combined business/investment use of the automobile for the tax year is 75% rests on sufficient
supporting evidence.
Example 2. Assume the same facts as in Example 1,
except that Denise maintains adequate records during the
first week of every month showing that 75% of her use of
the automobile is for business. Her business invoices
show that her business continued at the same rate during
the later weeks of each month so that her weekly records
are representative of the automobile's business use

throughout the month. The determination that her business/investment use of the automobile for the tax year is
75% rests on sufficient supporting evidence.
Example 3. Bill Baker, a sole proprietor and calendar
year taxpayer, is a salesman in a large metropolitan area
for a company that manufactures household products. For
the first 3 weeks of each month, he occasionally uses his
own automobile for business travel within the metropolitan
area. During these weeks, his business use of the automobile does not follow a consistent pattern. During the
fourth week of each month, he delivers all business orders
taken during the previous month. The business use of his
automobile, as supported by adequate records, is 70% of
its total use during that fourth week. The determination
based on the record maintained during the fourth week of
the month that his business/investment use of the automobile for the tax year is 70% does not rest on sufficient
supporting evidence because his use during that week is
not representative of use during other periods.
Loss of records. When you establish that failure to produce adequate records is due to loss of the records
through circumstances beyond your control, such as
through fire, flood, earthquake, or other casualty, you
have the right to support a deduction by reasonable reconstruction of your expenditures and use.

How Is Listed Property
Information Reported?
You must provide the information about your listed property requested in Part V of Form 4562, Section A, if you
claim either of the following deductions.
Any deduction for a vehicle.
A depreciation deduction for any other listed property.
If you claim any deduction for a vehicle, you also must
provide the information requested in Section B. If you provide the vehicle for your employee's use, the employee
must give you this information. If you provide any vehicle
for use by an employee, you must first answer the questions in Section C to see if you meet an exception to completing Section B for that vehicle.
Vehicles used by your employees. You do not have to
complete Section B, Part V, for vehicles used by your employees who are not more-than-5% owners or related persons if you meet at least one of the following requirements.
1. You maintain a written policy statement that prohibits
one of the following uses of the vehicles.

Chapter 5

a. All personal use including commuting.
b. Personal use, other than commuting, by employees who are not officers, directors, or 1%-or-more
owners.

Additional Rules for Listed Property

Page 67

2. You treat all use of the vehicles by your employees as
personal use.
3. You provide more than five vehicles for use by your
employees, and you keep in your records the information on their use given to you by the employees.
4. For demonstrator automobiles provided to full-time
salespersons, you maintain a written policy statement
that limits the total mileage outside the salesperson's
normal working hours and prohibits use of the automobile by anyone else, for vacation trips, or to store
personal possessions.
Exceptions. If you file Form 2106, 2106-EZ, or Schedule C-EZ (Form 1040), and you are not required to file
Form 4562, report information about listed property on
that form and not on Form 4562. Also, if you file Schedule C (Form 1040) and are claiming the standard mileage
rate or actual vehicle expenses (except depreciation) and
you are not required to file Form 4562 for any other reason, report vehicle information in Part IV of Schedule C
and not on Form 4562.

6.
How To Get Tax Help
If you have questions about a tax issue, need help preparing your tax return, or want to download free publications,
forms, or instructions, go to IRS.gov and find resources
that can help you right away.
Preparing and filing your tax return. Find free options
to prepare and file your return on IRS.gov or in your local
community if you qualify.
The Volunteer Income Tax Assistance (VITA) program
offers free tax help to people who generally make $54,000
or less, persons with disabilities, and limited-English-speaking taxpayers who need help preparing their
own tax returns. The Tax Counseling for the Elderly (TCE)
program offers free tax help for all taxpayers, particularly
those who are 60 years of age and older. TCE volunteers
specialize in answering questions about pensions and retirement-related issues unique to seniors.
You can go to IRS.gov to see your options for preparing
and filing your return which include the following.
Free File. Go to IRS.gov/FreeFile. See if you qualify
to use brand-name software to prepare and e-file your
federal tax return for free.
VITA. Go to IRS.gov/VITA, download the free IRS2Go
app, or call 1-800-906-9887 to find the nearest VITA
location for free tax preparation.

Page 68

Chapter 6

How To Get Tax Help

TCE. Go to IRS.gov/TCE, download the free IRS2Go
app, or call 1-888-227-7669 to find the nearest TCE
location for free tax preparation.
Getting answers to your tax law questions.
On IRS.gov get answers to your tax questions
anytime, anywhere.
Go to IRS.gov/Help or IRS.gov/LetUsHelp pages for a
variety of tools that will help you get answers to some
of the most common tax questions.
Go to IRS.gov/ITA for the Interactive Tax Assistant, a
tool that will ask you questions on a number of tax law
topics and provide answers. You can print the entire
interview and the final response for your records.
Go to IRS.gov/Pub17 to get Pub. 17, Your Federal Income Tax for Individuals, which features details on
tax-saving opportunities, 2017 tax changes, and thousands of interactive links to help you find answers to
your questions. View it online in HTML or as a PDF, or
download it to your mobile device as an eBook.
You may also be able to access tax law information in
your electronic filing software.
Getting tax forms and publications. Go to IRS.gov/
Forms to view, download, or print all of the forms and publications you may need. You can also download and view
popular tax publications and instructions (including the
1040 instructions) on mobile devices as an eBook at no
charge. Or, you can go to IRS.gov/OrderForms to place
an order and have forms mailed to you within 10 business
days.
Access your online account (Individual taxpayers
only). Go to IRS.gov/Account to securely access information about your federal tax account.
View the amount you owe, pay online or set up an online payment agreement.
Access your tax records online.
Review the past 18 months of your payment history.
Go to IRS.gov/SecureAccess to review the required
identity authentication process.
Using direct deposit. The fastest way to receive a tax
refund is to combine direct deposit and IRS e-file. Direct
deposit securely and electronically transfers your refund
directly into your financial account. Eight in 10 taxpayers
use direct deposit to receive their refund. IRS issues more
than 90% of refunds in less than 21 days.
Delayed refund for returns claiming certain credits.
Due to changes in the law, the IRS can’t issue refunds before mid-February 2018, for returns that properly claimed
the earned income credit (EIC) or the additional child tax
credit (ACTC). This applies to the entire refund, not just
the portion associated with these credits.
Getting a transcript or copy of a return. The quickest
way to get a copy of your tax transcript is to go to IRS.gov/
Transcripts. Click on either "Get Transcript Online" or "Get

Transcript by Mail" to order a copy of your transcript. If
you prefer, you can:
Order your transcript by calling 1-800-908-9946.
Mail Form 4506-T or Form 4506T-EZ (both available
on IRS.gov).
Using online tools to help prepare your return. Go to
IRS.gov/Tools for the following.
The Earned Income Tax Credit Assistant (IRS.gov/
EIC) determines if you are eligible for the EIC.
The Online EIN Application (IRS.gov/EIN) helps you
get an employer identification number.
The IRS Withholding Calculator (IRS.gov/W4App) estimates the amount you should have withheld from
your paycheck for federal income tax purposes.
The First Time Homebuyer Credit Account Look-up
(IRS.gov/HomeBuyer) tool provides information on
your repayments and account balance.
The Sales Tax Deduction Calculator (IRS.gov/
SalesTax) figures the amount you can claim if you
itemize deductions on Schedule A (Form 1040),
choose not to claim state and local income taxes, and
you didn’t save your receipts showing the sales tax
you paid.
Resolving tax-related identity theft issues.
The IRS doesn’t initiate contact with taxpayers by
email or telephone to request personal or financial information. This includes any type of electronic communication, such as text messages and social media
channels.
Go to IRS.gov/IDProtection for information and videos.
If your SSN has been lost or stolen or you suspect
you’re a victim of tax-related identity theft, visit
IRS.gov/ID to learn what steps you should take.
Checking on the status of your refund.
Go to IRS.gov/Refunds.
Due to changes in the law, the IRS can’t issue refunds
before mid-February 2018, for returns that properly
claim the EIC or the ACTC. This applies to the entire
refund, not just the portion associated with these credits.
Download the official IRS2Go app to your mobile device to check your refund status.
Call the automated refund hotline at 1-800-829-1954.
Making a tax payment. The IRS uses the latest encryption technology to ensure your electronic payments are
safe and secure. You can make electronic payments online, by phone, and from a mobile device using the
IRS2Go app. Paying electronically is quick, easy, and
faster than mailing in a check or money order. Go to

IRS.gov/Payments to make a payment using any of the
following options.
IRS Direct Pay: Pay your individual tax bill or estimated tax payment directly from your checking or savings account at no cost to you.
Debit or credit card: Choose an approved payment
processor to pay online, by phone, and by mobile device.
Electronic Funds Withdrawal: Offered only when filing your federal taxes using tax preparation software
or through a tax professional.
Electronic Federal Tax Payment System: Best option for businesses. Enrollment is required.
Check or money order: Mail your payment to the address listed on the notice or instructions.
Cash: You may be able to pay your taxes at a participating retail store.
What if I can’t pay now? Go to IRS.gov/Payments for
more information about your options.
Apply for an online payment agreement (IRS.gov/
OPA) to meet your tax obligation in monthly installments if you can’t pay your taxes in full today. Once
you complete the online process, you will receive immediate notification of whether your agreement has
been approved.
Use the Offer in Compromise Pre-Qualifier (IRS.gov/
OIC) to see if you can settle your tax debt for less than
the full amount you owe.
Checking the status of an amended return. Go to
IRS.gov/WMAR to track the status of Form 1040X amended returns. Please note that it can take up to 3 weeks
from the date you mailed your amended return for it show
up in our system and processing it can take up to 16
weeks.
Understanding an IRS notice or letter. Go to IRS.gov/
Notices to find additional information about responding to
an IRS notice or letter.
Contacting your local IRS office. Keep in mind, many
questions can be answered on IRS.gov without visiting an
IRS Tax Assistance Center (TAC). Go to IRS.gov/
LetUsHelp for the topics people ask about most. If you still
need help, IRS TACs provide tax help when a tax issue
can’t be handled online or by phone. All TACs now provide service by appointment so you’ll know in advance
that you can get the service you need without waiting. Before you visit, go to IRS.gov/TACLocator to find the nearest TAC, check hours, available services, and appointment options. Or, on the IRS2Go app, under the Stay
Connected tab, choose the Contact Us option and click on
“Local Offices.”
Watching IRS videos. The IRS Video portal
(IRSvideos.gov) contains video and audio presentations
for individuals, small businesses, and tax professionals.
Chapter 6

How To Get Tax Help

Page 69

Getting tax information in other languages. For taxpayers whose native language isn’t English, we have the
following resources available. Taxpayers can find information on IRS.gov in the following languages.
Spanish (IRS.gov/Spanish).
Chinese (IRS.gov/Chinese).
Vietnamese (IRS.gov/Vietnamese).
Korean (IRS.gov/Korean).
Russian (IRS.gov/Russian).
The IRS TACs provide over-the-phone interpreter service in over 170 languages, and the service is available
free to taxpayers.

The Taxpayer Advocate Service Is
Here To Help You
What is the Taxpayer Advocate Service?
The Taxpayer Advocate Service (TAS) is an independent organization within the IRS that helps taxpayers and
protects taxpayer rights. Our job is to ensure that every
taxpayer is treated fairly and that you know and understand your rights under the Taxpayer Bill of Rights.

What Can the Taxpayer Advocate Service
Do For You?
We can help you resolve problems that you can’t resolve
with the IRS. And our service is free. If you qualify for our
assistance, you will be assigned to one advocate who will
work with you throughout the process and will do everything possible to resolve your issue. TAS can help you if:
Your problem is causing financial difficulty for you,
your family, or your business,
You face (or your business is facing) an immediate
threat of adverse action, or
You’ve tried repeatedly to contact the IRS but no one
has responded, or the IRS hasn’t responded by the
date promised.

Page 70

Chapter 6

How To Get Tax Help

How Can You Reach Us?
We have offices in every state, the District of Columbia,
and Puerto Rico. Your local advocate’s number is in your
local directory and at TaxpayerAdvocate.IRS.gov/
Contact-Us. You can also call us at 1-877-777-4778.

How Can You Learn About Your Taxpayer
Rights?
The Taxpayer Bill of Rights describes 10 basic rights that
all taxpayers have when dealing with the IRS. Our Tax
Toolkit at TaxpayerAdvocate.IRS.gov can help you understand what these rights mean to you and how they apply.
These are your rights. Know them. Use them.

How Else Does the Taxpayer Advocate
Service Help Taxpayers?
TAS works to resolve large-scale problems that affect
many taxpayers. If you know of one of these broad issues,
please report it to us at IRS.gov/SAMS.

Low Income Taxpayer Clinics
Low Income Taxpayer Clinics (LITCs) are independent
from the IRS. LITCs represent individuals whose income
is below a certain level and need to resolve tax problems
with the IRS, such as audits, appeals, and tax collection
disputes. In addition, clinics can provide information about
taxpayer rights and responsibilities in different languages
for individuals who speak English as a second language.
Services are offered for free or a small fee. To find a clinic
near you, visit TaxpayerAdvocate.IRS.gov/LITCmap or
see IRS Publication 4134, Low Income Taxpayer Clinic
List.

Appendix A
MACRS Percentage Table Guide
General Depreciation System (GDS)
Alternative Depreciation System (ADS)
Chart 1. Use this chart to find the correct percentage table to use for any property other than residential rental
and nonresidential real property. Use Chart 2 for residential rental and nonresidential real property.
MACRS
System

Depreciation
Method

Recovery Period

Convention

Class

Month or
Quarter
Placed
in Service

Table

GDS

200%

GDS/3, 5, 7, 10 (Nonfarm)

Half-Year

3, 5, 7, 10

Any

A-1

GDS

200%

GDS/3, 5, 7, 10 (Nonfarm)

Mid-Quarter

3, 5, 7, 10

1st Qtr
2nd Qtr
3rd Qtr
4th Qtr

A-2
A-3
A-4
A-5

GDS

150%

GDS/3, 5, 7, 10

Half-Year

3, 5, 7, 10

Any

A-14

GDS

150%

GDS/3, 5, 7, 10

Mid-Quarter

3, 5, 7, 10

1st Qtr
2nd Qtr
3rd Qtr
4th Qtr

A-15
A-16
A-17
A-18

GDS

150%

GDS/15, 20

Half-Year

15 & 20

Any

A-1

GDS

150%

GDS/15, 20

Mid-Quarter

15 & 20

1st Qtr
2nd Qtr
3rd Qtr
4th Qtr

A-2
A-3
A-4
A-5

GDS
ADS

Half-Year

Any

A-8

GDS
ADS

Mid-Quarter

Any

1st Qtr
2nd Qtr
3rd Qtr
4th Qtr

A-9
A-10
A-11
A-12

ADS

150%

ADS

Half-Year

Any

A-14

ADS

150%

ADS

Mid-Quarter

Any

1st Qtr
2nd Qtr
3rd Qtr
4th Qtr

A-15
A-16
A-17
A-18

Chart 2. Use this chart to find the correct percentage table to use for residential rental and nonresidential real
property. Use Chart 1 for all other property.
MACRS
System

Depreciation
Method

Recovery Period

Convention

Class

Month or
Quarter
Placed
in Service

Table

GDS

GDS/27.5

Mid-Month

Residential Rental

Any

A-6

GDS

SL
SL

GDS/31.5
GDS/39

Mid-Month

Nonresidential Real

Any

A-7
A-7a

ADS

ADS/40

Mid-Month

Residential Rental
and
Nonresidential Real

Any

A-13

Chart 3. Income Inclusion Amount Rates
for MACRS Leased Listed Property
Table
Amount A Percentages

A-19

Amount B Percentages

A-20

Publication 946 (2017)

Page 71

Table A-1.
Year
1
2
3
4
5

3-, 5-, 7-, 10-, 15-, and 20-Year Property
Half-Year Convention
Depreciation rate for recovery period
3-year

5-year

7-year

10-year

15-year

33.33%
44.45
14.81
7.41

20.00%
32.00
19.20
11.52
11.52

14.29%
24.49
17.49
12.49
8.93

10.00%
18.00
14.40
11.52
9.22

5.00%
9.50
8.55
7.70
6.93

3.750%
7.219
6.677
6.177
5.713

5.76

8.92
8.93
4.46

7.37
6.55
6.55
6.56
6.55

6.23
5.90
5.90
5.91
5.90

5.285
4.888
4.522
4.462
4.461

3.28

5.91
5.90
5.91
5.90
5.91

4.462
4.461
4.462
4.461
4.462

2.95

4.461
4.462
4.461
4.462
4.461

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

2.231

Table A-2.

Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

Page 72

20-year

3-, 5-, 7-, 10-, 15-, and 20-Year Property
Mid-Quarter Convention
Placed in Service in First Quarter
Depreciation rate for recovery period
3-year

5-year

7-year

10-year

15-year

20-year

58.33%
27.78
12.35
1.54

35.00%
26.00
15.60
11.01
11.01

25.00%
21.43
15.31
10.93
8.75

17.50%
16.50
13.20
10.56
8.45

8.75%
9.13
8.21
7.39
6.65

6.563%
7.000
6.482
5.996
5.546

1.38

8.74
8.75
1.09

6.76
6.55
6.55
6.56
6.55

5.99
5.90
5.91
5.90
5.91

5.130
4.746
4.459
4.459
4.459

0.82

5.90
5.91
5.90
5.91
5.90

4.459
4.460
4.459
4.460
4.459

0.74

4.460
4.459
4.460
4.459
4.460
0.565

Publication 946 (2017)

Table A-3.

Year
1
2
3
4
5

3-, 5-, 7-, 10-, 15-, and 20-Year Property
Mid-Quarter Convention
Placed in Service in Second Quarter
Depreciation rate for recovery period
3-year

5-year

7-year

10-year

15-year

41.67%
38.89
14.14
5.30

25.00%
30.00
18.00
11.37
11.37

17.85%
23.47
16.76
11.97
8.87

12.50%
17.50
14.00
11.20
8.96

6.25%
9.38
8.44
7.59
6.83

4.688%
7.148
6.612
6.116
5.658

4.26

8.87
8.87
3.34

7.17
6.55
6.55
6.56
6.55

6.15
5.91
5.90
5.91
5.90

5.233
4.841
4.478
4.463
4.463

2.46

5.91
5.90
5.91
5.90
5.91

4.463
4.463
4.463
4.463
4.462

2.21

4.463
4.462
4.463
4.462
4.463

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

1.673

Table A-4.

Year
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21

Publication 946 (2017)

20-year

3-, 5-, 7-, 10-, 15-, and 20-Year Property
Mid-Quarter Convention
Placed in Service in Third Quarter
Depreciation rate for recovery period
3-year

5-year

7-year

10-year

15-year

20-year

25.00%
50.00
16.67
8.33

15.00%
34.00
20.40
12.24
11.30

10.71%
25.51
18.22
13.02
9.30

7.50%
18.50
14.80
11.84
9.47

3.75%
9.63
8.66
7.80
7.02

2.813%
7.289
6.742
6.237
5.769

7.06

8.85
8.86
5.53

7.58
6.55
6.55
6.56
6.55

6.31
5.90
5.90
5.91
5.90

5.336
4.936
4.566
4.460
4.460

4.10

5.91
5.90
5.91
5.90
5.91

4.460
4.460
4.461
4.460
4.461

3.69

4.460
4.461
4.460
4.461
4.460
2.788

Page 73

3-, 5-, 7-, 10-, 15-, and 20-Year Property
Mid-Quarter Convention
Placed in Service in Fourth Quarter

Table A-5.

Depreciation rate for recovery period

Year
1
2
3
4
5

3-year

5-year

7-year

10-year

15-year

8.33%
61.11
20.37
10.19

5.00%
38.00
22.80
13.68
10.94

3.57%
27.55
19.68
14.06
10.04

2.50%
19.50
15.60
12.48
9.98

1.25%
9.88
8.89
8.00
7.20

0.938%
7.430
6.872
6.357
5.880

9.58

8.73
8.73
7.64

7.99
6.55
6.55
6.56
6.55

6.48
5.90
5.90
5.90
5.91

5.439
5.031
4.654
4.458
4.458

5.74

5.90
5.91
5.90
5.91
5.90

4.458
4.458
4.458
4.458
4.458

5.17

4.458
4.458
4.459
4.458
4.459

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

20-year

3.901

Residential Rental Property
Mid-Month Convention
Straight Line—27.5 Years

Table A-6.

Year

Month property placed in service
1

3.485%
3.636
3.637
3.636
3.637

3.182%
3.636
3.637
3.636
3.637

2.879%
3.636
3.637
3.636
3.637

2.576%
3.636
3.637
3.636
3.637

2.273%
3.636
3.637
3.636
3.637

1.970%
3.636
3.637
3.636
3.637

1.667%
3.636
3.636
3.637
3.636

1.364%
3.636
3.636
3.637
3.636

1.061%
3.636
3.636
3.637
3.636

0.758%
3.636
3.636
3.637
3.636

0.455%
3.636
3.636
3.637
3.636

0.152%
3.636
3.636
3.637
3.636

13
14
15
16
17

3.636
3.637
3.636
3.637
3.636

3.637
3.636
3.637
3.636
3.637

18
19
20
21
22

3.637
3.636
3.637
3.636
3.637

3.636
3.637
3.636
3.637
3.636

23
24
25
26
27

3.636
3.637
3.636
3.637
3.636

3.637
3.636
3.637
3.636
3.637

28
29

1.97

2.273

2.576

2.879

3.182

3.485

3.636
0.152

3.636
0.455

3.636
0.758

3.636
1.061

3.636
1.364

3.636
1.667

1
2–9
10
11
12

Page 74

Publication 946 (2017)

Nonresidential Real Property
Mid-Month Convention
Straight Line—31.5 Years

Table A-7.

Year
1
2–7
8
9
10

Month property placed in service
1

3.042%
3.175
3.175
3.174
3.175

2.778%
3.175
3.174
3.175
3.174

2.513%
3.175
3.175
3.174
3.175

2.249%
3.175
3.174
3.175
3.174

1.984%
3.175
3.175
3.174
3.175

1.720%
3.175
3.174
3.175
3.174

1.455%
3.175
3.175
3.174
3.175

1.190%
3.175
3.175
3.175
3.174

0.926%
3.175
3.175
3.174
3.175

0.661%
3.175
3.175
3.175
3.174

0.397%
3.175
3.175
3.174
3.175

0.132%
3.175
3.175
3.175
3.174

11
12
13
14
15

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

16
17
18
19
20

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

21
22
23
24
25

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

26
27
28
29
30

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

3.175
3.174
3.175
3.174
3.175

3.174
3.175
3.174
3.175
3.174

31
32
33

3.174
1.720

3.175
1.984

3.174
2.249

3.175
2.513

3.174
2.778

3.175
3.042

3.174
3.175
0.132

3.175
3.174
0.397

3.174
3.175
0.661

3.175
3.174
0.926

3.174
3.175
1.190

3.175
3.174
1.455

Table A-7a. Nonresidential Real Property
Mid-Month Convention
Straight Line—39 Years
Year
1
2–39
40

Month property placed in service
1
2.461%
2.564
0.107

2
2.247%
2.564
0.321

Publication 946 (2017)

3
2.033%
2.564
0.535

4
1.819%
2.564
0.749

5
1.605%
2.564
0.963

6
1.391%
2.564
1.177

7
1.177%
2.564
1.391

8
0.963%
2.564
1.605

0.749%
2.564
1.819

0.535%
2.564
2.033

0.321%
2.564
2.247

0.107%
2.564
2.461

Page 75

Straight Line Method
Half-Year Convention

Table A-8.
Year
1
2
3
4
5

Recovery periods in years
2.5
20.0%
40.0
40.0

3.5

16.67%
33.33
33.33
16.67

14.29%
28.57
28.57
28.57

4
12.5%
25.0
25.0
25.0
12.5

6
7
8
9
10

6.5

7.5

8.5

9.5

10.0%
20.0
20.0
20.0
20.0

8.33%
16.67
16.67
16.67
16.66

7.69%
15.39
15.38
15.39
15.38

7.14%
14.29
14.29
14.28
14.29

6.67%
13.33
13.33
13.33
13.34

6.25%
12.50
12.50
12.50
12.50

5.88%
11.77
11.76
11.77
11.76

5.56%
11.11
11.11
11.11
11.11

5.26%
10.53
10.53
10.53
10.52

10.0

16.67
8.33

15.39
15.38

14.28
14.29
7.14

13.33
13.34
13.33

12.50
12.50
12.50
6.25

11.77
11.76
11.77
11.76

11.11
11.11
11.11
11.11
5.56

10.53
10.52
10.53
10.52
10.53

Table A-8. ( Continued)
Year

Recovery periods in years
10

10.5

11.5

12.5

13.5

16.5

5.0%
10.0
10.0
10.0
10.0

4.76%
9.52
9.52
9.53
9.52

4.55%
9.09
9.09
9.09
9.09

4.35%
8.70
8.70
8.69
8.70

4.17%
8.33
8.33
8.33
8.33

4.0%
8.0
8.0
8.0
8.0

3.85%
7.69
7.69
7.69
7.69

3.70%
7.41
7.41
7.41
7.41

3.57%
7.14
7.14
7.14
7.14

3.33%
6.67
6.67
6.67
6.67

3.13%
6.25
6.25
6.25
6.25

3.03%
6.06
6.06
6.06
6.06

2.94%
5.88
5.88
5.88
5.88

6
7
8
9
10

10.0
10.0
10.0
10.0
10.0

9.53
9.52
9.53
9.52
9.53

9.09
9.09
9.09
9.09
9.09

8.69
8.70
8.69
8.70
8.69

8.33
8.34
8.33
8.34
8.33

8.0
8.0
8.0
8.0
8.0

7.69
7.69
7.69
7.69
7.70

7.41
7.41
7.41
7.41
7.40

7.14
7.14
7.15
7.14
7.15

6.67
6.67
6.66
6.67
6.66

6.25
6.25
6.25
6.25
6.25

6.06
6.06
6.06
6.06
6.06

5.88
5.88
5.88
5.88
5.88

11
12
13
14
15

5.0

9.52

9.09
4.55

8.70
8.69

8.34
8.33
4.17

8.0
8.0
8.0

7.69
7.70
7.69
3.85

7.41
7.40
7.41
7.40

7.14
7.15
7.14
7.15
3.57

6.67
6.66
6.67
6.66
6.67

6.25
6.25
6.25
6.25
6.25

6.06
6.06
6.06
6.06
6.06

5.89
5.88
5.89
5.88
5.89

3.33

6.25
3.12

6.06
6.07

5.88
5.89
2.94

1
2
3
4
5

16
17
18

Page 76

Publication 946 (2017)

Table A-8. ( Continued)
Year

Recovery periods in years
18

26.5

2.78%
5.56
5.56
5.55
5.56

2.63%
5.26
5.26
5.26
5.26

2.5%
5.0
5.0
5.0
5.0

2.273%
4.545
4.545
4.545
4.546

2.083%
4.167
4.167
4.167
4.167

2.0%
4.0
4.0
4.0
4.0

1.887%
3.774
3.774
3.774
3.774

1.786%
3.571
3.571
3.571
3.571

1.667%
3.333
3.333
3.333
3.333

1.429%
2.857
2.857
2.857
2.857

1.25%
2.50
2.50
2.50
2.50

1.111%
2.222
2.222
2.222
2.222

1.0%
2.0
2.0
2.0
2.0

6
7
8
9
10

5.55
5.56
5.55
5.56
5.55

5.26
5.26
5.26
5.27
5.26

5.0
5.0
5.0
5.0
5.0

4.545
4.546
4.545
4.546
4.545

4.167
4.167
4.167
4.167
4.167

4.0
4.0
4.0
4.0
4.0

3.774
3.773
3.774
3.773
3.774

3.571
3.572
3.571
3.572
3.571

3.333
3.333
3.333
3.333
3.333

2.857
2.857
2.857
2.857
2.857

2.50
2.50
2.50
2.50
2.50

2.222
2.222
2.222
2.222
2.222

2.0
2.0
2.0
2.0
2.0

11
12
13
14
15

5.56
5.55
5.56
5.55
5.56

5.27
5.26
5.27
5.26
5.27

5.0
5.0
5.0
5.0
5.0

4.546
4.545
4.546
4.545
4.546

4.166
4.167
4.166
4.167
4.166

4.0
4.0
4.0
4.0
4.0

3.773
3.774
3.773
3.773
3.774

3.572
3.571
3.572
3.571
3.572

3.333
3.333
3.334
3.333
3.334

2.857
2.857
2.857
2.857
2.857

2.50
2.50
2.50
2.50
2.50

2.222
2.222
2.222
2.222
2.222

2.0
2.0
2.0
2.0
2.0

16
17
18
19
20

5.55
5.56
5.55
2.78

5.26
5.27
5.26
5.27
2.63

5.0
5.0
5.0
5.0
5.0

4.545
4.546
4.545
4.546
4.545

4.167
4.166
4.167
4.166
4.167

4.0
4.0
4.0
4.0
4.0

3.773
3.774
3.773
3.774
3.773

3.571
3.572
3.571
3.572
3.571

3.333
3.334
3.333
3.334
3.333

2.857
2.857
2.857
2.857
2.857

2.50
2.50
2.50
2.50
2.50

2.222
2.222
2.222
2.222
2.222

2.0
2.0
2.0
2.0
2.0

2.5

4.546
4.545
2.273

4.166
4.167
4.166
4.167
2.083

4.0
4.0
4.0
4.0
4.0

3.774
3.773
3.774
3.773
3.774

3.572
3.571
3.572
3.571
3.572

3.334
3.333
3.334
3.333
3.334

2.857
2.857
2.857
2.857
2.857

2.50
2.50
2.50
2.50
2.50

2.222
2.222
2.222
2.222
2.222

2.0
2.0
2.0
2.0
2.0

2.0

3.773
3.774

3.571
3.572
3.571
1.786

3.333
3.334
3.333
3.334
3.333

2.857
2.857
2.858
2.857
2.858

2.50
2.50
2.50
2.50
2.50

2.222
2.223
2.222
2.223
2.222

2.0
2.0
2.0
2.0
2.0

1.667

2.857
2.858
2.857
2.858
2.857

2.50
2.50
2.50
2.50
2.50

2.223
2.222
2.223
2.222
2.223

2.0
2.0
2.0
2.0
2.0

1.429

2.50
2.50
2.50
2.50
2.50

2.222
2.223
2.222
2.223
2.222

2.0
2.0
2.0
2.0
2.0

1.25

2.223
2.222
2.223
2.222
2.223

2.0
2.0
2.0
2.0
2.0

1.111

2.0
2.0
1.0

1
2
3
4
5

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47–50
51

Publication 946 (2017)

Page 77

Straight Line Method
Mid-Quarter Convention
Placed in Service in First Quarter

Table A-9.

Year
1
2
3
4
5

Recovery periods in years
2.5
35.0%
40.0
25.0

3.5

29.17%
33.33
33.33
4.17

25.00%
28.57
28.57
17.86

21.88%
25.00
25.00
25.00
3.12

6
7
8
9
10

5
17.5%
20.0
20.0
20.0
20.0
2.5

6.5

7.5

8.5

9.5

14.58%
16.67
16.67
16.67
16.66

13.46%
15.38
15.39
15.38
15.39

12.50%
14.29
14.28
14.29
14.28

11.67%
13.33
13.33
13.33
13.34

10.94%
12.50
12.50
12.50
12.50

10.29%
11.77
11.76
11.77
11.76

9.72%
11.11
11.11
11.11
11.11

9.21%
10.53
10.53
10.53
10.52

16.67
2.08

15.38
9.62

14.29
14.28
1.79

13.33
13.34
8.33

12.50
12.50
12.50
1.56

11.77
11.76
11.77
7.35

11.11
11.11
11.12
11.11
1.39

10.53
10.52
10.53
10.52
6.58

Table A-9. ( Continued)
Year

Recovery periods in years
10

10.5

11.5

12.5

13.5

16.5

8.75%
10.00
10.00
10.00
10.00

8.33%
9.52
9.52
9.53
9.52

7.95%
9.09
9.09
9.09
9.09

7.61%
8.70
8.70
8.69
8.70

7.29%
8.33
8.33
8.33
8.33

7.0%
8.0
8.0
8.0
8.0

6.73%
7.69
7.69
7.69
7.69

6.48%
7.41
7.41
7.41
7.41

6.25%
7.14
7.14
7.14
7.14

5.83%
6.67
6.67
6.67
6.67

5.47%
6.25
6.25
6.25
6.25

5.30%
6.06
6.06
6.06
6.06

5.15%
5.88
5.88
5.88
5.88

6
7
8
9
10

10.00
10.00
10.00
10.00
10.00

9.53
9.52
9.53
9.52
9.53

9.09
9.09
9.09
9.09
9.10

8.69
8.70
8.69
8.70
8.69

8.34
8.33
8.34
8.33
8.34

8.0
8.0
8.0
8.0
8.0

7.69
7.69
7.69
7.70
7.69

7.41
7.41
7.41
7.40
7.41

7.14
7.14
7.15
7.14
7.15

6.67
6.67
6.66
6.67
6.66

6.25
6.25
6.25
6.25
6.25

6.06
6.06
6.06
6.06
6.06

5.88
5.88
5.88
5.88
5.88

11
12
13
14
15

1.25

5.95

9.09
1.14

8.70
5.43

8.33
8.34
1.04

8.0
8.0
5.0

7.70
7.69
7.70
0.96

7.40
7.41
7.40
4.63

7.14
7.15
7.14
7.15
0.89

6.67
6.66
6.67
6.66
6.67

6.25
6.25
6.25
6.25
6.25

6.06
6.06
6.06
6.06
6.06

5.88
5.89
5.88
5.89
5.88

0.83

6.25
0.78

6.07
3.79

5.89
5.88
0.74

1
2
3
4
5

16
17
18

Page 78

Publication 946 (2017)

Table A-9. ( Continued)
Year

Recovery periods in years
18

26.5

4.86%
5.56
5.56
5.56
5.55

4.61%
5.26
5.26
5.26
5.26

4.375%
5.000
5.000
5.000
5.000

3.977%
4.545
4.545
4.546
4.545

3.646%
4.167
4.167
4.167
4.167

3.5%
4.0
4.0
4.0
4.0

3.302%
3.774
3.774
3.774
3.774

3.125%
3.571
3.571
3.571
3.571

2.917%
3.333
3.333
3.333
3.333

2.500%
2.857
2.857
2.857
2.857

2.188%
2.500
2.500
2.500
2.500

1.944%
2.222
2.222
2.222
2.222

1.75%
2.00
2.00
2.00
2.00

6
7
8
9
10

5.56
5.55
5.56
5.55
5.56

5.26
5.26
5.26
5.26
5.27

5.000
5.000
5.000
5.000
5.000

4.546
4.545
4.546
4.545
4.546

4.167
4.167
4.167
4.167
4.166

4.0
4.0
4.0
4.0
4.0

3.774
3.773
3.774
3.773
3.774

3.572
3.571
3.572
3.571
3.572

3.333
3.333
3.333
3.333
3.333

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

11
12
13
14
15

5.55
5.56
5.55
5.56
5.55

5.26
5.27
5.26
5.27
5.26

5.000
5.000
5.000
5.000
5.000

4.545
4.546
4.545
4.546
4.545

4.167
4.166
4.167
4.166
4.167

4.0
4.0
4.0
4.0
4.0

3.773
3.774
3.773
3.774
3.773

3.571
3.572
3.571
3.572
3.571

3.333
3.333
3.334
3.333
3.334

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

16
17
18
19
20

5.56
5.55
5.56
0.69

5.27
5.26
5.27
5.26
0.66

5.000
5.000
5.000
5.000
5.000

4.546
4.545
4.546
4.545
4.546

4.166
4.167
4.166
4.167
4.166

4.0
4.0
4.0
4.0
4.0

3.774
3.773
3.774
3.773
3.774

3.572
3.571
3.572
3.571
3.572

3.333
3.334
3.333
3.334
3.333

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

0.625

4.545
4.546
0.568

4.167
4.166
4.167
4.166
0.521

4.0
4.0
4.0
4.0
4.0

3.773
3.774
3.773
3.774
3.773

3.571
3.572
3.571
3.572
3.571

3.334
3.333
3.334
3.333
3.334

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

0.5

3.774
2.358

3.572
3.571
3.572
0.446

3.333
3.334
3.333
3.334
3.333

2.857
2.858
2.857
2.858
2.857

2.500
2.500
2.500
2.500
2.500

2.223
2.222
2.223
2.222
2.223

2.00
2.00
2.00
2.00
2.00

0.417

2.858
2.857
2.858
2.857
2.858

2.500
2.500
2.500
2.500
2.500

2.222
2.223
2.222
2.223
2.222

2.00
2.00
2.00
2.00
2.00

0.357

2.500
2.500
2.500
2.500
2.500

2.223
2.222
2.223
2.222
2.223

2.00
2.00
2.00
2.00
2.00

0.312

2.222
2.223
2.222
2.223
2.222

2.00
2.00
2.00
2.00
2.00

0.278

2.00
2.00
0.25

1
2
3
4
5

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47–50
51

Publication 946 (2017)

Page 79

Table A-10. Straight Line Method
Mid-Quarter Convention
Placed in Service in Second Quarter
Year
1
2
3
4
5

Recovery periods in years
2.5
25.0%
40.0
35.0

3.5

20.83%
33.33
33.34
12.50

17.86%
28.57
28.57
25.00

15.63%
25.00
25.00
25.00
9.37

6
7
8
9
10

5
12.5%
20.0
20.0
20.0
20.0
7.5

6.5

7.5

8.5

9.5

10.42%
16.67
16.67
16.66
16.67

9.62%
15.38
15.38
15.39
15.38

8.93%
14.29
14.28
14.29
14.28

8.33%
13.33
13.33
13.34
13.33

7.81%
12.50
12.50
12.50
12.50

7.35%
11.77
11.76
11.77
11.76

6.94%
11.11
11.11
11.11
11.11

6.58%
10.53
10.53
10.53
10.52

16.66
6.25

15.39
13.46

14.29
14.28
5.36

13.34
13.33
11.67

12.50
12.50
12.50
4.69

11.77
11.76
11.77
10.29

11.11
11.11
11.12
11.11
4.17

10.53
10.52
10.53
10.52
9.21

Table A-10. ( Continued)
Year

Recovery periods in years
10

10.5

11.5

12.5

13.5

16.5

6.25%
10.00
10.00
10.00
10.00

5.95%
9.52
9.52
9.53
9.52

5.68%
9.09
9.09
9.09
9.09

5.43%
8.70
8.70
8.70
8.69

5.21%
8.33
8.33
8.33
8.33

5.0%
8.0
8.0
8.0
8.0

4.81%
7.69
7.69
7.69
7.69

4.63%
7.41
7.41
7.41
7.41

4.46%
7.14
7.14
7.14
7.14

4.17%
6.67
6.67
6.67
6.67

3.91%
6.25
6.25
6.25
6.25

3.79%
6.06
6.06
6.06
6.06

3.68%
5.88
5.88
5.88
5.88

6
7
8
9
10

10.00
10.00
10.00
10.00
10.00

9.53
9.52
9.53
9.52
9.53

9.09
9.09
9.09
9.09
9.09

8.70
8.69
8.70
8.69
8.70

8.33
8.34
8.33
8.34
8.33

8.0
8.0
8.0
8.0
8.0

7.69
7.69
7.69
7.69
7.70

7.41
7.41
7.41
7.40
7.41

7.14
7.15
7.14
7.15
7.14

6.67
6.66
6.67
6.66
6.67

6.25
6.25
6.25
6.25
6.25

6.06
6.06
6.06
6.06
6.06

5.88
5.88
5.88
5.88
5.88

11
12
13
14
15

3.75

8.33

9.10
3.41

8.69
7.61

8.34
8.33
3.13

8.0
8.0
7.0

7.69
7.70
7.69
2.89

7.40
7.41
7.40
6.48

7.15
7.14
7.15
7.14
2.68

6.66
6.67
6.66
6.67
6.66

6.25
6.25
6.25
6.25
6.25

6.06
6.06
6.06
6.06
6.06

5.88
5.89
5.88
5.89
5.88

2.50

6.25
2.34

6.06
5.31

5.89
5.88
2.21

1
2
3
4
5

16
17
18

Page 80

Publication 946 (2017)

Table A-10. ( Continued)
Year

Recovery periods in years
18

26.5

3.47%
5.56
5.56
5.56
5.55

3.29%
5.26
5.26
5.26
5.26

3.125%
5.000
5.000
5.000
5.000

2.841%
4.545
4.545
4.545
4.546

2.604%
4.167
4.167
4.167
4.167

2.5%
4.0
4.0
4.0
4.0

2.358%
3.774
3.774
3.774
3.774

2.232%
3.571
3.571
3.571
3.571

2.083%
3.333
3.333
3.333
3.333

1.786%
2.857
2.857
2.857
2.857

1.563%
2.500
2.500
2.500
2.500

1.389%
2.222
2.222
2.222
2.222

1.25%
2.00
2.00
2.00
2.00

6
7
8
9
10

5.56
5.55
5.56
5.55
5.56

5.26
5.26
5.26
5.27
5.26

5.000
5.000
5.000
5.000
5.000

4.545
4.546
4.545
4.546
4.545

4.167
4.167
4.167
4.167
4.167

4.0
4.0
4.0
4.0
4.0

3.774
3.774
3.773
3.774
3.773

3.572
3.571
3.572
3.571
3.572

3.333
3.333
3.333
3.333
3.333

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

11
12
13
14
15

5.55
5.56
5.55
5.56
5.55

5.27
5.26
5.27
5.26
5.27

5.000
5.000
5.000
5.000
5.000

4.546
4.545
4.546
4.545
4.546

4.166
4.167
4.166
4.167
4.166

4.0
4.0
4.0
4.0
4.0

3.774
3.773
3.774
3.773
3.774

3.571
3.572
3.571
3.572
3.571

3.333
3.334
3.333
3.334
3.333

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

16
17
18
19
20

5.56
5.55
5.56
2.08

5.26
5.27
5.26
5.27
1.97

5.000
5.000
5.000
5.000
5.000

4.545
4.546
4.545
4.546
4.545

4.167
4.166
4.167
4.166
4.167

4.0
4.0
4.0
4.0
4.0

3.773
3.774
3.773
3.774
3.773

3.572
3.571
3.572
3.571
3.572

3.334
3.333
3.334
3.333
3.334

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

1.875

4.546
4.545
1.705

4.166
4.167
4.166
4.167
1.562

4.0
4.0
4.0
4.0
4.0

3.774
3.773
3.774
3.773
3.774

3.571
3.572
3.571
3.572
3.571

3.333
3.334
3.333
3.334
3.333

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

1.5

3.773
3.302

3.572
3.571
3.572
1.339

3.334
3.333
3.334
3.333
3.334

2.857
2.857
2.858
2.857
2.858

2.500
2.500
2.500
2.500
2.500

2.222
2.223
2.222
2.223
2.222

2.00
2.00
2.00
2.00
2.00

1.250

2.857
2.858
2.857
2.858
2.857

2.500
2.500
2.500
2.500
2.500

2.223
2.222
2.223
2.222
2.223

2.00
2.00
2.00
2.00
2.00

1.072

2.500
2.500
2.500
2.500
2.500

2.222
2.223
2.222
2.223
2.222

2.00
2.00
2.00
2.00
2.00

0.937

2.223
2.222
2.223
2.222
2.223

2.00
2.00
2.00
2.00
2.00

0.833

2.00
2.00
0.75

1
2
3
4
5

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47–50
51

Publication 946 (2017)

Page 81

Table A-11. Straight Line Method
Mid-Quarter Convention
Placed in Service in Third Quarter
Year
1
2
3
4
5

Recovery periods in years
2.5
15.0%
40.0
40.0
5.0

3.5

12.50%
33.33
33.34
20.83

10.71%
28.57
28.57
28.58
3.57

9.38%
25.00
25.00
25.00
15.62

6
7
8
9
10

6.5

7.5

8.5

9.5

7.5%
20.0
20.0
20.0
20.0

6.25%
16.67
16.67
16.66
16.67

5.77%
15.38
15.39
15.38
15.39

5.36%
14.29
14.28
14.29
14.28

5.00%
13.33
13.33
13.33
13.34

4.69%
12.50
12.50
12.50
12.50

4.41%
11.76
11.77
11.76
11.77

4.17%
11.11
11.11
11.11
11.11

3.95%
10.53
10.53
10.52
10.53

12.5

16.66
10.42

15.38
15.39
1.92

14.29
14.28
8.93

13.33
13.34
13.33
1.67

12.50
12.50
12.50
7.81

11.76
11.77
11.76
11.77
1.47

11.11
11.11
11.11
11.11
6.95

10.52
10.53
10.52
10.53
10.52

1.32

Table A-11. ( Continued)
Year

Recovery periods in years
10

10.5

11.5

12.5

13.5

16.5

3.75%
10.00
10.00
10.00
10.00

3.57%
9.52
9.52
9.52
9.53

3.41%
9.09
9.09
9.09
9.09

3.26%
8.70
8.70
8.69
8.70

3.13%
8.33
8.33
8.33
8.33

3.0%
8.0
8.0
8.0
8.0

2.88%
7.69
7.69
7.69
7.69

2.78%
7.41
7.41
7.41
7.41

2.68%
7.14
7.14
7.14
7.14

2.50%
6.67
6.67
6.67
6.67

2.34%
6.25
6.25
6.25
6.25

2.27%
6.06
6.06
6.06
6.06

2.21%
5.88
5.88
5.88
5.88

6
7
8
9
10

10.00
10.00
10.00
10.00
10.00

9.52
9.53
9.52
9.53
9.52

9.09
9.09
9.09
9.09
9.09

8.69
8.70
8.69
8.70
8.69

8.33
8.34
8.33
8.34
8.33

8.0
8.0
8.0
8.0
8.0

7.69
7.69
7.70
7.69
7.70

7.41
7.41
7.40
7.41
7.40

7.14
7.14
7.14
7.15
7.14

6.67
6.66
6.67
6.66
6.67

6.25
6.25
6.25
6.25
6.25

6.06
6.06
6.06
6.06
6.06

5.88
5.88
5.88
5.88
5.88

11
12
13
14
15

6.25

9.53
1.19

9.10
5.68

8.70
8.69
1.09

8.34
8.33
5.21

8.0
8.0
8.0
1.0

7.69
7.70
7.69
4.81

7.41
7.40
7.41
7.40
0.93

7.15
7.14
7.15
7.14
4.47

6.66
6.67
6.66
6.67
6.66

6.25
6.25
6.25
6.25
6.25

6.06
6.06
6.06
6.06
6.06

5.88
5.89
5.88
5.89
5.88

4.17

6.25
3.91

6.07
6.06
0.76

5.89
5.88
3.68

1
2
3
4
5

16
17
18

Page 82

Publication 946 (2017)

Table A-11. ( Continued)
Year

Recovery periods in years
18

26.5

2.08%
5.56
5.56
5.56
5.55

1.97%
5.26
5.26
5.26
5.26

1.875%
5.000
5.000
5.000
5.000

1.705%
4.545
4.545
4.545
4.546

1.563%
4.167
4.167
4.167
4.167

1.5%
4.0
4.0
4.0
4.0

1.415%
3.774
3.774
3.774
3.774

1.339%
3.571
3.571
3.571
3.571

1.250%
3.333
3.333
3.333
3.333

1.071%
2.857
2.857
2.857
2.857

0.938%
2.500
2.500
2.500
2.500

0.833%
2.222
2.222
2.222
2.222

0.75%
2.00
2.00
2.00
2.00

6
7
8
9
10

5.56
5.55
5.56
5.55
5.56

5.26
5.26
5.26
5.27
5.26

5.000
5.000
5.000
5.000
5.000

4.545
4.546
4.545
4.546
4.545

4.167
4.167
4.167
4.166
4.167

4.0
4.0
4.0
4.0
4.0

3.774
3.773
3.774
3.773
3.774

3.572
3.571
3.572
3.571
3.572

3.333
3.333
3.333
3.333
3.333

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

11
12
13
14
15

5.55
5.56
5.55
5.56
5.55

5.27
5.26
5.27
5.26
5.27

5.000
5.000
5.000
5.000
5.000

4.546
4.545
4.546
4.545
4.546

4.166
4.167
4.166
4.167
4.166

4.0
4.0
4.0
4.0
4.0

3.773
3.774
3.773
3.774
3.773

3.571
3.572
3.571
3.572
3.571

3.333
3.334
3.333
3.334
3.333

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

16
17
18
19
20

5.56
5.55
5.56
3.47

5.26
5.27
5.26
5.27
3.29

5.000
5.000
5.000
5.000
5.000

4.545
4.546
4.545
4.546
4.545

4.167
4.166
4.167
4.166
4.167

4.0
4.0
4.0
4.0
4.0

3.774
3.773
3.774
3.773
3.774

3.572
3.571
3.572
3.571
3.572

3.334
3.333
3.334
3.333
3.334

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

3.125

4.546
4.545
2.841

4.166
4.167
4.166
4.167
2.604

4.0
4.0
4.0
4.0
4.0

3.773
3.774
3.773
3.774
3.773

3.571
3.572
3.571
3.572
3.571

3.333
3.334
3.333
3.334
3.333

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

2.5

3.774
3.773
0.472

3.572
3.571
3.572
2.232

3.334
3.333
3.334
3.333
3.334

2.858
2.857
2.858
2.857
2.858

2.500
2.500
2.500
2.500
2.500

2.222
2.223
2.222
2.223
2.222

2.00
2.00
2.00
2.00
2.00

2.083

2.857
2.858
2.857
2.858
2.857

2.500
2.500
2.500
2.500
2.500

2.223
2.222
2.223
2.222
2.223

2.00
2.00
2.00
2.00
2.00

1.786

2.500
2.500
2.500
2.500
2.500

2.222
2.223
2.222
2.223
2.222

2.00
2.00
2.00
2.00
2.00

1.562

2.223
2.222
2.223
2.222
2.223

2.00
2.00
2.00
2.00
2.00

1.389

2.00
2.00
1.25

1
2
3
4
5

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47–50
51

Publication 946 (2017)

Page 83

Table A-12. Straight Line Method
Mid-Quarter Convention
Placed in Service in Fourth Quarter
Year
1
2
3
4
5

Recovery periods in years
2.5
5.0%
40.0
40.0
15.0

3.5

4.17%
33.33
33.33
29.17

3.57%
28.57
28.57
28.57
10.72

3.13%
25.00
25.00
25.00
21.87

6
7
8
9
10

6.5

7.5

8.5

9.5

2.5%
20.0
20.0
20.0
20.0

2.08%
16.67
16.67
16.67
16.66

1.92%
15.39
15.38
15.39
15.38

1.79%
14.29
14.28
14.29
14.28

1.67%
13.33
13.33
13.33
13.33

1.56%
12.50
12.50
12.50
12.50

1.47%
11.76
11.77
11.76
11.77

1.39%
11.11
11.11
11.11
11.11

1.32%
10.53
10.53
10.52
10.53

17.5

16.67
14.58

15.39
15.38
5.77

14.29
14.28
12.50

13.34
13.33
13.34
5.00

12.50
12.50
12.50
10.94

11.76
11.77
11.76
11.77
4.41

11.11
11.11
11.11
11.11
9.73

10.52
10.53
10.52
10.53
10.52

3.95

Table A-12. ( Continued)
Year

Recovery periods in years
10

10.5

11.5

12.5

13.5

16.5

1.25%
10.00
10.00
10.00
10.00

1.19%
9.52
9.52
9.52
9.53

1.14%
9.09
9.09
9.09
9.09

1.09%
8.70
8.69
8.70
8.69

1.04%
8.33
8.33
8.33
8.33

1.0%
8.0
8.0
8.0
8.0

0.96%
7.69
7.69
7.69
7.69

0.93%
7.41
7.41
7.41
7.41

0.89%
7.14
7.14
7.14
7.14

0.83%
6.67
6.67
6.67
6.67

0.78%
6.25
6.25
6.25
6.25

0.76%
6.06
6.06
6.06
6.06

0.74%
5.88
5.88
5.88
5.88

6
7
8
9
10

10.00
10.00
10.00
10.00
10.00

9.52
9.53
9.52
9.53
9.52

9.09
9.09
9.09
9.09
9.09

8.70
8.69
8.70
8.69
8.70

8.34
8.33
8.34
8.33
8.34

8.0
8.0
8.0
8.0
8.0

7.69
7.69
7.69
7.70
7.69

7.41
7.41
7.40
7.41
7.40

7.14
7.14
7.15
7.14
7.15

6.67
6.67
6.66
6.67
6.66

6.25
6.25
6.25
6.25
6.25

6.06
6.06
6.06
6.06
6.06

5.88
5.88
5.88
5.88
5.88

11
12
13
14
15

8.75

9.53
3.57

9.09
7.96

8.69
8.70
3.26

8.33
8.34
7.29

8.0
8.0
8.0
3.0

7.70
7.69
7.70
6.73

7.41
7.40
7.41
7.40
2.78

7.14
7.15
7.14
7.15
6.25

6.67
6.66
6.67
6.66
6.67

6.25
6.25
6.25
6.25
6.25

6.06
6.06
6.06
6.06
6.06

5.88
5.89
5.88
5.89
5.88

5.83

6.25
5.47

6.06
6.07
2.27

5.89
5.88
5.15

1
2
3
4
5

16
17
18

Page 84

Publication 946 (2017)

Table A-12. ( Continued)
Year

Recovery periods in years
18

26.5

0.69%
5.56
5.56
5.56
5.55

0.66%
5.26
5.26
5.26
5.26

0.625%
5.000
5.000
5.000
5.000

0.568%
4.545
4.545
4.546
4.545

0.521%
4.167
4.167
4.167
4.167

0.5%
4.0
4.0
4.0
4.0

0.472%
3.774
3.774
3.774
3.774

0.446%
3.571
3.571
3.571
3.571

0.417%
3.333
3.333
3.333
3.333

0.357%
2.857
2.857
2.857
2.857

0.313%
2.500
2.500
2.500
2.500

0.278%
2.222
2.222
2.222
2.222

0.25%
2.00
2.00
2.00
2.00

6
7
8
9
10

5.56
5.55
5.56
5.55
5.56

5.26
5.26
5.26
5.26
5.27

5.000
5.000
5.000
5.000
5.000

4.546
4.545
4.546
4.545
4.546

4.167
4.167
4.167
4.167
4.166

4.0
4.0
4.0
4.0
4.0

3.773
3.774
3.773
3.774
3.773

3.572
3.571
3.572
3.571
3.572

3.333
3.333
3.333
3.333
3.333

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

11
12
13
14
15

5.55
5.56
5.55
5.56
5.55

5.26
5.27
5.26
5.27
5.26

5.000
5.000
5.000
5.000
5.000

4.545
4.546
4.545
4.546
4.545

4.167
4.166
4.167
4.166
4.167

4.0
4.0
4.0
4.0
4.0

3.774
3.773
3.774
3.773
3.774

3.571
3.572
3.571
3.572
3.571

3.333
3.333
3.334
3.333
3.334

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

16
17
18
19
20

5.56
5.55
5.56
4.86

5.27
5.26
5.27
5.26
4.61

5.000
5.000
5.000
5.000
5.000

4.546
4.545
4.546
4.545
4.546

4.166
4.167
4.166
4.167
4.166

4.0
4.0
4.0
4.0
4.0

3.773
3.774
3.773
3.774
3.773

3.572
3.571
3.572
3.571
3.572

3.333
3.334
3.333
3.334
3.333

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

4.375

4.545
4.546
3.977

4.167
4.166
4.167
4.166
3.646

4.0
4.0
4.0
4.0
4.0

3.774
3.773
3.774
3.773
3.774

3.571
3.572
3.571
3.572
3.571

3.334
3.333
3.334
3.333
3.334

2.857
2.857
2.857
2.857
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.222
2.222
2.222

2.00
2.00
2.00
2.00
2.00

3.5

3.773
3.774
1.415

3.572
3.571
3.572
3.125

3.333
3.334
3.333
3.334
3.333

2.857
2.858
2.857
2.858
2.857

2.500
2.500
2.500
2.500
2.500

2.222
2.222
2.223
2.222
2.223

2.00
2.00
2.00
2.00
2.00

2.917

2.858
2.857
2.858
2.857
2.858

2.500
2.500
2.500
2.500
2.500

2.222
2.223
2.222
2.223
2.222

2.00
2.00
2.00
2.00
2.00

2.500

2.500
2.500
2.500
2.500
2.500

2.223
2.222
2.223
2.222
2.223

2.00
2.00
2.00
2.00
2.00

2.187

2.222
2.223
2.222
2.223
2.222

2.00
2.00
2.00
2.00
2.00

1.945

2.00
2.00
1.75

1
2
3
4
5

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47–50
51

Publication 946 (2017)

Page 85

Table A-13. Straight Line
Mid-Month Convention
Month property placed in service

Year
1
2–40
41

2.396%
2.500
0.104

2.188%
2.500
0.312

1.563%
2.500
0.937

1.771%
2.500
0.729

1.979%
2.500
0.521

1.354%
2.500
1.146

1.146%
2.500
1.354

0.938%
2.500
1.562

0.729%
2.500
1.771

0.521%
2.500
1.979

0.313%
2.500
2.187

12
0.104%
2.500
2.396

Table A-14. 150% Declining Balance Method
Half-Year Convention
Year
1
2
3
4
5

Recovery periods in years
2.5
30.0%
42.0
28.0

3
25.0%
37.5
25.0
12.5

3.5

6.5

7.5

8.5

9.5

21.43%
33.67
22.45
22.45

18.75%
30.47
20.31
20.31
10.16

15.00%
25.50
17.85
16.66
16.66

12.50%
21.88
16.41
14.06
14.06

11.54%
20.41
15.70
13.09
13.09

10.71%
19.13
15.03
12.25
12.25

10.00%
18.00
14.40
11.52
11.52

9.38%
16.99
13.81
11.22
10.80

8.82%
16.09
13.25
10.91
10.19

8.33%
15.28
12.73
10.61
9.65

7.89%
14.54
12.25
10.31
9.17

14.06
7.03

13.09
13.08

12.25
12.25
6.13

11.52
11.52
11.52

10.80
10.80
10.80
5.40

10.19
10.18
10.19
10.18

9.64
9.65
9.64
9.65
4.82

9.17
9.17
9.17
9.17
9.16

16.5

6
7
8
9
10

8.33

Table A-14. ( Continued)
Year

Recovery periods in years
10

10.5

11.5

12.5

13.5

1
2
3
4
5

7.50%
13.88
11.79
10.02
8.74

7.14%
13.27
11.37
9.75
8.35

6.82%
12.71
10.97
9.48
8.18

6.52%
12.19
10.60
9.22
8.02

6.25%
11.72
10.25
8.97
7.85

6.00%
11.28
9.93
8.73
7.69

5.77%
10.87
9.62
8.51
7.53

5.56%
10.49
9.33
8.29
7.37

5.36%
10.14
9.05
8.08
7.22

6
7
8
9
10

8.74
8.74
8.74
8.74
8.74

8.35
8.35
8.35
8.36
8.35

7.98
7.97
7.98
7.97
7.98

7.64
7.64
7.63
7.64
7.63

7.33
7.33
7.33
7.33
7.33

7.05
7.05
7.05
7.04
7.05

6.79
6.79
6.79
6.79
6.79

6.55
6.55
6.55
6.55
6.55

11
12
13
14
15

4.37

8.36

7.97
3.99

7.64
7.63

7.32
7.33
3.66

7.04
7.05
7.04

6.79
6.78
6.79
3.39

6.55
6.55
6.56
6.55

16
17
18

Page 86

5.00%
9.50
8.55
7.70
6.93

4.69%
8.94
8.10
7.34
6.65

4.55%
8.68
7.89
7.17
6.52

4.41%
8.43
7.69
7.01
6.39

6.44
6.32
6.32
6.32
6.32

6.23
5.90
5.90
5.91
5.90

6.03
5.55
5.55
5.55
5.55

5.93
5.39
5.39
5.39
5.39

5.83
5.32
5.23
5.23
5.23

6.32
6.32
6.32
6.31
3.16

5.91
5.90
5.91
5.90
5.91

5.55
5.55
5.54
5.55
5.54

5.39
5.39
5.38
5.39
5.38

5.23
5.23
5.23
5.23
5.23

2.95

5.55
2.77

5.39
5.38

5.23
5.23
2.62

Publication 946 (2017)

Table A-14. ( Continued)
Year

Recovery periods in years
18

26.5

4.17%
7.99
7.32
6.71
6.15

3.95%
7.58
6.98
6.43
5.93

3.750%
7.219
6.677
6.177
5.713

3.409%
6.586
6.137
5.718
5.328

3.125%
6.055
5.676
5.322
4.989

3.000%
5.820
5.471
5.143
4.834

2.830%
5.500
5.189
4.895
4.618

2.679%
5.214
4.934
4.670
4.420

2.500%
4.875
4.631
4.400
4.180

2.143%
4.194
4.014
3.842
3.677

1.875%
3.680
3.542
3.409
3.281

1.667%
3.278
3.169
3.063
2.961

1.500%
2.955
2.866
2.780
2.697

6
7
8
9
10

5.64
5.17
4.94
4.94
4.94

5.46
5.03
4.69
4.69
4.69

5.285
4.888
4.522
4.462
4.461

4.965
4.627
4.311
4.063
4.063

4.677
4.385
4.111
3.854
3.729

4.544
4.271
4.015
3.774
3.584

4.357
4.110
3.877
3.658
3.451

4.183
3.959
3.747
3.546
3.356

3.971
3.772
3.584
3.404
3.234

3.520
3.369
3.225
3.086
2.954

3.158
3.040
2.926
2.816
2.710

2.862
2.767
2.674
2.585
2.499

2.616
2.538
2.461
2.388
2.316

11
12
13
14
15

4.94
4.95
4.94
4.95
4.94

4.69
4.69
4.69
4.69
4.69

4.462
4.461
4.462
4.461
4.462

4.063
4.063
4.064
4.063
4.064

3.729
3.729
3.730
3.729
3.730

3.583
3.584
3.583
3.584
3.583

3.383
3.383
3.383
3.383
3.383

3.205
3.205
3.205
3.205
3.205

3.072
2.994
2.994
2.994
2.994

2.828
2.706
2.590
2.571
2.571

2.609
2.511
2.417
2.326
2.253

2.416
2.335
2.257
2.182
2.110

2.246
2.179
2.114
2.050
1.989

16
17
18
19
20

4.95
4.94
4.95
2.47

4.69
4.69
4.70
4.69
2.35

4.461
4.462
4.461
4.462
4.461

4.063
4.064
4.063
4.064
4.063

3.729
3.730
3.729
3.730
3.729

3.584
3.583
3.584
3.583
3.584

3.383
3.383
3.383
3.383
3.384

3.205
3.205
3.205
3.205
3.205

2.994
2.994
2.994
2.994
2.993

2.571
2.571
2.571
2.571
2.571

2.253
2.253
2.253
2.253
2.253

2.039
2.005
2.005
2.005
2.005

1.929
1.871
1.815
1.806
1.806

2.231

4.064
4.063
2.032

3.730
3.729
3.730
3.729
1.865

3.583
3.584
3.583
3.584
3.583

3.383
3.384
3.383
3.384
3.383

3.205
3.205
3.205
3.205
3.205

2.994
2.993
2.994
2.993
2.994

2.571
2.571
2.571
2.571
2.571

2.253
2.253
2.253
2.253
2.253

2.005
2.005
2.005
2.004
2.005

1.806
1.806
1.806
1.806
1.806

1.792

3.384
3.383

3.205
3.205
3.205
1.602

2.993
2.994
2.993
2.994
2.993

2.571
2.571
2.572
2.571
2.572

2.253
2.253
2.253
2.253
2.253

2.004
2.005
2.004
2.005
2.004

1.806
1.806
1.806
1.806
1.806

1.497

2.571
2.572
2.571
2.572
2.571

2.253
2.253
2.252
2.253
2.252

2.005
2.004
2.005
2.004
2.005

1.806
1.806
1.806
1.806
1.806

1.286

2.253
2.252
2.253
2.252
2.253

2.004
2.005
2.004
2.005
2.004

1.806
1.806
1.806
1.806
1.806

1.126

2.005
2.004
2.005
2.004
2.005

1.806
1.805
1.806
1.805
1.806

1.002

1.805
1.806
1.805
1.806
1.805

1
2
3
4
5

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51

Publication 946 (2017)

0.903

Page 87

Table A-15. 150% Declining Balance Method
Mid-Quarter Convention
Property Placed in Service in First Quarter
Year
1
2
3
4
5

Recovery periods in years
2.5

3.5

6.5

7.5

8.5

9.5

52.50%
29.23
18.27

43.75%
28.13
25.00
3.12

37.50%
26.79
21.98
13.73

32.81%
25.20
19.76
19.76
2.47

26.25%
22.13
16.52
16.52
16.52

21.88%
19.53
14.65
14.06
14.06

20.19%
18.42
14.17
13.03
13.02

18.75%
17.41
13.68
12.16
12.16

17.50%
16.50
13.20
11.42
11.42

16.41%
15.67
12.74
10.77
10.77

15.44%
14.92
12.29
10.20
10.19

14.58%
14.24
11.86
9.89
9.64

13.82%
13.61
11.46
9.65
9.15

14.06
1.76

13.03
8.14

12.16
12.16
1.52

11.41
11.42
7.13

10.76
10.77
10.76
1.35

10.20
10.19
10.20
6.37

9.65
9.64
9.65
9.64
1.21

9.15
9.15
9.15
9.14
5.72

16.5

6
7
8
9
10

2.06

Table A-15. ( Continued)
Year

Recovery periods in years
10

10.5

11.5

12.5

13.5

1
2
3
4
5

13.13%
13.03
11.08
9.41
8.71

12.50%
12.50
10.71
9.18
8.32

11.93%
12.01
10.37
8.96
7.96

11.41%
11.56
10.05
8.74
7.64

10.94%
11.13
9.74
8.52
7.46

10.50%
10.74
9.45
8.32
7.32

10.10%
10.37
9.18
8.12
7.18

9.72%
10.03
8.92
7.93
7.04

6
7
8
9
10

8.71
8.71
8.71
8.71
8.71

8.32
8.32
8.32
8.32
8.31

7.96
7.96
7.96
7.96
7.97

7.64
7.64
7.64
7.64
7.63

7.33
7.33
7.33
7.33
7.32

7.04
7.04
7.04
7.04
7.04

6.78
6.77
6.78
6.77
6.78

11
12
13
14
15

1.09

5.20

7.96
1.00

7.64
4.77

7.33
7.32
0.92

7.04
7.03
4.40

6.77
6.78
6.77
0.85

16
17
18

Page 88

9.38%
9.71
8.67
7.74
6.91

8.75%
9.13
8.21
7.39
6.65

8.20%
8.61
7.80
7.07
6.41

7.95%
8.37
7.61
6.92
6.29

7.72%
8.14
7.42
6.77
6.17

6.53
6.54
6.53
6.54
6.53

6.31
6.31
6.31
6.31
6.31

5.99
5.90
5.91
5.90
5.91

5.80
5.54
5.54
5.54
5.54

5.71
5.38
5.38
5.38
5.38

5.63
5.23
5.23
5.23
5.23

6.54
6.53
6.54
4.08

6.31
6.31
6.32
6.31
0.79

5.90
5.91
5.90
5.91
5.90

5.54
5.54
5.54
5.55
5.54

5.38
5.38
5.38
5.38
5.38

5.23
5.22
5.23
5.22
5.23

0.74

5.55
0.69

5.37
3.36

5.22
5.23
0.65

Publication 946 (2017)

Table A-15. ( Continued)
Year
1
2
3
4
5

Recovery periods in years
18

26.5

7.29%
7.73
7.08
6.49
5.95

6.91%
7.35
6.77
6.23
5.74

6.563%
7.008
6.482
5.996
5.546

5.966%
6.411
5.974
5.567
5.187

5.469%
5.908
5.539
5.193
4.868

5.250%
5.685
5.344
5.023
4.722

4.953%
5.380
5.075
4.788
4.517

4.688%
5.106
4.832
4.574
4.329

4.375%
4.781
4.542
4.315
4.099

3.750%
4.125
3.948
3.779
3.617

3.281%
3.627
3.491
3.360
3.234

2.917%
3.236
3.128
3.024
2.923

2.625%
2.921
2.834
2.749
2.666

6
7
8
9
10

5.45
5.00
4.94
4.95
4.94

5.29
4.87
4.69
4.69
4.69

5.130
4.746
4.459
4.459
4.459

4.834
4.504
4.197
4.061
4.061

4.564
4.279
4.011
3.761
3.729

4.439
4.172
3.922
3.687
3.582

4.262
4.020
3.793
3.578
3.383

4.097
3.877
3.669
3.473
3.287

3.894
3.700
3.515
3.339
3.172

3.462
3.314
3.172
3.036
2.906

3.113
2.996
2.884
2.776
2.671

2.826
2.732
2.640
2.552
2.467

2.586
2.509
2.433
2.360
2.290

11
12
13
14
15

4.95
4.94
4.95
4.94
4.95

4.69
4.69
4.69
4.69
4.68

4.459
4.460
4.459
4.460
4.459

4.061
4.061
4.061
4.061
4.061

3.729
3.730
3.729
3.730
3.729

3.582
3.582
3.582
3.582
3.582

3.384
3.383
3.384
3.383
3.384

3.204
3.204
3.204
3.204
3.204

3.013
2.994
2.994
2.994
2.994

2.781
2.662
2.571
2.571
2.571

2.571
2.475
2.382
2.293
2.252

2.385
2.306
2.229
2.154
2.083

2.221
2.154
2.090
2.027
1.966

16
17
18
19
20

4.94
4.95
4.94
0.62

4.69
4.68
4.69
4.68
0.59

4.460
4.459
4.460
4.459
4.460

4.061
4.061
4.061
4.061
4.060

3.730
3.729
3.730
3.729
3.730

3.582
3.582
3.582
3.581
3.582

3.383
3.384
3.383
3.384
3.383

3.204
3.204
3.204
3.204
3.204

2.994
2.994
2.994
2.994
2.994

2.571
2.571
2.571
2.571
2.571

2.252
2.253
2.252
2.253
2.252

2.013
2.005
2.005
2.005
2.005

1.907
1.850
1.806
1.806
1.806

0.557

4.061
4.060
0.508

3.729
3.730
3.729
3.730
0.466

3.581
3.582
3.581
3.582
3.581

3.384
3.383
3.384
3.383
3.384

3.203
3.204
3.203
3.204
3.203

2.993
2.994
2.993
2.994
2.993

2.571
2.571
2.571
2.570
2.571

2.253
2.252
2.253
2.252
2.253

2.005
2.005
2.005
2.005
2.004

1.806
1.806
1.806
1.806
1.806

0.448

3.383
2.115

3.204
3.203
3.204
0.400

2.994
2.993
2.994
2.993
2.994

2.570
2.571
2.570
2.571
2.570

2.252
2.253
2.252
2.253
2.252

2.005
2.004
2.005
2.004
2.005

1.806
1.806
1.805
1.806
1.805

0.374

2.571
2.570
2.571
2.570
2.571

2.253
2.252
2.253
2.252
2.253

2.004
2.005
2.004
2.005
2.004

1.806
1.805
1.806
1.805
1.806

0.321

2.252
2.253
2.252
2.253
2.252

2.005
2.004
2.005
2.004
2.005

1.805
1.806
1.805
1.806
1.805

0.282

2.004
2.005
2.004
2.005
2.004

1.806
1.805
1.806
1.805
1.806

0.251

1.805
1.806
1.805
1.806
1.805

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51

Publication 946 (2017)

0.226

Page 89

Table A-16. 150% Declining Balance Method
Mid-Quarter Convention
Property Placed in Service in Second Quarter
Year
1
2
3
4
5

Recovery periods in years
2.5

3.5

6.5

7.5

8.5

9.5

37.50%
37.50
25.00

31.25%
34.38
25.00
9.37

26.79%
31.38
22.31
19.52

23.44%
28.71
20.15
20.15
7.55

18.75%
24.38
17.06
16.76
16.76

15.63%
21.09
15.82
14.06
14.06

14.42%
19.75
15.19
13.07
13.07

13.39%
18.56
14.58
12.22
12.22

12.50%
17.50
14.00
11.49
11.49

11.72%
16.55
13.45
10.93
10.82

11.03%
15.70
12.93
10.65
10.19

10.42%
14.93
12.44
10.37
9.64

9.87%
14.23
11.98
10.09
9.16

14.07
5.27

13.07
11.43

12.22
12.23
4.58

11.49
11.48
10.05

10.82
10.83
10.82
4.06

10.19
10.19
10.20
8.92

9.65
9.64
9.65
9.64
3.62

9.16
9.16
9.17
9.16
8.02

16.5

6
7
8
9
10

6.29

Table A-16. ( Continued)
Year

Recovery periods in years
10

10.5

11.5

12.5

13.5

1
2
3
4
5

9.38%
13.59
11.55
9.82
8.73

8.93%
13.01
11.15
9.56
8.34

8.52%
12.47
10.77
9.31
8.04

8.15%
11.98
10.42
9.06
7.88

7.81%
11.52
10.08
8.82
7.72

7.50%
11.10
9.77
8.60
7.56

7.21%
10.71
9.47
8.38
7.41

6.94%
10.34
9.19
8.17
7.26

6.70%
10.00
8.92
7.97
7.12

6
7
8
9
10

8.73
8.73
8.73
8.73
8.73

8.34
8.34
8.34
8.34
8.35

7.98
7.98
7.98
7.99
7.98

7.64
7.64
7.64
7.64
7.63

7.33
7.33
7.33
7.33
7.33

7.04
7.04
7.05
7.04
7.05

6.78
6.79
6.78
6.79
6.78

6.55
6.55
6.55
6.54
6.55

11
12
13
14
15

3.28

7.30

7.99
2.99

7.64
6.68

7.33
7.32
2.75

7.04
7.05
6.16

6.79
6.78
6.79
2.54

6.54
6.55
6.54
5.73

16
17
18

Page 90

6.25%
9.38
8.44
7.59
6.83

5.86%
8.83
8.00
7.25
6.57

5.68%
8.57
7.80
7.09
6.44

5.51%
8.34
7.60
6.93
6.32

6.35
6.32
6.32
6.32
6.32

6.15
5.91
5.90
5.91
5.90

5.95
5.55
5.55
5.55
5.54

5.86
5.38
5.39
5.38
5.39

5.76
5.25
5.23
5.23
5.23

6.32
6.32
6.32
6.33
2.37

5.91
5.90
5.91
5.90
5.91

5.55
5.54
5.55
5.54
5.55

5.38
5.39
5.38
5.39
5.38

5.23
5.23
5.24
5.23
5.24

2.21

5.54
2.08

5.39
4.71

5.23
5.24
1.96

Publication 946 (2017)

Table A-16. ( Continued)
Year

Recovery periods in years
18

26.5

5.21%
7.90
7.24
6.64
6.08

4.93%
7.51
6.91
6.37
5.86

4.688%
7.148
6.612
6.116
5.658

4.261%
6.528
6.083
5.668
5.281

3.906%
6.006
5.631
5.279
4.949

3.750%
5.775
5.429
5.103
4.797

3.538%
5.460
5.151
4.859
4.584

3.348%
5.178
4.900
4.638
4.389

3.125%
4.844
4.602
4.371
4.153

2.679%
4.171
3.992
3.821
3.657

2.344%
3.662
3.525
3.393
3.265

2.083%
3.264
3.155
3.050
2.948

1.875%
2.944
2.855
2.770
2.687

6
7
8
9
10

5.58
5.11
4.94
4.94
4.95

5.40
4.98
4.69
4.69
4.69

5.233
4.841
4.478
4.463
4.463

4.921
4.586
4.273
4.063
4.063

4.639
4.349
4.078
3.823
3.729

4.509
4.238
3.984
3.745
3.583

4.325
4.080
3.849
3.631
3.426

4.154
3.932
3.721
3.522
3.333

3.945
3.748
3.561
3.383
3.213

3.501
3.351
3.207
3.069
2.938

3.143
3.025
2.912
2.802
2.697

2.850
2.755
2.663
2.574
2.489

2.606
2.528
2.452
2.378
2.307

11
12
13
14
15

4.94
4.95
4.94
4.95
4.94

4.69
4.69
4.69
4.69
4.69

4.463
4.463
4.463
4.463
4.462

4.062
4.063
4.062
4.063
4.062

3.729
3.729
3.730
3.729
3.730

3.583
3.583
3.583
3.583
3.583

3.384
3.383
3.384
3.383
3.384

3.205
3.205
3.205
3.205
3.205

3.053
2.994
2.994
2.994
2.994

2.812
2.692
2.576
2.571
2.571

2.596
2.499
2.405
2.315
2.253

2.406
2.325
2.248
2.173
2.101

2.238
2.171
2.106
2.042
1.981

16
17
18
19
20

4.95
4.94
4.95
1.85

4.69
4.69
4.69
4.69
1.76

4.463
4.462
4.463
4.462
4.463

4.063
4.062
4.063
4.062
4.063

3.729
3.730
3.729
3.730
3.729

3.583
3.583
3.583
3.583
3.583

3.383
3.384
3.383
3.384
3.383

3.204
3.205
3.204
3.205
3.204

2.994
2.994
2.993
2.994
2.993

2.571
2.571
2.571
2.571
2.571

2.253
2.253
2.253
2.253
2.253

2.031
2.005
2.005
2.005
2.005

1.922
1.864
1.808
1.806
1.806

1.673

4.062
4.063
1.523

3.730
3.729
3.730
3.729
1.399

3.583
3.583
3.583
3.582
3.583

3.384
3.383
3.384
3.383
3.384

3.205
3.204
3.205
3.204
3.205

2.994
2.993
2.994
2.993
2.994

2.572
2.571
2.572
2.571
2.572

2.253
2.253
2.253
2.253
2.253

2.005
2.005
2.004
2.005
2.004

1.806
1.806
1.806
1.806
1.806

1.343

3.383
2.961

3.204
3.205
3.204
1.202

2.993
2.994
2.993
2.994
2.993

2.571
2.572
2.571
2.572
2.571

2.253
2.253
2.253
2.253
2.252

2.005
2.004
2.005
2.004
2.005

1.806
1.806
1.806
1.806
1.806

1.123

2.572
2.571
2.572
2.571
2.572

2.253
2.252
2.253
2.252
2.253

2.004
2.005
2.004
2.005
2.004

1.806
1.806
1.806
1.806
1.806

0.964

2.252
2.253
2.252
2.253
2.252

2.005
2.004
2.005
2.004
2.005

1.806
1.806
1.806
1.806
1.806

0.845

2.004
2.005
2.004
2.005
2.004

1.806
1.806
1.806
1.806
1.805

0.752

1.806
1.805
1.806
1.805
1.806

1
2
3
4
5

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51

Publication 946 (2017)

0.677

Page 91

Table A-17. 150% Declining Balance Method
Mid-Quarter Convention
Property Placed in Service in Third Quarter
Year
1
2
3
4
5

Recovery periods in years
2.5

3.5

6.5

7.5

8.5

9.5

22.50%
46.50
27.56
3.44

18.75%
40.63
25.00
15.62

16.07%
35.97
22.57
22.57
2.82

14.06%
32.23
20.46
20.46
12.79

11.25%
26.63
18.64
16.56
16.57

9.38%
22.66
16.99
14.06
14.06

8.65%
21.08
16.22
13.10
13.10

8.04%
19.71
15.48
12.27
12.28

7.50%
18.50
14.80
11.84
11.48

7.03%
17.43
14.16
11.51
10.78

6.62%
16.48
13.57
11.18
10.18

6.25%
15.63
13.02
10.85
9.64

5.92%
14.85
12.51
10.53
9.17

10.35

14.06
8.79

13.11
13.10
1.64

12.27
12.28
7.67

11.48
11.48
11.48
1.44

10.78
10.78
10.79
6.74

10.17
10.18
10.17
10.18
1.27

9.65
9.64
9.65
9.64
6.03

9.17
9.18
9.17
9.18
9.17

6
7
8
9
10
11

1.15

Table A-17. ( Continued)
Year

Recovery periods in years
10

10.5

11.5

12.5

13.5

1
2
3
4
5

5.63%
14.16
12.03
10.23
8.75

5.36%
13.52
11.59
9.93
8.51

5.11%
12.94
11.18
9.65
8.33

4.89%
12.41
10.79
9.38
8.16

4.69%
11.91
10.43
9.12
7.98

4.50%
11.46
10.08
8.88
7.81

4.33%
11.04
9.77
8.64
7.64

4.17%
10.65
9.46
8.41
7.48

4.02%
10.28
9.18
8.20
7.32

6
7
8
9
10

8.75
8.75
8.74
8.75
8.74

8.34
8.34
8.34
8.34
8.34

7.97
7.97
7.97
7.97
7.97

7.63
7.63
7.63
7.63
7.63

7.33
7.33
7.33
7.33
7.32

7.05
7.05
7.05
7.05
7.05

6.79
6.79
6.79
6.79
6.79

6.65
6.55
6.54
6.55
6.54

11
12
13
14
15

5.47

8.35
1.04

7.96
4.98

7.63
7.64
0.95

7.33
7.32
4.58

7.05
7.04
7.05
0.88

6.79
6.80
6.79
4.25

6.55
6.54
6.55
6.54
0.82

16
17
18

Page 92

16.5

3.75%
9.63
8.66
7.80
7.02

3.52%
9.05
8.20
7.43
6.73

3.41%
8.78
7.98
7.26
6.60

3.31%
8.53
7.78
7.09
6.47

6.54
6.31
6.31
6.32
6.31

6.31
5.90
5.90
5.91
5.90

6.10
5.55
5.55
5.55
5.55

6.00
5.45
5.38
5.39
5.38

5.90
5.38
5.23
5.23
5.23

6.32
6.31
6.32
6.31
3.95

5.91
5.90
5.91
5.90
5.91

5.55
5.55
5.55
5.55
5.55

5.39
5.38
5.39
5.38
5.39

5.23
5.23
5.22
5.23
5.22

3.69

5.55
3.47

5.38
5.39
0.67

5.23
5.22
3.27

Publication 946 (2017)

Table A-17. ( Continued)
Year
1
2
3
4
5

Recovery periods in years
18

26.5

3.13%
8.07
7.40
6.78
6.22

2.96%
7.66
7.06
6.50
5.99

2.813%
7.289
6.742
6.237
5.769

2.557%
6.644
6.191
5.769
5.375

2.344%
6.104
5.722
5.364
5.029

2.250%
5.865
5.513
5.182
4.871

2.123%
5.540
5.227
4.931
4.652

2.009%
5.250
4.968
4.702
4.450

1.875%
4.906
4.661
4.428
4.207

1.607%
4.217
4.036
3.863
3.698

1.406%
3.697
3.559
3.425
3.297

1.250%
3.292
3.182
3.076
2.973

1.125%
2.966
2.877
2.791
2.707

6
7
8
9
10

5.70
5.23
4.94
4.94
4.94

5.51
5.08
4.69
4.69
4.69

5.336
4.936
4.566
4.460
4.460

5.009
4.667
4.349
4.064
4.064

4.715
4.420
4.144
3.885
3.729

4.579
4.304
4.046
3.803
3.584

4.388
4.140
3.906
3.685
3.476

4.212
3.986
3.773
3.571
3.379

3.996
3.796
3.607
3.426
3.255

3.539
3.387
3.242
3.103
2.970

3.173
3.054
2.940
2.829
2.723

2.874
2.778
2.686
2.596
2.510

2.626
2.547
2.471
2.397
2.325

11
12
13
14
15

4.94
4.95
4.94
4.95
4.94

4.69
4.69
4.69
4.69
4.70

4.460
4.460
4.461
4.460
4.461

4.064
4.064
4.064
4.064
4.064

3.730
3.729
3.730
3.729
3.730

3.584
3.584
3.584
3.584
3.584

3.383
3.383
3.383
3.383
3.383

3.205
3.205
3.205
3.205
3.205

3.092
2.994
2.994
2.994
2.994

2.843
2.721
2.605
2.571
2.571

2.621
2.523
2.428
2.337
2.253

2.426
2.345
2.267
2.192
2.118

2.255
2.187
2.122
2.058
1.996

16
17
18
19
20

4.95
4.94
4.95
3.09

4.69
4.70
4.69
4.70
2.93

4.460
4.461
4.460
4.461
4.460

4.064
4.064
4.065
4.064
4.065

3.729
3.730
3.729
3.730
3.729

3.584
3.584
3.584
3.584
3.584

3.383
3.383
3.383
3.383
3.383

3.206
3.205
3.206
3.205
3.206

2.994
2.994
2.994
2.994
2.993

2.571
2.571
2.571
2.571
2.571

2.253
2.253
2.253
2.253
2.253

2.048
2.005
2.005
2.005
2.005

1.937
1.878
1.822
1.806
1.806

2.788

4.064
4.065
2.540

3.730
3.729
3.730
3.729
2.331

3.585
3.584
3.585
3.584
3.585

3.383
3.383
3.383
3.383
3.382

3.205
3.206
3.205
3.206
3.205

2.994
2.993
2.994
2.993
2.994

2.571
2.571
2.571
2.571
2.571

2.253
2.253
2.253
2.253
2.253

2.005
2.005
2.005
2.005
2.004

1.806
1.806
1.806
1.806
1.806

2.240

3.383
3.382
0.423

3.206
3.205
3.206
2.003

2.993
2.994
2.993
2.994
2.993

2.571
2.571
2.571
2.571
2.571

2.253
2.253
2.253
2.253
2.253

2.005
2.004
2.005
2.004
2.005

1.806
1.806
1.806
1.806
1.806

1.871

2.571
2.571
2.571
2.571
2.571

2.253
2.253
2.253
2.253
2.253

2.004
2.005
2.004
2.005
2.004

1.806
1.806
1.806
1.806
1.806

1.607

2.253
2.253
2.254
2.253
2.254

2.005
2.004
2.005
2.004
2.005

1.806
1.805
1.806
1.805
1.806

1.408

2.004
2.005
2.004
2.005
2.004

1.805
1.806
1.805
1.806
1.805

1.253

1.806
1.805
1.806
1.805
1.806

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51

Publication 946 (2017)

1.128

Page 93

Table A-18. 150% Declining Balance Method
Mid-Quarter Convention
Property Placed in Service in Fourth Quarter
Year
1
2
3
4
5

Recovery periods in years
2.5

3.5

6.5

7.5

8.5

9.5

7.50%
55.50
26.91
10.09

6.25%
46.88
25.00
21.87

5.36%
40.56
23.18
22.47
8.43

4.69%
35.74
22.34
19.86
17.37

3.75%
28.88
20.21
16.40
16.41

3.13%
24.22
18.16
14.06
14.06

2.88%
22.41
17.24
13.26
13.10

2.68%
20.85
16.39
12.87
12.18

2.50%
19.50
15.60
12.48
11.41

2.34%
18.31
14.88
12.09
10.74

2.21%
17.26
14.21
11.70
10.16

2.08%
16.32
13.60
11.33
9.65

1.97%
15.48
13.03
10.98
9.24

14.35

14.06
12.31

13.10
13.10
4.91

12.18
12.19
10.66

11.41
11.41
11.41
4.28

10.75
10.74
10.75
9.40

10.16
10.16
10.16
10.17
3.81

9.65
9.64
9.65
9.64
8.44

9.17
9.17
9.17
9.17
9.18

6
7
8
9
10
11

3.44

Table A-18. ( Continued)
Year

Recovery periods in years
10

10.5

11.5

12.5

13.5

1
2
3
4
5

1.88%
14.72
12.51
10.63
9.04

1.79%
14.03
12.03
10.31
8.83

1.70%
13.40
11.58
10.00
8.63

1.63%
12.83
11.16
9.70
8.44

1.56%
12.31
10.77
9.42
8.24

1.50%
11.82
10.40
9.15
8.06

1.44%
11.37
10.06
8.90
7.87

1.39%
10.96
9.74
8.66
7.69

1.34%
10.57
9.44
8.43
7.52

6
7
8
9
10

8.72
8.72
8.72
8.72
8.71

8.32
8.31
8.32
8.31
8.32

7.95
7.96
7.95
7.96
7.95

7.63
7.63
7.62
7.63
7.62

7.33
7.33
7.33
7.33
7.32

7.09
7.05
7.05
7.05
7.05

6.96
6.78
6.78
6.78
6.78

6.84
6.53
6.53
6.53
6.54

11
12
13
14
15

7.63

8.31
3.12

7.96
6.96

7.63
7.62
2.86

7.33
7.32
6.41

7.05
7.04
7.05
2.64

6.78
6.78
6.78
5.94

6.53
6.54
6.53
6.54
2.45

16
17
18

Page 94

16.5

1.25%
9.88
8.89
8.00
7.20

1.17%
9.27
8.40
7.61
6.90

1.14%
8.99
8.17
7.43
6.75

1.10%
8.73
7.96
7.25
6.61

6.72
6.31
6.31
6.31
6.31

6.48
5.90
5.90
5.90
5.91

6.25
5.66
5.54
5.54
5.54

6.14
5.58
5.38
5.38
5.38

6.03
5.50
5.22
5.23
5.22

6.31
6.30
6.31
6.30
5.52

5.90
5.91
5.90
5.91
5.90

5.54
5.55
5.54
5.55
5.54

5.38
5.38
5.38
5.38
5.37

5.23
5.22
5.23
5.22
5.23

5.17

5.55
4.85

5.38
5.37
2.02

5.22
5.23
4.57

Publication 946 (2017)

Table A-18. ( Continued)
Year
1
2
3
4
5

Recovery periods in years
18

26.5

1.04%
8.25
7.56
6.93
6.35

0.99%
7.82
7.20
6.63
6.11

0.938%
7.430
6.872
6.357
5.880

0.852%
6.760
6.299
5.870
5.469

0.781%
6.201
5.814
5.450
5.110

0.750%
5.955
5.598
5.262
4.946

0.708%
5.620
5.302
5.002
4.719

0.670%
5.321
5.036
4.766
4.511

0.625%
4.969
4.720
4.484
4.260

0.536%
4.263
4.080
3.905
3.738

0.469%
3.732
3.592
3.458
3.328

0.417%
3.319
3.209
3.102
2.998

0.375%
2.989
2.899
2.812
2.728

6
7
8
9
10

5.82
5.34
4.94
4.94
4.94

5.63
5.18
4.77
4.69
4.69

5.439
5.031
4.654
4.458
4.458

5.097
4.749
4.425
4.124
4.062

4.790
4.491
4.210
3.947
3.730

4.649
4.370
4.108
3.862
3.630

4.452
4.200
3.962
3.738
3.526

4.269
4.041
3.824
3.619
3.426

4.047
3.845
3.653
3.470
3.296

3.578
3.424
3.278
3.137
3.003

3.203
3.083
2.968
2.856
2.749

2.898
2.802
2.708
2.618
2.531

2.646
2.567
2.490
2.415
2.342

11
12
13
14
15

4.95
4.94
4.95
4.94
4.95

4.69
4.69
4.69
4.69
4.69

4.458
4.458
4.458
4.458
4.458

4.062
4.062
4.062
4.061
4.062

3.729
3.730
3.729
3.730
3.729

3.582
3.582
3.582
3.582
3.582

3.383
3.382
3.383
3.382
3.383

3.242
3.204
3.204
3.204
3.204

3.132
2.994
2.994
2.994
2.994

2.874
2.751
2.633
2.570
2.571

2.646
2.547
2.451
2.359
2.271

2.447
2.365
2.286
2.210
2.136

2.272
2.204
2.138
2.074
2.011

16
17
18
19
20

4.94
4.95
4.94
4.33

4.69
4.68
4.69
4.68
4.10

4.458
4.458
4.459
4.458
4.459

4.061
4.062
4.061
4.062
4.061

3.730
3.729
3.730
3.729
3.730

3.583
3.582
3.583
3.582
3.583

3.382
3.383
3.382
3.383
3.382

3.204
3.204
3.204
3.204
3.204

2.994
2.994
2.994
2.993
2.994

2.570
2.571
2.570
2.571
2.570

2.253
2.253
2.253
2.253
2.253

2.065
2.005
2.005
2.005
2.005

1.951
1.893
1.836
1.806
1.806

3.901

4.062
4.061
3.554

3.729
3.730
3.729
3.730
3.263

3.582
3.583
3.582
3.583
3.582

3.383
3.382
3.383
3.382
3.383

3.204
3.204
3.205
3.204
3.205

2.993
2.994
2.993
2.994
2.993

2.571
2.570
2.571
2.570
2.571

2.253
2.253
2.253
2.253
2.253

2.005
2.005
2.005
2.005
2.005

1.806
1.806
1.806
1.805
1.806

3.135

3.382
3.383
1.268

3.204
3.205
3.204
2.804

2.994
2.993
2.994
2.993
2.994

2.570
2.571
2.570
2.571
2.570

2.252
2.253
2.252
2.253
2.252

2.005
2.004
2.005
2.004
2.005

1.805
1.806
1.805
1.806
1.805

2.619

2.571
2.570
2.571
2.570
2.571

2.253
2.252
2.253
2.252
2.253

2.004
2.005
2.004
2.005
2.004

1.806
1.805
1.806
1.805
1.806

2.249

2.252
2.253
2.252
2.253
2.252

2.005
2.004
2.005
2.004
2.005

1.805
1.806
1.805
1.806
1.805

1.971

2.004
2.005
2.004
2.005
2.004

1.806
1.805
1.806
1.805
1.806

1.754

1.805
1.806
1.805
1.806
1.805

21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51

Publication 946 (2017)

1.580

Page 95

RATES TO FIGURE INCLUSION AMOUNTS
FOR
LEASED LISTED PROPERTY

Amount A Percentages

Table A-19.
Recovery Period
of Property
Under ADS
Less than 7 years
7 to 10 years
More than 10 years

First Tax Year During Lease in Which
Business Use is 50% or Less
1

12 & Later

2.1%
3.9%
6.6%

–7.2%
–3.8%
–1.6%

–19.8%
–17.7%
–16.9%

–20.1%
–25.1%
–25.6%

–12.4%
–27.8%
–29.9%

–12.4%
–27.2%
–31.1%

–12.4%
–27.1%
–32.8%

–12.4%
–27.6%
–35.1%

–12.4%
–23.7%
–33.3%

–12.4%
–14.7%
–26.7%

–12.4%
–14.7%
–19.7%

–12.4%
–14.7%
–12.2%

Amount B Percentages

Table A-20.
Recovery Period
of Property
Under ADS
Less than 7 years
7 to 10 years
More than 10 years

Page 96

First Tax Year During Lease in Which
Business Use is 50% or Less
1

12 & Later

0.0%
0.0%
0.0%

10.0%
9.3%
10.1%

22.0%
23.8%
26.3%

21.2%
31.3%
35.4%

12.7%
33.8%
39.6%

12.7%
32.7%
40.2%

12.7%
31.6%
40.8%

12.7%
30.5%
41.4%

12.7%
25.0%
37.5%

12.7%
15.0%
29.2%

12.7%
15.0%
20.8%

12.7%
15.0%
12.5%

Publication 946 (2017)

Qualified Indian Reservation Property Tables
Table A-21.

2-Year Qualified Indian Reservation Property
Half-Year and Mid-Quarter Conventions

Year

Half-Year
Convention

Q-1

Q-2

Q-3

Q-4

50.00%

87.50%

62.50%

37.50%

12.50%

50.00

12.50

37.50

62.50

87.50

Q-4

Table A-22.

4-Year Qualified Indian Reservation Property
Half-Year and Mid-Quarter Conventions

Year

Half-Year
Convention

Q-1

Q-2

Q-3

25.00%

43.75%

31.25%

18.75%

37.50

28.13

34.37

40.63

46.87

18.75

14.06

17.19

20.31

23.44

12.50

6.25

1.56

4.69

7.81

10.94

Q-4

Table A-23.

6.25%

6-Year Qualified Indian Reservation Property
Half-Year and Mid-Quarter Conventions

Year

Half-Year
Convention

Q-1

Q-2

Q-3

16.67%

29.17%

20.83%

12.50%

27.78

23.61

26.39

29.17

31.94

18.52

15.74

17.59

19.44

21.30

12.35

10.49

11.73

12.96

14.20

9.87

9.88

9.87

9.88

4.94

1.23

3.70

6.17

8.64

Publication 946 (2017)

4.17%

Page 97

Table A-24.

Year
1

Page 98

Qualified Nonresidential Real Indian Reservation Property
Mid-Month Convention
Straight Line—22 Years
Month property placed in service

4.356%

3.977%

3.598%

3.220%

2.841%

2.462%

2.083%

1.705%

1.326%

0.947%

0.568%

0.189%

2-3

4.545

4.546

4.545

4.546

4.545

4.546

4.545

4.546

4.545

4.546

4.545

6
7

4.546
4.545

4.545
4.546

4.546
4.545

4.545
4.546

4.546
4.545

8
9

4.546
4.545

4.545
4.546

4.546
4.545

4.545
4.546

4.546
4.545

10
11

4.546
4.545

4.545
4.546

4.546
4.545

4.545
4.546

4.546
4.545

4.546

4.545

4.546

4.545

4.546

4.545

4.546

4.545

4.546

4.545

14
15

4.546
4.545

4.545
4.546

4.546
4.545

4.545
4.546

4.546
4.545

16
17

4.546
4.545

4.545
4.546

4.546
4.545

4.545
4.546

4.546
4.545

18
19

4.546
4.545

4.545
4.546

4.546
4.545

4.545
4.546

4.546
4.545

20
21
22

4.546
4.545

4.546

4.545
4.546
4.545

4.546
4.545

4.546

4.545
4.546
4.545

4.546
4.545

4.546

4.545
4.546
4.545

4.546
4.545

4.546

4.545
4.546
4.545

4.546

0.189%

0.568%

0.947%

1.326%

1.705%

2.083%

2.462%

2.841%

3.220%

3.598%

3.977%

4.356%

Publication 946 (2017)

Appendix B — Table of Class Lives and Recovery Periods
The Table of Class Lives and Recovery Periods has two sections. The first
section, Specific Depreciable Assets
Used In All Business Activities, Except
As Noted, generally lists assets used in
all business activities. It is shown as
Table B-1. The second section, Depreciable Assets Used In The Following
Activities, describes assets used only
in certain activities. It is shown as Table B-2.

How To Use the Tables
You will need to look at both Table B-1
and B-2 to find the correct recovery period. Generally, if the property is listed
in Table B-1 you use the recovery period shown in that table. However, if
the property is specifically listed in Table B-2 under the type of activity in
which it is used, you use the recovery
period listed under the activity in that
table. Use the tables in the order
shown below to determine the recovery period of your depreciable property.
Table B-1. Check Table B-1 for a description of the property. If it is described in Table B-1, also check Table B-2
to find the activity in which the property
is being used. If the activity is described in Table B-2, read the text (if any)
under the title to determine if the property is specifically included in that asset class. If it is, use the recovery period shown in the appropriate column
of Table B-2 following the description
of the activity. If the activity is not described in Table B-2 or if the activity is
described but the property either is not
specifically included in or is specifically
excluded from that asset class, then
use the recovery period shown in the
appropriate column following the description of the property in Table B-1.
Tax-exempt use property subject to
a lease. The recovery period for ADS
cannot be less than 125% of the lease
term for any property leased under a
leasing arrangement to a tax-exempt
organization, governmental unit, or foreign person or entity (other than a partnership).

Publication 946 (2017)

Table B-2. If the property is not listed
in Table B-1, check Table B-2 to find
the activity in which the property is being used and use the recovery period
shown in the appropriate column following the description.

finds his activity, paper manufacturing,
under asset class 26.1, Manufacture of
Pulp and Paper. He uses the recovery
period under this asset class because
it specifically includes land improvements. The land improvements have a
13-year class life and a 7-year recovery period for GDS. If he elects to use
ADS, the recovery period is 13 years. If
Richard only looked at Table B-1, he
would select asset class 00.3, Land
Improvements, and incorrectly use a
recovery period of 15 years for GDS or
20 years for ADS.

Property not in either table. If the
activity or the property is not included
in either table, check the end of Table
B-2 to find Certain Property for Which
Recovery Periods Assigned. This property generally has a recovery period of
7 years for GDS or 12 years for ADS.
See Which Property Class Applies Under GDS and Which Recovery Period
Example 2. Sam Plower produces
Applies in chapter 4 for the class lives rubber products. During the year, he
or the recovery periods for GDS and made substantial improvements to the
ADS for the following.
land on which his rubber plant is located.
He checks Table B-1 and finds
Residential rental property and
land
improvements under asset class
nonresidential real property (also
00.3.
He then checks Table B-2 and
see Appendix A, Chart 2).
finds his activity, producing rubber
Qualified rent-to-own property.
products, under asset class 30.1, Manufacture of Rubber Products. Reading
A motorsport entertainment complex placed in service before Janu- the headings and descriptions under
asset class 30.1, Sam finds that it does
ary 1, 2018.
not include land improvements. ThereAny retail motor fuels outlet.
fore, Sam uses the recovery period under asset class 00.3. The land imAny qualified leasehold improvement property placed in service be- provements have a 20-year class life
and a 15-year recovery period for
fore January 1, 2018.
GDS. If he elects to use ADS, the reAny qualified restaurant property
covery period is 20 years.
placed in service before January 1,
2018.
Example 3. Pam Martin owns a retail
clothing store. During the year, she
Initial clearing and grading land impurchased
a desk and a cash register
provements for gas utility property
for
use
in
her business. She checks
and electric utility transmission and
Table
B-1
and
finds office furniture undistribution plants.
der asset class 00.11. Cash registers
Any water utility property.
are not listed in any of the asset
Certain electric transmission prop- classes in Table B-1. She then checks
erty used in the transmission at 69 Table B-2 and finds her activity, retail
store, under asset class 57.0, Distribuor more kilovolts of electricity for
tive Trades and Services, which insale and placed in service after
cludes assets used in wholesale
April 11, 2005.
and retail trade. This asset class
Natural gas gathering and distribu- does not specifically list office furniture
tion lines placed in service after
or a cash register. She looks back at
April 11, 2005.
Table B-1 and uses asset class 00.11
Example 1. Richard Green is a pa- for the desk. The desk has a 10-year
per manufacturer. During the year, he class life and a 7-year recovery period
made substantial improvements to the for GDS. If she elects to use ADS, the
land on which his paper plant is loca- recovery period is 10 years. For the
ted. He checks Table B-1 and finds cash register, she uses asset class
land improvements under asset class 57.0 because cash registers are not
00.3. He then checks Table B-2 and listed in Table B-1 but it is an asset
Page 99

used in her retail business. The cash elects to use the ADS method, the reregister has a 9-year class life and a covery period is 9 years.
5-year recovery period for GDS. If she

Page 100

Publication 946 (2017)

Table B-1. Table of Class Lives and Recovery Periods
Asset
class
Description of assets included
SPECIFIC DEPRECIABLE ASSETS USED IN ALL BUSINESS ACTIVITIES, EXCEPT AS NOTED:
00.11
Office Furniture, Fixtures, and Equipment:
Includes furniture and fixtures that are not a structural component of a building. Includes such
assets as desks, files, safes, and communications equipment. Does not include
communications equipment that is included in other classes.
00.12
Information Systems:
Includes computers and their peripheral equipment used in administering normal business
transactions and the maintenance of business records, their retrieval and analysis.
Information systems are defined as:
1) Computers: A computer is a programmable electronically activated device capable of
accepting information, applying prescribed processes to the information, and supplying the
results of these processes with or without human intervention. It usually consists of a central
processing unit containing extensive storage, logic, arithmetic, and control capabilities.
Excluded from this category are adding machines, electronic desk calculators, etc., and other
equipment described in class 00.13.
2) Peripheral equipment consists of the auxiliary machines which are designed to be placed
under control of the central processing unit. Nonlimiting examples are: Card readers, card
punches, magnetic tape feeds, high speed printers, optical character readers, tape cassettes,
mass storage units, paper tape equipment, keypunches, data entry devices, teleprinters,
terminals, tape drives, disc drives, disc files, disc packs, visual image projector tubes, card
sorters, plotters, and collators. Peripheral equipment may be used on-line or off-line.
Does not incude equipment that is an integral part of other capital equipment that is included
in other classes of economic activity, i.e., computers used primarily for process or production
control, switching, channeling, and automating distributive trades and services such as point
of sale (POS) computer systems. Also, does not include equipment of a kind used primarily for
amusement or entertainment of the user.
00.13
Data Handling Equipment; except Computers:
Includes only typewriters, calculators, adding and accounting machines, copiers, and
duplicating equipment.
00.21
Airplanes (airframes and engines), except those used in commercial or contract carrying
of passengers or freight, and all helicopters (airframes and engines)
Automobiles, Taxis
00.22
00.23
Buses
00.241 Light General Purpose Trucks:
Includes trucks for use over the road (actual weight less than 13,000 pounds)
00.242 Heavy General Purpose Trucks:
Includes heavy general purpose trucks, concrete ready mix-trucks, and ore trucks, for use
over the road (actual unloaded weight 13,000 pounds or more)
Railroad Cars and Locomotives, except those owned by railroad transportation
00.25
companies
Tractor Units for Use Over-The-Road
00.26
Trailers and Trailer-Mounted Containers
00.27
Vessels, Barges, Tugs, and Similar Water Transportation Equipment, except those used
00.28
in marine construction
Land Improvements:
00.3
Includes improvements directly to or added to land, whether such improvements are section
1245 property or section 1250 property, provided such improvements are depreciable.
Examples of such assets might include sidewalks, roads, canals, waterways, drainage
facilities, sewers (not including municipal sewers in Class 51), wharves and docks, bridges,
fences, landscaping shrubbery, or radio and television transmitting towers. Does not include
land improvements that are explicitly included in any other class, and buildings and structural
components as defined in section 1.48-1(e) of the regulations. Excludes public utility initial
clearing and grading land improvements as specified in Rev. Rul. 72-403, 1972-2 C.B. 102.
Industrial
Steam and Electric Generation and/or Distribution Systems:
00.4
Includes assets, whether such assets are section 1245 property or 1250 property, providing
such assets are depreciable, used in the production and/or distribution of electricity with rated
total capacity in excess of 500 Kilowatts and/or assets used in the production and/or
distribution of steam with rated total capacity in excess of 12,500 pounds per hour for use by
the taxpayer in its industrial manufacturing process or plant activity and not ordinarily available
for sale to others. Does not include buildings and structural components as defined in section
1.48-1(e) of the regulations. Assets used to generate and/or distribute electricity or steam of
the type described above, but of lesser rated capacity, are not included, but are included in
the appropriate manufacturing equipment classes elsewhere specified. Also includes electric
generating and steam distribution assets, which may utilize steam produced by a waste
reduction and resource recovery plant, used by the taxpayer in its industrial manufacturing
process or plant activity. Steam and chemical recovery boiler systems used for the recovery
and regeneration of chemicals used in manufacturing, with rated capacity in excess of that
described above, with specifically related distribution and return systems are not included but
are included in appropriate manufacturing equipment classes elsewhere specified. An example
of an excluded steam and chemical recovery boiler system is that used in the pulp and paper
manufacturing equipment classes elsewhere specified. An example of an excluded steam and
chemical recovery boiler system is that used in the pulp and paper manufacturing industry.

Publication 946 (2017)

Recovery Periods
(in years)
Class Life
GDS
(in years) (MACRS)
ADS

3
9

5
5

5
9

4
6
18

3
5
10

4
6
18

Page 101

Table B-2. Table of Class Lives and Recovery Periods
Asset
class
Description of assets included
DEPRECIABLE ASSETS USED IN THE FOLLOWING ACTIVITIES:
Agriculture:
01.1
Includes machinery and equipment, grain bins, and fences but no other land improvements,
that are used in the production of crops or plants, vines, and trees; livestock; the operation of
farm dairies, nurseries, greenhouses, sod farms, mushroom cellars, cranberry bogs, apiaries,
and fur farms; the performance of agriculture, animal husbandry, and horticultural services.
01.11
Cotton Ginning Assets
Cattle, Breeding or Dairy
01.21
01.221 Any breeding or work horse that is 12 years old or less at the time it is placed in service**
01.222 Any breeding or work horse that is more than 12 years old at the time it is placed in service**
01.223 Any race horse that is more than 2 years old at the time it is placed in service**
01.224 Any horse that is more than 12 years old at the time it is placed in service and that is
neither a race horse nor a horse described in class 01.222**
01.225 Any horse not described in classes 01.221, 01.222, 01.223, or 01.224
Hogs, Breeding
01.23
Sheep and Goats, Breeding
01.24
Farm buildings except structures included in Class 01.4
01.3
Single purpose agricultural or horticultural structures (within the meaning of section
01.4
168(i)(13) of the Code)
Mining:
10.0
Includes assets used in the mining and quarrying of metallic and nonmetallic minerals (including sand,
gravel, stone, and clay) and the milling, beneficiation and other primary preparation of such materials.
Offshore Drilling:
13.0
Includes assets used in offshore drilling for oil and gas such as floating, self-propelled and
other drilling vessels, barges, platforms, and drilling equipment and support vessels such as
tenders, barges, towboats and crewboats. Excludes oil and gas production assets.
13.1
Drilling of Oil and Gas Wells:
Includes assets used in the drilling of onshore oil and gas wells and the provision of
geophysical and other exploration services; and the provision of such oil and gas field services
as chemical treatment, plugging and abandoning of wells and cementing or perforating well
casings. Does not include assets used in the performance of any of these activities and
services by integrated petroleum and natural gas producers for their own account.
13.2
Exploration for and Production of Petroleum and Natural Gas Deposits:
Includes assets used by petroleum and natural gas producers for drilling of wells and production of
petroleum and natural gas, including gathering pipelines and related storage facilities. Also includes
petroleum and natural gas offshore transportation facilities used by producers and others consisting
of platforms (other than drilling platforms classified in Class 13.0), compression or pumping
equipment, and gathering and transmission lines to the first onshore transshipment facility. The assets
used in the first onshore transshipment facility are also included and consist of separation equipment
(used for separation of natural gas, liquids, and in Class 49.23), and liquid holding or storage facilities
(other than those classified in Class 49.25). Does not include support vessels.
13.3
Petroleum Refining:
Includes assets used for the distillation, fractionation, and catalytic cracking of crude petroleum
into gasoline and its other components.
15.0
Construction:
Includes assets used in construction by general building, special trade, heavy and marine
construction contractors, operative and investment builders, real estate subdividers and
developers, and others except railroads.
20.1
Manufacture of Grain and Grain Mill Products:
Includes assets used in the production of flours, cereals, livestock feeds, and other grain and
grain mill products.
20.2
Manufacture of Sugar and Sugar Products:
Includes assets used in the production of raw sugar, syrup, or finished sugar from sugar cane
or sugar beets.
20.3
Manufacture of Vegetable Oils and Vegetable Oil Products:
Includes assets used in the production of oil from vegetable materials and the manufacture of
related vegetable oil products.
20.4
Manufacture of Other Food and Kindred Products:
Includes assets used in the production of foods and beverages not included in classes 20.1,
20.2 and 20.3.
20.5
Manufacture of Food and Beverages—Special Handling Devices:
Includes assets defined as specialized materials handling devices such as returnable pallets,
palletized containers, and fish processing equipment including boxes, baskets, carts, and flaking trays
used in activities as defined in classes 20.1, 20.2, 20.3 and 20.4. Does not include general purpose
small tools such as wrenches and drills, both hand and power-driven, and other general purpose
equipment such as conveyors, transfer equipment, and materials handling devices.

Recovery Periods
(in years)
Class Life
GDS
(in years) (MACRS)
ADS

12
7
10
10
*
*

7
5
7
3
3
3

12
7
10
10
12
12

*
3
5
25
15

7
3
5
20
10***

12
3
5
25
15

7.5

* Property described in asset classes 01.223, 01.224, and 01.225 are assigned recovery periods but have no class lives.
** A horse is more than 2 (or 12) years old after the day that is 24 (or 144) months after its actual birthdate.
*** 7 if property was placed in service before 1989.

Page 102

Publication 946 (2017)

Table B-2. Table of Class Lives and Recovery Periods
Asset
class
21.0
22.1

22.2

22.3

22.4

22.5

23.0

24.1
24.2
24.3

24.4
26.1

Description of assets included
Manufacture of Tobacco and Tobacco Products:
Includes assets used in the production of cigarettes, cigars, smoking and chewing tobacco,
snuff, and other tobacco products.
Manufacture of Knitted Goods:
Includes assets used in the production of knitted and netted fabrics and lace. Assets used in
yarn preparation, bleaching, dyeing, printing, and other similar finishing processes, texturing,
and packaging, are elsewhere classified.
Manufacture of Yarn, Thread, and Woven Fabric:
Includes assets used in the production of spun yarns including the preparing, blending, spinning, and
twisting of fibers into yarns and threads, the preparation of yarns such as twisting, warping, and winding, the
production of covered elastic yarn and thread, cordage, woven fabric, tire fabric, braided fabric, twisted jute
for packaging, mattresses, pads, sheets, and industrial belts, and the processing of textile mill waste to
recover fibers, flocks, and shoddies. Assets used to manufacture carpets, man-made fibers, and nonwovens,
and assets used in texturing, bleaching, dyeing, printing, and other similar finishing processes, are elsewhere
classified.
Manufacture of Carpets and Dyeing, Finishing, and Packaging of Textile Products and
Manufacture of Medical and Dental Supplies:
Includes assets used in the production of carpets, rugs, mats, woven carpet backing, chenille, and other
tufted products, and assets used in the joining together of backing with carpet yarn or fabric. Includes assets
used in washing, scouring, bleaching, dyeing, printing, drying, and similar finishing processes applied to
textile fabrics, yarns, threads, and other textile goods. Includes assets used in the production and packaging
of textile products, other than apparel, by creasing, forming, trimming, cutting, and sewing, such as the
preparation of carpet and fabric samples, or similar joining together processes (other than the production of
scrim reinforced paper products and laminated paper products) such as the sewing and folding of hosiery
and panty hose, and the creasing, folding, trimming, and cutting of fabrics to produce nonwoven products,
such as disposable diapers and sanitary products. Also includes assets used in the production of medical
and dental supplies other than drugs and medicines. Assets used in the manufacture of nonwoven carpet
backing, and hard surface floor covering such as tile, rubber, and cork, are elsewhere classified.
Manufacture of Textile Yarns:
Includes assets used in the processing of yarns to impart bulk and/or stretch properties to the
yarn. The principal machines involved are falsetwist, draw, beam-to-beam, and stuffer box
texturing equipment and related highspeed twisters and winders. Assets, as described above,
which are used to further process man-made fibers are elsewhere classified when located in
the same plant in an integrated operation with man-made fiber producing assets. Assets used
to manufacture man-made fibers and assets used in bleaching, dyeing, printing, and other
similar finishing processes, are elsewhere classified.
Manufacture of Nonwoven Fabrics:
Includes assets used in the production of nonwoven fabrics, felt goods including felt hats, padding, batting,
wadding, oakum, and fillings, from new materials and from textile mill waste. Nonwoven fabrics are defined
as fabrics (other than reinforced and laminated composites consisting of nonwovens and other products)
manufactured by bonding natural and/or synthetic fibers and/or filaments by means of induced mechanical
interlocking, fluid entanglement, chemical adhesion, thermal or solvent reaction, or by combination thereof
other than natural hydration bonding as ocurs with natural cellulose fibers. Such means include resin
bonding, web bonding, and melt bonding. Specifically includes assets used to make flocked and needle
punched products other than carpets and rugs. Assets, as described above, which are used to manufacture
nonwovens are elsewhere classified when located in the same plant in an integrated operation with
man-made fiber producing assets. Assets used to manufacture man-made fibers and assets used in
bleaching, dyeing, printing, and other similar finishing processes, are elsewhere classified.
Manufacture of Apparel and Other Finished Products:
Includes assets used in the production of clothing and fabricated textile products by the cutting
and sewing of woven fabrics, other textile products, and furs; but does not include assets used
in the manufacture of apparel from rubber and leather.
Cutting of Timber:
Includes logging machinery and equipment and roadbuilding equipment used by logging and
sawmill operators and pulp manufacturers for their own account.
Sawing of Dimensional Stock from Logs:
Includes machinery and equipment installed in permanent or well established sawmills.
Sawing of Dimensional Stock from Logs:
Includes machinery and equipment in sawmills characterized by temporary foundations and a
lack, or minimum amount, of lumberhandling, drying, and residue disposal equipment and
facilities.
Manufacture of Wood Products, and Furniture:
Includes assets used in the production of plywood, hardboard, flooring, veneers, furniture, and
other wood products, including the treatment of poles and timber.
Manufacture of Pulp and Paper:
Includes assets for pulp materials handling and storage, pulp mill processing, bleach processing, paper and
paperboard manufacturing, and on-line finishing. Includes pollution control assets and all land improvements
associated with the factory site or production process such as effluent ponds and canals, provided such
improvements are depreciable but does not include buildings and structural components as defined in
section 1.48-1(e)(1) of the regulations. Includes steam and chemical recovery boiler systems, with any rated
capacity, used for the recovery and regeneration of chemicals used in manufacturing. Does not include
assets used either in pulpwood logging, or in the manufacture of hardboard.

Publication 946 (2017)

Recovery Periods
(in years)
Class Life
GDS
(in years) (MACRS)
ADS
15

7.5

Page 103

Table B-2. Table of Class Lives and Recovery Periods
Asset
class
26.2

27.0

28.0

30.1

30.11

30.2

30.21

31.0

32.1

32.11

32.2
32.3

Page 104

Description of assets included
Manufacture of Converted Paper, Paperboard, and Pulp Products:
Includes assets used for modification, or remanufacture of paper and pulp into converted
products, such as paper coated off the paper machine, paper bags, paper boxes, cartons and
envelopes. Does not include assets used for manufacture of nonwovens that are elsewhere
classified.
Printing, Publishing, and Allied Industries:
Includes assets used in printing by one or more processes, such as letter-press, lithography,
gravure, or screen; the performance of services for the printing trade, such as bookbinding,
typesetting, engraving, photo-engraving, and electrotyping; and the publication of newspapers,
books, and periodicals.
Manufacture of Chemicals and Allied Products:
Includes assets used to manufacture basic organic and inorganic chemicals; chemical products
to be used in further manufacture, such as synthetic fibers and plastics materials; and finished
chemical products. Includes assets used to further process man-made fibers, to manufacture
plastic film, and to manufacture nonwoven fabrics, when such assets are located in the same
plant in an integrated operation with chemical products producing assets. Also includes assets
used to manufacture photographic supplies, such as film, photographic paper, sensitized
photographic paper, and developing chemicals. Includes all land improvements associated with
plant site or production processes, such as effluent ponds and canals, provided such land
improvements are depreciable but does not include buildings and structural components as
defined in section 1.48-1(e) of the regulations. Does not include assets used in the manufacture
of finished rubber and plastic products or in the production of natural gas products, butane,
propane, and by-products of natural gas production plants.
Manufacture of Rubber Products:
Includes assets used for the production of products from natural, synthetic, or reclaimed
rubber, gutta percha, balata, or gutta siak, such as tires, tubes, rubber footwear, mechanical
rubber goods, heels and soles, flooring, and rubber sundries; and in the recapping, retreading,
and rebuilding of tires.
Manufacture of Rubber Products—Special Tools and Devices:
Includes assets defined as special tools, such as jigs, dies, mandrels, molds, lasts, patterns,
specialty containers, pallets, shells; and tire molds, and accessory parts such as rings and
insert plates used in activities as defined in class 30.1. Does not include tire building drums
and accessory parts and general purpose small tools such as wrenches and drills, both power
and hand-driven, and other general purpose equipment such as conveyors and transfer
equipment.
Manufacture of Finished Plastic Products:
Includes assets used in the manufacture of plastics products and the molding of primary
plastics for the trade. Does not include assets used in the manufacture of basic plastics
materials nor the manufacture of phonograph records.
Manufacture of Finished Plastic Products—Special Tools:
Includes assets defined as special tools, such as jigs, dies, fixtures, molds, patterns, gauges,
and specialty transfer and shipping devices, used in activities as defined in class 30.2. Special
tools are specifically designed for the production or processing of particular parts and have no
significant utilitarian value and cannot be adapted to further or different use after changes or
improvements are made in the model design of the particular part produced by the special
tools. Does not include general purpose small tools such as wrenches and drills, both hand and
power-driven, and other general purpose equipment such as conveyors, transfer equipment,
and materials handling devices.
Manufacture of Leather and Leather Products:
Includes assets used in the tanning, currying, and finishing of hides and skins; the processing
of fur pelts; and the manufacture of finished leather products, such as footwear, belting,
apparel, and luggage.
Manufacture of Glass Products:
Includes assets used in the production of flat, blown, or pressed products of glass, such as
float and window glass, glass containers, glassware and fiberglass. Does not include assets
used in the manufacture of lenses.
Manufacture of Glass Products—Special Tools:
Includes assets defined as special tools such as molds, patterns, pallets, and specialty transfer
and shipping devices such as steel racks to transport automotive glass, used in activities as
defined in class 32.1. Special tools are specifically designed for the production or processing of
particular parts and have no significant utilitarian value and cannot be adapted to further or
different use after changes or improvements are made in the model design of the particular
part produced by the special tools. Does not include general purpose small tools such as
wrenches and drills, both hand and power-driven, and other general purpose equipment such
as conveyors, transfer equipment, and materials handling devices.
Manufacture of Cement:
Includes assets used in the production of cement, but does not include assets used in the
manufacture of concrete and concrete products nor in any mining or extraction process.
Manufacture of Other Stone and Clay Products:
Includes assets used in the manufacture of products from materials in the form of clay and
stone, such as brick, tile, and pipe; pottery and related products, such as vitreous-china,
plumbing fixtures, earthenware and ceramic insulating materials; and also includes assets used
in manufacture of concrete and concrete products. Does not include assets used in any mining
or extraction processes.

Recovery Periods
(in years)
Class Life
GDS
(in years) (MACRS)
ADS
10

9.5

3.5

2.5

Publication 946 (2017)

Table B-2. Table of Class Lives and Recovery Periods
Asset
class
33.2

33.21

33.3

33.4

34.0

34.01

35.0

36.0

36.1

Description of assets included
Manufacture of Primary Nonferrous Metals:
Includes assets used in the smelting, refining, and electrolysis of nonferrous metals from ore,
pig, or scrap, the rolling, drawing, and alloying of nonferrous metals; the manufacture of
castings, forgings, and other basic products of nonferrous metals; and the manufacture of
nails, spikes, structural shapes, tubing, wire, and cable.
Manufacture of Primary Nonferrous Metals—Special Tools:
Includes assets defined as special tools such as dies, jigs, molds, patterns, fixtures, gauges,
and drawings concerning such special tools used in the activities as defined in class 33.2,
Manufacture of Primary Nonferrous Metals. Special tools are specifically designed for the
production or processing of particular products or parts and have no significant utilitarian value
and cannot be adapted to further or different use after changes or improvements are made in
the model design of the particular part produced by the special tools. Does not include general
purpose small tools such as wrenches and drills, both hand and power-driven, and other
general purpose equipment such as conveyors, transfer equipment, and materials handling
devices. Rolls, mandrels and refractories are not included in class 33.21 but are included in
class 33.2.
Manufacture of Foundry Products:
Includes assets used in the casting of iron and steel, including related operations such as
molding and coremaking. Also includes assets used in the finishing of castings and
patternmaking when performed at the foundry, all special tools and related land improvements.
Manufacture of Primary Steel Mill Products:
Includes assets used in the smelting, reduction, and refining of iron and steel from ore, pig, or
scrap; the rolling, drawing and alloying of steel; the manufacture of nails, spikes, structural
shapes, tubing, wire, and cable. Includes assets used by steel service centers, ferrous metal
forges, and assets used in coke production, regardless of ownership. Also includes related land
improvements and all special tools used in the above activities.
Manufacture of Fabricated Metal Products:
Includes assets used in the production of metal cans, tinware, fabricated structural metal
products, metal stampings, and other ferrous and nonferrous metal and wire products not
elsewhere classified. Does not include assets used to manufacture non-electric heating
apparatus.
Manufacture of Fabricated Metal Products—Special Tools:
Includes assets defined as special tools such as dies, jigs, molds, patterns, fixtures, gauges,
and returnable containers and drawings concerning such special tools used in the activities as
defined in class 34.0. Special tools are specifically designed for the production or processing of
particular machine components, products, or parts, and have no significant utilitarian value and
cannot be adapted to further or different use after changes or improvements are made in the
model design of the particular part produced by the special tools. Does not include general
small tools such as wrenches and drills, both hand and power-driven, and other general
purpose equipment such as conveyors, transfer equipment, and materials handling devices.
Manufacture of Electrical and Non-Electrical Machinery and Other Mechanical Products:
Includes assets used to manufacture or rebuild finished machinery and equipment and
replacement parts thereof such as machine tools, general industrial and special industry
machinery, electrical power generation, transmission, and distribution systems, space heating,
cooling, and refrigeration systems, commercial and home appliances, farm and garden
machinery, construction machinery, mining and oil field machinery, internal combustion engines
(except those elsewhere classified), turbines (except those that power airborne vehicles),
batteries, lamps and lighting fixtures, carbon and graphite products, and electromechanical and
mechanical products including business machines, instruments, watches and clocks, vending
and amusement machines, photographic equipment, medical and dental equipment and
appliances, and ophthalmic goods. Includes assets used by manufacturers or rebuilders of
such finished machinery and equipment in activities elsewhere classified such as the
manufacture of castings, forgings, rubber and plastic products, electronic subassemblies or
other manufacturing activities if the interim products are used by the same manufacturer
primarily in the manufacture, assembly, or rebuilding of such finished machinery and
equipment. Does not include assets used in mining, assets used in the manufacture of primary
ferrous and nonferrous metals, assets included in class 00.11 through 00.4 and assets
elsewhere classified.
Manufacture of Electronic Components, Products, and Systems:
Includes assets used in the manufacture of electronic communication, computation,
instrumentation and control system, including airborne applications; also includes assets used
in the manufacture of electronic products such as frequency and amplitude modulated
transmitters and receivers, electronic switching stations, television cameras, video recorders,
record players and tape recorders, computers and computer peripheral machines, and
electronic instruments, watches, and clocks; also includes assets used in the manufacture of
components, provided their primary use is products and systems defined above such as
electron tubes, capacitors, coils, resistors, printed circuit substrates, switches, harness cables,
lasers, fiber optic devices, and magnetic media devices. Specifically excludes assets used to
manufacture electronic products and components, photocopiers, typewriters, postage meters
and other electromechanical and mechanical business machines and instruments that are
elsewhere classified. Does not include semiconductor manufacturing equipment included in
class 36.1.
Any Semiconductor Manufacturing Equipment

Publication 946 (2017)

Recovery Periods
(in years)
Class Life
GDS
(in years) (MACRS)
ADS
14

6.5

Page 105

Table B-2. Table of Class Lives and Recovery Periods
Asset
class
37.11

37.12

37.2

37.31

37.32

37.33

37.41

37.42

39.0

Page 106

Description of assets included
Manufacture of Motor Vehicles:
Includes assets used in the manufacture and assembly of finished automobiles, trucks, trailers,
motor homes, and buses. Does not include assets used in mining, printing and publishing,
production of primary metals, electricity, or steam, or the manufacture of glass, industrial
chemicals, batteries, or rubber products, which are classified elsewhere. Includes assets used
in manufacturing activities elsewhere classified other than those excluded above, where such
activities are incidental to and an integral part of the manufacture and assembly of finished
motor vehicles such as the manufacture of parts and subassemblies of fabricated metal
products, electrical equipment, textiles, plastics, leather, and foundry and forging operations.
Does not include any assets not classified in manufacturing activity classes, e.g., does not
include any assets classified in asset guideline classes 00.11 through 00.4. Activities will be
considered incidental to the manufacture and assembly of finished motor vehicles only if 75
percent or more of the value of the products produced under one roof are used for the
manufacture and assembly of finished motor vehicles. Parts that are produced as a normal
replacement stock complement in connection with the manufacture and assembly of finished
motor vehicles are considered used for the manufacture assembly of finished motor vehicles.
Does not include assets used in the manufacture of component parts if these assets are used
by taxpayers not engaged in the assembly of finished motor vehicles.
Manufacture of Motor Vehicles—Special Tools:
Includes assets defined as special tools, such as jigs, dies, fixtures, molds, patterns, gauges,
and specialty transfer and shipping devices, owned by manufacturers of finished motor vehicles
and used in qualified activities as defined in class 37.11. Special tools are specifically designed
for the production or processing of particular motor vehicle components and have no
significant utilitarian value, and cannot be adapted to further or different use, after changes or
improvements are made in the model design of the particular part produced by the special
tools. Does not include general purpose small tools such as wrenches and drills, both hand and
powerdriven, and other general purpose equipment such as conveyors, transfer equipment, and
materials handling devices.
Manufacture of Aerospace Products:
Includes assets used in the manufacture and assembly of airborne vehicles and their component
parts including hydraulic, pneumatic, electrical, and mechanical systems. Does not include assets
used in the production of electronic airborne detection, guidance, control, radiation, computation,
test, navigation, and communication equipment or the components thereof.
Ship and Boat Building Machinery and Equipment:
Includes assets used in the manufacture and repair of ships, boats, caissons, marine drilling
rigs, and special fabrications not included in asset classes 37.32 and 37.33. Specifically
includes all manufacturing and repairing machinery and equipment, including machinery and
equipment used in the operation of assets included in asset class 37.32. Excludes buildings
and their structural components.
Ship and Boat Building Dry Docks and Land Improvements:
Includes assets used in the manufacture and repair of ships, boats, caissons, marine drilling
rigs, and special fabrications not included in asset classes 37.31 and 37.33. Specifically
includes floating and fixed dry docks, ship basins, graving docks, shipways, piers, and all other
land improvements such as water, sewer, and electric systems. Excludes buildings and their
structural components.
Ship and Boat Building—Special Tools:
Includes assets defined as special tools such as dies, jigs, molds, patterns, fixtures, gauges,
and drawings concerning such special tools used in the activities defined in classes 37.31 and
37.32. Special tools are specifically designed for the production or processing of particular
machine components, products, or parts, and have no significant utilitarian value and cannot
be adapted to further or different use after changes or improvements are made in the model
design of the particular part produced by the special tools. Does not include general purpose
small tools such as wrenches and drills, both hand and power-driven, and other general
purpose equipment such as conveyors, transfer equipment, and materials handling devices.
Manufacture of Locomotives:
Includes assets used in building or rebuilding railroad locomotives (including mining and
industrial locomotives). Does not include assets of railroad transportation companies or assets
of companies which manufacture components of locomotives but do not manufacture finished
locomotives.
Manufacture of Railroad Cars:
Includes assets used in building or rebuilding railroad freight or passenger cars (including rail
transit cars). Does not include assets of railroad transportation companies or assets of
companies which manufacture components of railroad cars but do not manufacture finished
railroad cars.
Manufacture of Athletic, Jewelry, and Other Goods:
Includes assets used in the production of jewelry; musical instruments; toys and sporting
goods; motion picture and television films and tapes; and pens, pencils, office and art supplies,
brooms, brushes, caskets, etc.
Railroad Transportation:
Classes with the prefix 40 include the assets identified below that are used in the commercial
and contract carrying of passengers and freight by rail. Assets of electrified railroads will be
classified in a manner corresponding to that set forth below for railroads not independently
operated as electric lines. Excludes the assets included in classes with the prefix beginning
00.1 and 00.2 above, and also excludes any non-depreciable assets included in Interstate
Commerce Commission accounts enumerated for this class.

Recovery Periods
(in years)
Class Life
GDS
(in years) (MACRS)
ADS
12

6.5

11.5

Publication 946 (2017)

Table B-2. Table of Class Lives and Recovery Periods
Asset
class
40.1

40.2

40.3

40.4
40.51
40.52
40.53
40.54
41.0
42.0
44.0

45.0

45.1

46.0

Description of assets included
Railroad Machinery and Equipment:
Includes assets classified in the following Interstate Commerce Commission accounts:
Roadway accounts:
(16) Station and office buildings (freight handling machinery and equipment only)
(25) TOFC/COFC terminals (freight handling machinery and equipment only)
(26) Communication systems
(27) Signals and interlockers
(37) Roadway machines
(44) Shop machinery
Equipment accounts:
(52) Locomotives
(53) Freight train cars
(54) Passenger train cars
(57) Work equipment
Railroad Structures and Similar Improvements:
Includes assets classified in the following Interstate Commerce Commission road accounts:
(6) Bridges, trestles, and culverts
(7) Elevated structures
(13) Fences, snowsheds, and signs
(16) Station and office buildings (stations and other operating structures only)
(17) Roadway buildings
(18) Water stations
(19) Fuel stations
(20) Shops and enginehouses
(25) TOFC/COFC terminals (operating structures only)
(31) Power transmission systems
(35) Miscellaneous structures
(39) Public improvements construction
Railroad Wharves and Docks:
Includes assets classified in the following Interstate Commission Commerce accounts:
(23) Wharves and docks
(24) Coal and ore wharves
Railroad Track
Railroad Hydraulic Electric Generating Equipment
Railroad Nuclear Electric Generating Equipment
Railroad Steam Electric Generating Equipment
Railroad Steam, Compressed Air, and Other Power Plan Equipment
Motor Transport—Passengers:
Includes assets used in the urban and interurban commercial and contract carrying of
passengers by road, except the transportation assets included in classes with the prefix 00.2.
Motor Transport—Freight:
Includes assets used in the commercial and contract carrying of freight by road, except the
transportation assets included in classes with the prefix 00.2.
Water Transportation:
Includes assets used in the commercial and contract carrying of freight and passengers by
water except the transportation assets included in classes with the prefix 00.2. Includes all
related land improvements.
Air Transport:
Includes assets (except helicopters) used in commercial and contract carrying of passengers
and freight by air. For purposes of section 1.167(a)-11(d)(2)(iv)(a) of the regulations,
expenditures for “repair, maintenance, rehabilitation, or improvement,” shall consist of direct
maintenance expenses (irrespective of airworthiness provisions or charges) as defined by Civil
Aeronautics Board uniform accounts 5200, maintenance burden (exclusive of expenses
pertaining to maintenance buildings and improvements) as defined by Civil Aeronautics Board
accounts 5300, and expenditures which are not “excluded additions” as defined in section
1.167(a)-11(d)(2)(vi) of the regulations and which would be charged to property and equipment
accounts in the Civil Aeronautics Board uniform system of accounts.
Air Transport (restricted):
Includes each asset described in the description of class 45.0 which was held by the taxpayer
on April 15, 1976, or is acquired by the taxpayer pursuant to a contract which was, on April 15,
1976, and at all times thereafter, binding on the taxpayer. This criterion of classification based
on binding contract concept is to be applied in the same manner as under the general rules
expressed in section 49(b)(1), (4), (5) and (8) of the Code (as in effect prior to its repeal by the
Revenue Act of 1978, section 312(c)(1), (d), 1978-3 C.B. 1, 60).
Pipeline Transportation:
Includes assets used in the private, commercial, and contract carrying of petroleum, gas and
other products by means of pipes and conveyors. The trunk lines and related storage facilities
of integrated petroleum and natural gas producers are included in this class. Excludes initial
clearing and grading land improvements as specified in Rev. Rul. 72-403, 1972-2; C.B. 102, but
includes all other related land improvements.

Publication 946 (2017)

Recovery Periods
(in years)
Class Life
GDS
(in years) (MACRS)
ADS
14

10
50
20
28
28

7
20
15
20
20

10
50
20
28
28

Page 107

Table B-2. Table of Class Lives and Recovery Periods
Asset
class

48.11

48.12

48.121

48.13

48.14

48.2

48.31

48.32

48.33

48.34

48.35
48.36

48.37
48.38

48.39

Description of assets included
Telephone Communications:
Includes the assets classified below and that are used in the provision of commercial and
contract telephonic services such as:
Telephone Central Office Buildings:
Includes assets intended to house central office equipment, as defined in Federal
Communications Commission Part 31 Account No. 212 whether section 1245 or section 1250
property.
Telephone Central Office Equipment:
Includes central office switching and related equipment as defined in Federal Communications
Commission Part 31 Account No. 221.
Does not include computer-based telephone central office switching equipment included in
class 48.121. Does not include private branch exchange (PBX) equipment.
Computer-based Telephone Central Office Switching Equipment:
Includes equipment whose functions are those of a computer or peripheral equipment (as
defined in section 168(i)(2)(B) of the Code) used in its capacity as telephone central office
equipment. Does not include private exchange (PBX) equipment.
Telephone Station Equipment:
Includes such station apparatus and connections as teletypewriters, telephones, booths, private
exchanges, and comparable equipment as defined in Federal Communications Commission
Part 31 Account No. 231, 232, and 234.
Telephone Distribution Plant:
Includes such assets as pole lines, cable, aerial wire, underground conduits, and comparable
equipment, and related land improvements as defined in Federal Communications Commission
Part 31 Account Nos. 241, 242.1, 242.2, 242.3, 242.4, 243, and 244.
Radio and Television Broadcastings:
Includes assets used in radio and television broadcasting, except transmitting towers.
Telegraph, Ocean Cable, and Satellite Communications (TOCSC) includes
communications-related assets used to provide domestic and international radio-telegraph,
wire-telegraph, ocean-cable, and satellite communications services; also includes related land
improvements. If property described in Classes 48.31–48.45 is comparable to telephone
distribution plant described in Class 48.14 and used for 2-way exchange of voice and data
communication which is the equivalent of telephone communication, such property is assigned
a class life of 24 years under this revenue procedure. Comparable equipment does not include
cable television equipment used primarily for 1-way communication.
TOCSC—Electric Power Generating and Distribution Systems:
Includes assets used in the provision of electric power by generation, modulation, rectification,
channelization, control, and distribution. Does not include these assets when they are installed
on customers premises.
TOCSC—High Frequency Radio and Microwave Systems:
Includes assets such as transmitters and receivers, antenna supporting structures, antennas,
transmission lines from equipment to antenna, transmitter cooling systems, and control and
amplification equipment. Does not include cable and long-line systems.
TOCSC—Cable and Long-line Systems:
Includes assets such as transmission lines, pole lines, ocean cables, buried cable and conduit,
repeaters, repeater stations, and other related assets. Does not include high frequency radio or
microwave systems.
TOCSC—Central Office Control Equipment:
Includes assets for general control, switching, and monitoring of communications signals
including electromechanical switching and channeling apparatus, multiplexing equipment
patching and monitoring facilities, in-house cabling, teleprinter equipment, and associated site
improvements.
TOCSC—Computerized Switching, Channeling, and Associated Control Equipment:
Includes central office switching computers, interfacing computers, other associated specialized
control equipment, and site improvements.
TOCSC—Satellite Ground Segment Property:
Includes assets such as fixed earth station equipment, antennas, satellite communications
equipment, and interface equipment used in satellite communications. Does not include general
purpose equipment or equipment used in satellite space segment property.
TOCSC—Satellite Space Segment Property:
Includes satellites and equipment used for telemetry, tracking, control, and monitoring when
used in satellite communications.
TOCSC—Equipment Installed on Customer’s Premises:
Includes assets installed on customer’s premises, such as computers, terminal equipment,
power generation and distribution systems, private switching center, teleprinters, facsimile
equipment and other associated and related equipment.
TOCSC—Support and Service Equipment:
Includes assets used to support but not engage in communications. Includes store, warehouse
and shop tools, and test and laboratory assets.
Cable Television (CATV): Includes communications-related assets used to provide cable
television community antenna television services. Does not include assets used to provide
subscribers with two-way communications services.

Recovery Periods
(in years)
Class Life
GDS
(in years) (MACRS)
ADS

9.5

10*

26.5

16.5

10.5

13.5

Property described in asset guideline class 48.13 which is qualified technological equipment as defined in section 168(i)(2) is assigned a 5-year recovery
period.

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Publication 946 (2017)

Table B-2. Table of Class Lives and Recovery Periods
Asset
class
48.41
48.42

48.43
48.44
48.45

49.11
49.12
49.121

49.13

49.14

49.15

49.21
49.221

49.222

49.223

49.23
49.24
49.25

Description of assets included
CATV—Headend:
Includes assets such as towers, antennas, preamplifiers, converters, modulation equipment, and program
non-duplication systems. Does not include headend buildings and program origination assets.
CATV—Subscriber Connection and Distribution Systems:
Includes assets such as trunk and feeder cable, connecting hardware, amplifiers, power
equipment, passive devices, directional taps, pedestals, pressure taps, drop cables, matching
transformers, multiple set connector equipment, and convertors.
CATV—Program Origination:
Includes assets such as cameras, film chains, video tape recorders, lighting, and remote location
equipment excluding vehicles. Does not include buildings and their structural components.
CATV—Service and Test:
Includes assets such as oscilloscopes, field strength meters, spectrum analyzers, and cable
testing equipment, but does not include vehicles.
CATV—Microwave Systems:
Includes assets such as towers, antennas, transmitting and receiving equipment, and broad
band microwave assets is used in the provision of cable television services. Does not include
assets used in the provision of common carrier services.
Electric, Gas, Water and Steam, Utility Services:
Includes assets used in the production, transmission and distribution of electricity, gas, steam,
or water for sale including related land improvements.
Electric Utility Hydraulic Production Plant:
Includes assets used in the hydraulic power production of electricity for sale, including related
land improvements, such as dams, flumes, canals, and waterways.
Electric Utility Nuclear Production Plant:
Includes assets used in the nuclear power production and electricity for sale and related land
improvements. Does not include nuclear fuel assemblies.
Electric Utility Nuclear Fuel Assemblies:
Includes initial core and replacement core nuclear fuel assemblies (i.e., the composite of fabricated nuclear
fuel and container) when used in a boiling water, pressurized water, or high temperature gas reactor used in
the production of electricity. Does not include nuclear fuel assemblies used in breader reactors.
Electric Utility Steam Production Plant:
Includes assets used in the steam power production of electricity for sale, combustion turbines operated in a
combined cycle with a conventional steam unit and related land improvements. Also includes package
boilers, electric generators and related assets such as electricity and steam distribution systems as used by
a waste reduction and resource recovery plant if the steam or electricity is normally for sale to others.
Electric Utility Transmission and Distribution Plant:
Includes assets used in the transmission and distribution of electricity for sale and related land
improvements. Excludes initial clearing and grading land improvements as specified in Rev. Rul.
72-403, 1972-2 C.B. 102.
Electric Utility Combustion Turbine Production Plant:
Includes assets used in the production of electricity for sale by the use of such prime movers as jet
engines, combustion turbines, diesel engines, gasoline engines, and other internal combustion
engines, their associated power turbines and/or generators, and related land improvements. Does not
include combustion turbines operated in a combined cycle with a conventional steam unit.
Gas Utility Distribution Facilities:
Includes gas water heaters and gas conversion equipment installed by utility on customers’
premises on a rental basis.
Gas Utility Manufactured Gas Production Plants:
Includes assets used in the manufacture of gas having chemical and/or physical properties
which do not permit complete interchangeability with domestic natural gas. Does not include
gas-producing systems and related systems used in waste reduction and resource recovery
plants which are elsewhere classified.
Gas Utility Substitute Natural Gas (SNG) Production Plant (naphtha or lighter hydrocarbon
feedstocks):
Includes assets used in the catalytic conversion of feedstocks or naphtha or lighter
hydrocarbons to a gaseous fuel which is completely interchangeable with domestic natural gas.
Substitute Natural Gas—Coal Gasification:
Includes assets used in the manufacture and production of pipeline quality gas from coal using the basic Lurgi
process with advanced methanation. Includes all process plant equipment and structures used in this coal
gasification process and all utility assets such as cooling systems, water supply and treatment facilities, and
assets used in the production and distribution of electricity and steam for use by the taxpayer in a gasification
plant and attendant coal mining site processes but not for assets used in the production and distribution of
electricity and steam for sale to others. Also includes all other related land improvements. Does not include
assets used in the direct mining and treatment of coal prior to the gasification process itself.
Natural Gas Production Plant
Gas Utility Trunk Pipelines and Related Storage Facilities:
Excluding initial clearing and grading land improvements as specified in Rev. Rul. 72-40.
Liquefied Natural Gas Plant:
Includes assets used in the liquefaction, storage, and regasification of natural gas including
loading and unloading connections, instrumentation equipment and controls, pumps, vaporizers
and odorizers, tanks, and related land improvements. Also includes pipeline interconnections
with gas transmission lines and distribution systems and marine terminal facilities.

Publication 946 (2017)

Recovery Periods
(in years)
Class Life
GDS
(in years) (MACRS)
ADS
11

8.5

9.5

Page 109

Table B-2. Table of Class Lives and Recovery Periods
Asset
class
49.3
49.4
49.5

50.
51.
57.0
57.1

79.0

80.0

*
**
***

Description of assets included
Water Utilities:
Includes assets used in the gathering, treatment, and commercial distribution of water.
Central Steam Utility Production and Distribution:
Includes assets used in the production and distribution of steam for sale. Does not include
assets used in waste reduction and resource recovery plants which are elsewhere classified.
Waste Reduction and Resource Recovery Plants:
Includes assets used in the conversion of refuse or other solid waste or biomass to heat or to a
solid, liquid, or gaseous fuel. Also includes all process plant equipment and structures at the
site used to receive, handle, collect, and process refuse or other solid waste or biomass in a
waterwall, combustion system, oil or gas pyrolysis system, or refuse derived fuel system to
create hot water, gas, steam and electricity. Includes material recovery and support assets
used in refuse or solid refuse or solid waste receiving, collecting, handling, sorting, shredding,
classifying, and separation systems. Does not include any package boilers, or electric
generators and related assets such as electricity, hot water, steam and manufactured gas
production plants classified in classes 00.4, 49.13, 49.221, and 49.4. Does include, however, all
other utilities such as water supply and treatment facilities, ash handling and other related land
improvements of a waste reduction and resource recovery plant.
Municipal Wastewater Treatment Plant
Municipal Sewer
Distributive Trades and Services:
Includes assets used in wholesale and retail trade, and personal and professional services.
Includes section 1245 assets used in marketing petroleum and petroleum products.
Distributive Trades and Services—Billboard, Service Station Buildings and Petroleum
Marketing Land Improvements:
Includes section 1250 assets, including service station buildings and depreciable land
improvements, whether section 1245 property or section 1250 property, used in the marketing
of petroleum and petroleum products, but not including any of these facilities related to
petroleum and natural gas trunk pipelines. Includes car wash buildings and related land
improvements. Includes billboards, whether such assets are section 1245 property or section
1250 property. Excludes all other land improvements, buildings and structural components as
defined in section 1.48-1(e) of the regulations. See Gas station convenience stores in chapter 3.
Recreation:
Includes assets used in the provision of entertainment services on payment of a fee or
admission charge, as in the operation of bowling alleys, billiard and pool establishments,
theaters, concert halls, and miniature golf courses. Does not include amusement and theme
parks and assets which consist primarily of specialized land improvements or structures, such
as golf courses, sports stadia, race tracks, ski slopes, and buildings which house the assets
used in entertainment services.
Theme and Amusement Parks:
Includes assets used in the provision of rides, attractions, and amusements in activities defined as theme
and amusement parks, and includes appurtenances associated with a ride, attraction, amusement or theme
setting within the park such as ticket booths, facades, shop interiors, and props, special purpose structures,
and buildings other than warehouses, administration buildings, hotels, and motels. Includes all land
improvements for or in support of park activities (e.g., parking lots, sidewalks, waterways, bridges, fences,
landscaping, etc.), and support functions (e.g., food and beverage retailing, souvenir vending and other
nonlodging accommodations) if owned by the park and provided exclusively for the benefit of park patrons.
Theme and amusement parks are defined as combinations of amusements, rides, and attractions which are
permanently situated on park land and open to the public for the price of admission. This guideline class is a
composite of all assets used in this industry except transportation equipment (general purpose trucks, cars,
airplanes, etc., which are included in asset guideline classes with the prefix 00.2), assets used in the
provision of administrative services (asset classes with the prefix 00.1) and warehouses, administration
buildings, hotels and motels.
Certain Property for Which Recovery Periods Assigned
A. Personal Property With No Class Life
Section 1245 Real Property With No Class Life

Recovery Periods
(in years)
Class Life
GDS
(in years) (MACRS)
ADS
50

20***

24
50

15
20***

24
50

12.5

7
7

12
40
5

B. Qualified Technological Equipment, as defined in section 168(i)(2).

C. Property Used in Connection with Research and Experimentation referred to in section
168(e)(3)(B).

D. Alternative energy property described in sections 48(l)(3)(A)(ix) (as in effect on the day before
the date of enactment (11/5/90) of the Revenue Reconciliation Act of 1990).

E. Biomass property described in section 48(l)(15) (as in effect on the day before the date of
enactment (11/5/90) of the Revenue Reconciliation Act of 1990) and is a qualifying small
production facility within the meaning of section 3(17)(c) of the Federal Power Act (16 U.S.C.
796(17)(C)), as in effect on September 1, 1986.

F. Energy property described in section 48(a)(3)(A) (or would be described if “solar or wind
energy” were substituted for “solar energy” in section 48(a)(3)(A)(i)).

class life if
no class
life—12
class life if
no class
life—12
class life if
no class
life—12
class life if
no class
life—12

Any high technology medical equipment as defined in section 168(i)(2)(C) which is described in asset guideline class 57.0 is assigned a 5-year
recovery period for the alternate MACRS method.
The class life (if any) of property described in classes B, C, D, E, or F is determined by reference to the asset guideline classes. If an item of property
described in paragraphs B, C, D, E, or F is not described in any asset guideline class, such item of property has no class life.
Use straight line over 25 years if placed in service after June 12, 1996, unless placed in service under a binding contract in effect before June 10,
1996, and at all times until placed in service.

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Publication 946 (2017)

Glossary
Abstract fees: Expenses generally System (GDS) and Alternative Deprepaid by a buyer to research the title of ciation System (ADS).
real property.
Commuting: Travel between a perActive conduct of a trade or busi- sonal home and work or job site within
ness: Generally, for the section 179 the area of an individual's tax home.
deduction, a taxpayer is considered to
conduct a trade or business actively if Convention: A method established
he or she meaningfully participates in under the Modified Accelerated Cost
the management or operations of the Recovery System (MACRS) to detertrade or business. A mere passive in- mine the portion of the year to deprecivestor in a trade or business does not ate property both in the year the propactively conduct the trade or business. erty is placed in service and in the year
of disposition.
Adjusted basis: The original cost of
property, plus certain additions and im- Declining balance method: An acprovements, minus certain deductions celerated method to depreciate propsuch as depreciation allowed or allow- erty. The General Depreciation System
(GDS) of MACRS uses the 150% and
able and casualty losses.
200% declining balance methods for
Amortization: A ratable deduction for certain types of property. A depreciathe cost of intangible property over its tion rate (percentage) is determined by
useful life.
dividing the declining balance percentage by the recovery period for the
Amount realized: The total of all property.
money received plus the fair market
value of all property or services re- Disposition: The permanent withceived from a sale or exchange. The drawal from use in a trade or business
amount realized also includes any lia- or from the production of income.
bilities assumed by the buyer and any
liabilities to which the property transfer- Documentary evidence: Written rered is subject, such as real estate cords that establish certain facts.
taxes or a mortgage.
Exchange: To barter, swap, part with,
Basis: A measure of an individual's in- give, or transfer property for other
vestment in property for tax purposes. property or services.
Business/investment use: Usually, a
percentage showing how much an item
of property, such as an automobile, is
used for business and investment purposes.
Capitalized: Expended or treated as
an item of a capital nature. A capitalized amount is not deductible as a current expense and must be included in
the basis of property.
Circumstantial evidence: Details or
facts which indirectly point to other
facts.
Class life: A number of years that establishes the property class and recovery period for most types of property
under the General Depreciation
Publication 946 (2017)

Fair market value (FMV): The price
that property brings when it is offered
for sale by one who is willing but not
obligated to sell, and is bought by one
who is willing or desires to buy but is
not compelled to do so.

business is transacted, to a list of customers, or to other elements of value in
business as a going concern.
Grantor: The one who transfers property to another.
Improvement: An addition to or partial replacement of property that adds
to its value, appreciably lengthens the
time you can use it, or adapts it to a different use.
Intangible property: Property that
has value but cannot be seen or
touched, such as goodwill, patents,
copyrights, and computer software.
Listed property: Passenger automobiles; any other property used for
transportation; property of a type generally used for entertainment, recreation or amusement; and computers and
their peripheral equipment (unless
used only at a regular business establishment and owned or leased by the
person operating the establishment).
Nonresidential real property: Most
real property other than residential
rental property.
Placed in service: Ready and available for a specific use whether in a trade
or business, the production of income,
a tax-exempt activity, or a personal activity.
Property class: A category for property under MACRS. It generally determines the depreciation method, recovery period, and convention.

Recapture: To include as income on
Fiduciary: The one who acts on be- your return an amount allowed or alhalf of another as a guardian, trustee, lowable as a deduction in a prior year.
executor, administrator, receiver, or
Recovery period: The number of
conservator.
years over which the basis of an item
Fungible commodity: A commodity of property is recovered.
of a nature that one part may be used
Remainder interest: That part of an
in place of another part.
estate that is left after all the other proGoodwill: An intangible property such visions of a will have been satisfied.
as the advantage or benefit received in
property beyond its mere value. It is Residential rental property: Real
not confined to a name but can also be property, generally buildings or strucattached to a particular area where tures, if 80% or more of its annual
Page 111

gross rental income is from dwelling dividing 1 by the number of years in the account any depreciation taken in earunits.
recovery period.
lier years but with adjustments for other
amounts, including amortization, the
Salvage value: An estimated value of Structural components: Parts that section 179 deduction, any special deproperty at the end of its useful life. Not together form an entire structure, such preciation allowance, any deduction
used under MACRS.
as a building. The term includes those claimed for clean-fuel vehicles or
parts of a building such as walls, parti- clean-fuel vehicle refueling property
Section 1245 property: Property that tions, floors, and ceilings, as well as placed in service before January 1,
is or has been subject to an allowance any permanent coverings such as pan- 2006, and any electric vehicle credit.
for depreciation or amortization. Sec- eling or tiling, windows and doors, and
tion 1245 property includes personal all components of a central air condi- Unit-of-production method: A way
property, single purpose agricultural tioning or heating system including mo- to figure depreciation for certain propand horticultural structures, storage fa- tors, compressors, pipes and ducts. It erty. It is determined by estimating the
cilities used in connection with the dis- also includes plumbing fixtures such as number of units that can be produced
tribution of petroleum or primary prod- sinks, bathtubs, electrical wiring and before the property is worn out. For exucts of petroleum, and railroad grading lighting fixtures, and other parts that ample, if it is estimated that a machine
or tunnel bores.
form the structure.
will produce 1000 units before its useful life ends, and it actually produces
Section 1250 property: Real prop- Tangible property: Property you can
100 units in a year, the percentage to
erty (other than section 1245 property) see or touch, such as buildings, machifigure depreciation for that year is 10%
which is or has been subject to an al- nery, vehicles, furniture, and equipof the machine's cost less its salvage
lowance for depreciation.
ment.
value.
Standard mileage rate: The estab- Tax-exempt: Not subject to tax.
Useful life: An estimate of how long
lished amount for optional use in deteran
item of property can be expected to
mining a tax deduction for automobiles Term interest: A life interest in propbe
usable in trade or business or to
instead of deducting depreciation and erty, an interest in property for a term
produce
income.
actual operating expenses.
of years, or an income interest in a
trust. It generally refers to a present or
Straight line method: A way to figure future interest in income from property
depreciation for property that ratably or the right to use property that termideducts the same amount for each nates or fails upon the lapse of time,
year in the recovery period. The rate the occurrence of an event, or the fail(in percentage terms) is determined by ure of an event to occur.
Unadjusted basis: The basis of an
item of property for purposes of figuring gain on a sale without taking into

Page 112

Publication 946 (2017)

Index

To help us develop a more useful index, please let us know if you have ideas for index entries.
See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

Addition to property 37
Adjusted basis 12
Alternative Depreciation System (ADS):
Recovery periods 36
Required use 30
Amended return 14
Apartment:
Cooperative 4
Rental 32
Assistance (See Tax help)
Automobile (See Passenger automobile)

Basis:
Adjustments 13, 22, 40
Basis for depreciation 34
Casualty loss 40
Change in use 12
Cost 12
Depreciable basis 28
Other than cost 12
Recapture of clean-fuel vehicle deduction or
credit 40
Term interest 7
Unadjusted 41
Business-use limit, recapture of Section 179
deduction 23
Business use of property, partial 5
Business-use requirement, listed
property 58

Car (See Passenger automobile)
Carryover of section 179 deduction 21
Casualty loss, effect of 40
Changing accounting method 14
Communication equipment (See Listed
property)
Commuting 58
Computer (See Listed property)
Computer software 10, 16
Containers 5
Conventions 37
Cooperative apartment 4
Copyright 10
(See also Section 197 intangibles)
Correcting depreciation deductions 13
Cost basis 12

Declining balance:
Method 43
Rates 44
Deduction limit:
Automobile 62
Section 179 19
Depreciation:
Deduction:
Employee 57
Listed property 57
Determinable useful life 6
Excepted property 6
Incorrect amount deducted 13
Methods 38
Property lasting more than one year 6
Property owned 4
Property used in business 5
Recapture 54, 60
Depreciation allowable 13
Depreciation allowed 13
Depreciation deduction:
Listed property 58
Determinable useful life 6

Publication 946 (2017)

Disposition:
Before recovery period ends 43
General asset account property 51
Section 179 deduction 24

Election:
ADS 30, 39
Declining balance (150% DB) method 38
Exclusion from MACRS 11
General asset account 54
Not to claim special depreciation
allowance 29
Section 179 deduction 23
Straight line method 39
Electric vehicle 63
Employee:
Depreciation deduction 57
How to claim depreciation 13
Employee deduction, listed property 57
Energy property 18
Exchange of MACRS property 47

Farm:
Property 38
Figuring MACRS:
Using percentage tables 40
Without using percentage tables 43
Films 11

General asset account:
Abusive transaction 52
Disposing of property 51
Grouping property in 50
Nonrecognition transaction 52
General Depreciation System (GDS),
recovery periods 35
Gift (See Basis, other than cost)
Glossary 111

Identity theft 69
Idle property 7
Improvements 13, 37
Income forecast method 11
Incorrect depreciation deductions 13
Indian reservation:
Defined 36
Qualified infrastructure property 36
Qualified property 36
Recovery periods for qualified property 35
Related person 36
Inheritance (See Basis, other than cost)
Intangible property:
Depreciation method 10, 11
Income forecast method 11
Straight line method 10
Inventory 5
Investment use of property, partial 5
Involuntary conversion of MACRS
property 47

Land:
Not depreciable 6
Preparation costs 6
Leased property 18
Leasehold improvement property,
defined 26, 33
Life tenant 4
(See also Term interests)

Limit on deduction:
Automobile 62
Section 179 19
Listed property:
5% owner 59
Computer 57
Condition of employment 57
Defined 55
Employee deduction 57
Employer convenience 57
Improvements to 56
Leased 60
Passenger automobile 56
Qualified business use 59
Recordkeeping 66
Related person 59
Reporting on Form 4562 67
Lodging 18

Maximum deduction:
Electric vehicles 63
Passenger automobiles 62
Trucks 63
Vans 63
Mobile home (See Residential rental property)
Modified ACRS (MACRS):
Addition or improvement 37
Alternative Depreciation System (ADS) 30
Conventions 37
Declining balance method 43
Depreciation methods 38
Farm property 38
Figuring, short tax year 49
General Depreciation System (GDS) 30
Percentage tables 40
Property classes 31
Recovery periods 35
Short tax year 47
Straight line method 44

Nonresidential real property 32
Nontaxable transfer of MACRS property 47

Office in the home 5, 35
Ownership, incidents of 4

Partial business use 17
Passenger automobile:
Defined 56
Electric vehicles 63
Limit on 62
Maximum depreciation deduction 62
Trucks 63
Vans 63
Patent 10
(See also Section 197 intangibles)
Personal property 8
Phonographic equipment (See Listed
property)
Photographic equipment (See Listed
property)
Placed in service:
Before 1987 8
Date 34
Rule 7
Property:
Classes 31
Depreciable 4
Idle 7
Improvements 13
Leased 4, 18

Page 113

Listed 55
Personal 8
Real 9
Retired from service 7
Tangible personal 16
Term interest 6
Publications (See Tax help)

Qualified leasehold improvement property,
defined 26, 33
Qualified property, special depreciation
allowance 24

Real property 9
Recapture:
Clean-fuel vehicle deduction or credit 40
General asset account, abusive
transaction 52
Listed property 60
MACRS depreciation 54
Section 179 deduction 23
Special depreciation allowance 29
Recordkeeping:
Listed property 66
Section 179 23
Recovery periods:
ADS 36
GDS 35
Related persons 6, 9, 17, 36, 59
Rental home (See Residential rental property)
Rented property, improvements 13
Rent-to-own property, defined 32
Repairs 13

Page 114

Residential rental property 32
Retail motor fuels outlet 33
Revoking:
ADS election 30
General asset account election 54
Section 179 election 23

Sale of property 43
Section 179 deduction:
Business use required 17
Carryover 21
Dispositions 24
Electing 23
Limits:
Business (taxable) income 20
Business-use, recapture 23
Dollar 19
Enterprise zone business 19
Partial business use 17
Married filing separate returns 20
Partnership rules 22
Property:
Eligible 16
Excepted 18
Purchase required 17
Recapture 23
Recordkeeping 23
S corporation rules 22
Settlement fees 12
Short tax year:
Figuring depreciation 49
Figuring placed-in-service date 48
Software, computer 10, 16
Sound recording 11
Special depreciation allowance:
Election not to claim 29

Qualified property 24
Recapture 29
Stock, constructive ownership of 9
Straight line method 10, 44
Created intangibles 10

Tangible personal property 16
Tax help
Term interest 6
Trade-in of property 19
Trucks 63

Unadjusted basis 41
Useful life 6

Vans 63
Video-recording equipment (See Listed
property)
Video tape 11

When to use ADS 30
Worksheet:
Leased listed property 61
MACRS 41

Publication 946 (2017)

Tax Publications for Business Taxpayers
General Guides
1
17
334
910

Your Rights as a Taxpayer
Your Federal Income Tax
Tax Guide for Small Business
IRS Guide to Free Tax Services

Employer’s Guides
15
15-A
15-B
51
80

926

(Circular E), Employer’s Tax Guide
Employer’s Supplemental Tax Guide
Employer’s Tax Guide to Fringe
Benefits
(Circular A), Agricultural Employer’s
Tax Guide
(Circular SS), Federal Tax Guide for
Employers in the U.S. Virgin Islands,
Guam, American Samoa, and the
Commonwealth of the Northern
Mariana Islands
Household Employer’s Tax Guide

Specialized Publications
225
463
505
510
515

Farmer’s Tax Guide
Travel, Entertainment, Gift, and Car
Expenses
Tax Withholding and Estimated Tax
Excise Taxes
Withholding of Tax on Nonresident
Aliens and Foreign Entities

Commonly Used Tax Forms

517
527
534
535
536
537
538
541
542
544
551
556
560
561
583
587
594
597
598
901

Social Security and Other Information
for Members of the Clergy and
Religious Workers
Residential Rental Property
Depreciating Property Placed in
Service Before 1987
Business Expenses
Net Operating Losses (NOLs) for
Individuals, Estates, and Trusts
Installment Sales
Accounting Periods and Methods
Partnerships
Corporations
Sales and Other Dispositions of Assets
Basis of Assets
Examination of Returns, Appeal Rights,
and Claims for Refund
Retirement Plans for Small Business
Determining the Value of Donated
Property
Starting a Business and Keeping
Records
Business Use of Your Home
The IRS Collection Process
Information on the United StatesCanada Income Tax Treaty
Tax on Unrelated Business Income of
Exempt Organizations
U.S. Tax Treaties

Wage and Tax Statement
Employee’s Withholding Allowance Certificate
Employer’s Annual Federal Unemployment
(FUTA) Tax Return
941
Employer’s QUARTERLY Federal Tax Return
1040
U.S. Individual Income Tax Return
Sch A
Itemized Deductions
Interest and Ordinary Dividends
Sch B
Sch C
Profit or Loss From Business
Sch C-EZ Net Profit From Business
Sch D
Capital Gains and Losses
Sch E
Supplemental Income and Loss
Sch F
Profit or Loss From Farming
Sch H
Household Employment Taxes
Sch J
Income Averaging for Farmers and Fishermen
Sch R
Credit for the Elderly or the Disabled
Sch SE
Self-Employment Tax
1040-ES Estimated Tax for Individuals
1040X
Amended U.S. Individual Income Tax Return
1065
U.S. Return of Partnership Income
Sch D
Capital Gains and Losses
Sch K-1
Partner’s Share of Income,
Deductions, Credits, etc.
1120
U.S. Corporation Income Tax Return
1120S
U.S. Income Tax Return for an S Corporation
Sch D
Capital Gains and Losses and Built-In Gains
Sch K-1
Shareholder’s Share of Income,
Deductions, Credits, etc.

Publication 946 (2017)

908
925
946
947
966
1544
1546

Bankruptcy Tax Guide
Passive Activity and At-Risk Rules
How To Depreciate Property
Practice Before the IRS and Power
of Attorney
Electronic Federal Tax Payment System:
A Guide to Getting Started
Reporting Cash Payments of Over
$10,000
Taxpayer Advocate Service: Your
Voice at the IRS

Spanish Language Publications
1SP
179
594SP
850
(EN/SP)
1544SP

Derechos del Contribuyente
(Circular PR), Guía Contributiva Federal
para Patronos Puertorriqueños
El Proceso de Cobro del IRS
English-Spanish Glossary of Words
and Phrases
Informe de Pagos en Efectivo en
Exceso de $10,000

See How To Get Tax Help for a variety of ways to get forms, including by computer, phone,
and mail.

Form Number and Title
W-2
W-4
940

See How To Get Tax Help for a variety of ways to get publications, including by
computer, phone, and mail.

Catalog
Number

Form Number and Title

Catalog
Number

10134
10220
11234

2106
Employee Business Expenses
2106-EZ Unreimbursed Employee Business Expenses
2210
Underpayment of Estimated Tax by Individuals,
Estates, and Trusts
2441
Child and Dependent Care Expenses
2848
Power of Attorney and Declaration of
Representative
3800
General Business Credit
3903
Moving Expenses
4562
Depreciation and Amortization
4797
Sales of Business Property
4868
Application for Automatic Extension of Time To File
U.S. Individual Income Tax Return
5329
Additional Taxes on Qualified Plans (Including
IRAs) and Other Tax-Favored Accounts
6252
Installment Sale Income
8283
Noncash Charitable Contributions
8300
Report of Cash Payments Over $10,000 Received
in a Trade or Business
8582
Passive Activity Loss Limitations
8606
Nondeductible IRAs
8822
Change of Address
8822-B
Change of Address or Responsible Party—Business
8829
Expenses for Business Use of Your Home
8949
Sales and Other Dispositions of Capital Assets
8959
Additional Medicare Tax

11700
20604
11744

17001
11320
17145
17146
11334
14374
11338
11344
11346
12187
25513
11359
11358
11340
11360
11390
11393
11394
11450
11510
11516
11520

11862
11980
12392
12490
12906
13086
13141
13329
13601
62299
62133
63704
63966
12081
57465
13232
37768
59475

Page 115

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