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            Department of the Treasury                   Contents
            Internal Revenue Service
                                                         Future Developments . . . . . . . . . . . . . . . . . . . . . . .           2
                                                         What's New for 2023      . . . . . . . . . . . . . . . . . . . . . . . .    2
Publication 946
Cat. No. 13081F                                          What’s New for 2024 . . . . . . . . . . . . . . . . . . . . . . . .         2
                                                         Reminders    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  2
                                                         Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
How To
                                                         Chapter  1.  Overview of Depreciation                   . . . . . . . . . . 3
                                                         What Property Can Be Depreciated?                       . . . . . . . . . . 3
Depreciate
                                                         What Property Cannot Be Depreciated? . . . . . . . .                        6
                                                         When Does Depreciation Begin and End?                           . . . . . . 7
Property                                                 What Method Can You Use To Depreciate 
                                                         Your Property? . . . . . . . . . . . . . . . . . . . . . . . .              7
                                                         What Is the Basis of Your Depreciable 
• Section 179 Deduction                                  Property? . . . . . . . . . . . . . . . . . . . . . . . . . . .             11
• Special Depreciation                                   How Do You Treat Repairs and 
                                                         Improvements?              . . . . . . . . . . . . . . . . . . . . . .      12
Allowance                                                Do You Have To File Form 4562? . . . . . . . . . . . .                      13
                                                         How Do You Correct Depreciation 
• MACRS
                                                         Deductions?          . . . . . . . . . . . . . . . . . . . . . . . . .      13
• Listed Property                                        Chapter  2.  Electing the Section 
                                                         179 Deduction          . . . . . . . . . . . . . . . . . . . . . . . .      15
For use in preparing                                     What Property Qualifies?                . . . . . . . . . . . . . . . . . . 15
                                                         What Property Does Not Qualify?                     . . . . . . . . . . .   17
2023 Returns                                             How Much Can You Deduct? . . . . . . . . . . . . . . .                      17
                                                         How Do You Elect the Deduction?                     . . . . . . . . . . .   21
                                                         When Must You Recapture the Deduction? . . . . .                            22
                                                         Chapter  3.  Claiming the Special 
                                                         Depreciation Allowance . . . . . . . . . . . . . . . . .                    23
                                                         What Is Qualified Property? . . . . . . . . . . . . . . . .                 23
                                                         How Much Can You Deduct? . . . . . . . . . . . . . . .                      25
                                                         How Can You Elect Not To Claim an 
                                                         Allowance?           . . . . . . . . . . . . . . . . . . . . . . . . .      26
                                                         When Must You Recapture an Allowance?                           . . . . .   26
                                                         Chapter  4.  Figuring Depreciation 
                                                         Under MACRS            . . . . . . . . . . . . . . . . . . . . . . . .      26
                                                         Which Depreciation System (GDS or ADS) 
                                                         Applies?         . . . . . . . . . . . . . . . . . . . . . . . . . . .      27
                                                         Which Property Class Applies Under GDS?                           . . . .   28
                                                         What Is the Placed in Service Date?                   . . . . . . . . . .   30
                                                         What Is the Basis for Depreciation?                   . . . . . . . . . .   31
                                                         Which Recovery Period Applies? . . . . . . . . . . . .                      31
                                                         Which Convention Applies? . . . . . . . . . . . . . . . .                   32
                                                         Which Depreciation Method Applies? . . . . . . . . .                        33
                                                         How Is the Depreciation Deduction Figured?                        . . . .   34
                                                         How Do You Use General Asset Accounts?                            . . . .   46
                                                         When Do You Recapture MACRS 
                                                         Depreciation?          . . . . . . . . . . . . . . . . . . . . . . . .      50
                                                         Chapter  5.  Additional Rules for 
Get forms and other information faster and easier at:    Listed Property        . . . . . . . . . . . . . . . . . . . . . . . .      50
• IRS.gov (English)    • IRS.gov/Korean (한국어)            What Is Listed Property? . . . . . . . . . . . . . . . . . .                51
• IRS.gov/Spanish (Español)  • IRS.gov/Russian (Pусский) 
• IRS.gov/Chinese (中文) • IRS.gov/Vietnamese (Tiếng Việt) Can Employees Claim a Deduction?                        . . . . . . . . .   52

Feb 14, 2024

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What Is the Business-Use Requirement? . . . . . . 53 by which the cost of section 179 property placed in serv-
Do the Passenger Automobile Limits Apply? . . . . 57 ice during the tax year exceeds $3,050,000.
What Records Must Be Kept? . . . . . . . . . . . . . . 61 Also, the maximum section 179 expense deduction for
How Is Listed Property Information sport utility vehicles placed in service in tax years begin-
Reported? . . . . . . . . . . . . . . . . . . . . . . . . . . 63 ning in 2024 is $30,500.
Phase down of special depreciation allowance. The
How To Get Tax Help . . . . . . . . . . . . . . . . . . . . . . . 63
special depreciation allowance is 60% for certain qualified
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 property acquired after September 27, 2017, and placed
in service after December 31, 2023, and before January 1,
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 2025 (other than certain property with a long production
period and certain aircraft). Property with a long produc-
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
tion period and certain aircraft placed in service after De-
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 cember 31, 2023, and before January 1, 2025, is eligible
for a special depreciation allowance of 80% of the depre-
ciable basis of the property. The special depreciation al-
lowance is also 60% for certain specified plants bearing
Future Developments fruits and nuts planted or grafted after December 31,
For the latest information about developments related to 2023, and before January 1, 2025. See Certain Qualified
Pub. 946, such as legislation enacted after this publication Property Acquired After September 27, 2017 and Certain
was published, go to IRS.gov/Pub946. Plants Bearing Fruits and Nuts under What Is Qualified
Property? in chapter 3.

What's New for 2023
Reminders
Section 179 deduction dollar limits. For tax years be-
ginning in 2023, the maximum section 179 expense de- Photographs of missing children. The Internal Reve-
duction is $1,160,000. This limit is reduced by the amount nue Service is a proud partner with the National Center for
by which the cost of section 179 property placed in serv- Missing & Exploited Children® (NCMEC). Photographs of
ice during the tax year exceeds $2,890,000. missing children selected by the Center may appear in
this publication on pages that would otherwise be blank.
Also, the maximum section 179 expense deduction for You can help bring these children home by looking at the
sport utility vehicles placed in service in tax years begin- photographs and calling 1-800-THE-LOST
ning in 2023 is $28,900. (1-800-843-5678) if you recognize a child.
Phase down of special depreciation allowance. The
special depreciation allowance is 80% for certain qualified
property acquired after September 27, 2017, and placed
in service after December 31, 2022, and before January 1, Introduction
2024 (other than certain property with a long production
This publication explains how you can recover the cost of
period and certain aircraft). The special depreciation al-
business or income-producing property through deduc-
lowance is also 80% for certain specified plants bearing
tions for depreciation (for example, the special deprecia-
fruits and nuts planted or grafted after December 31,
tion allowance and deductions under the Modified Accel-
2022, and before January 1, 2024. See Certain Qualified
erated Cost Recovery System (MACRS)). It also explains
Property Acquired After September 27, 2017 and Certain
how you can elect to take a section 179 deduction, in-
Plants Bearing Fruits and Nuts under What Is Qualified
stead of depreciation deductions, for certain property and
Property? in chapter 3.
the additional rules for listed property.
Depreciation limits on business vehicles. The total
section 179 deduction and depreciation you can deduct The depreciation methods discussed in this publi-
for a passenger automobile, including a truck or van, you ! cation generally do not apply to property placed in
use in your business and first placed in service in 2023 is CAUTION service before 1987. For more information, see
$20,200, if the special depreciation allowance applies, or Pub. 534, Depreciating Property Placed in Service Before
$12,200, if the special depreciation allowance does not 1987.
apply. See Maximum Depreciation Deduction in chapter 5.
Definitions. Many of the terms used in this publication
are defined in the Glossary at the end of this publication.
Glossary terms used in each discussion under the major
What’s New for 2024 headings are listed before the beginning of each discus-
sion throughout the publication.
Section 179 deduction dollar limits. For tax years be-
ginning in 2024, the maximum section 179 expense de- Do you need a different publication? The following ta-
duction is $1,220,000. This limit is reduced by the amount ble shows where you can get more detailed information
when depreciating certain types of property.

2 Publication 946 (2023)

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For information         See Publication:                           This chapter discusses the general rules for depreciat-
on depreciating:                                                 ing property and answers the following questions.
A car              463, Travel, Gift, and Car Expenses            • What property can be depreciated?
Residential rental                                                • What property cannot be depreciated?
                   527, Residential Rental Property
property                                                            When does depreciation begin and end?
                                                                  •
Office space in 
                   587, Business Use of Your Home                 • What method can you use to depreciate your prop-
your home                                                           erty?
Farm property      225, Farmer's Tax Guide
                                                                  • What is the basis of your depreciable property?
Comments  and  suggestions. We  welcome  your  com-               • How do you treat repairs and improvements?
ments about this publication and your suggestions for fu-         • Do you have to file Form 4562?
ture editions.
You  can  send  us  comments  through               IRS.gov/      • How do you correct depreciation deductions?
FormComments. Or, you can write to the Internal Revenue 
Service,  Tax  Forms  and  Publications,  1111  Constitution     Useful Items
Ave. NW, IR-6526, Washington, DC 20224.                          You may want to see:
Although  we  can’t  respond  individually  to  each  com-
ment  received,  we  do  appreciate  your  feedback  and  will     Publication
consider  your  comments  and  suggestions  as  we  revise            534 534 Depreciating Property Placed in Service Before 
our tax forms, instructions, and publications. Don’t send                 1987
tax questions, tax returns, or payments to the above ad-
                                                                          538 
dress.                                                                538     Accounting Periods and Methods
                                                                          551 
Getting answers to your tax questions.         If you have            551     Basis of Assets

a tax question not answered by this publication or the How         Form (and Instructions)
To Get Tax Help section at the end of this publication, go 
to  the  IRS  Interactive  Tax  Assistant  page  at IRS.gov/          Sch C (Form 1040)      Sch C (Form 1040) Profit or Loss From Business
Help/ITA  where  you  can  find  topics  by  using  the  search       2106    2106 Employee Business Expenses
feature or viewing the categories listed.
                                                                      3115    3115 Application for Change in Accounting Method
Getting  tax  forms,  instructions,  and  publications.               4562    4562 Depreciation and Amortization
Go to IRS.gov/Forms to download current and prior-year 
forms, instructions, and publications.                           See  How  To  Get  Tax  Help  for  information  about  getting 
Ordering tax forms, instructions, and publications.              publications and forms.
Go to IRS.gov/OrderForms to order current forms, instruc-
tions,  and  publications;  call  800-829-3676  to  order 
prior-year  forms  and  instructions.  The  IRS  will  process   What Property Can Be 
your order for forms and publications as soon as possible. 
Don’t resubmit requests you’ve already sent us. You can          Depreciated?
get forms and publications faster online.

                                                                 Terms you may need to know 
                                                                 (see Glossary):
                                                                    Adjusted basis
1.                                                                  Basis
                                                                    Commuting
                                                                    Disposition
Overview of Depreciation
                                                                    Fair market value (FMV)
                                                                    Intangible property
Introduction                                                        Listed property
Depreciation  is  an  annual  income  tax  deduction  that  al-     Placed in service
lows you to recover the cost or other basis of certain prop-
erty over the time you use the property. It is an allowance         Tangible property
for  the  wear  and  tear,  deterioration,  or  obsolescence  of    Term interest
the property.                                                       Useful life
                                                                   
Publication 946 (2023)                   Chapter 1     Overview of Depreciation                                                            3

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You can depreciate most types of tangible property (ex- • The risk of loss if the property is destroyed, con-
cept land), such as buildings, machinery, vehicles, furni- demned, or diminished in value through obsolescence
ture, and equipment. You can also depreciate certain in- or exhaustion.
tangible property, such as patents, copyrights, and
computer software. Life tenant. Generally, if you hold business or investment
property as a life tenant, you can depreciate it as if you
To be depreciable, the property must meet all the fol- were the absolute owner of the property. However, see
lowing requirements. Certain term interests in property under Excepted Prop-
• It must be property you own. erty, later.

• It must be used in your business or income-producing Cooperative apartments. If you are a tenant-stock-
activity. holder in a cooperative housing corporation and use your
• It must have a determinable useful life. cooperative apartment in your business or for the produc-
tion of income, you can depreciate your stock in the cor-
• It must be expected to last more than 1 year. poration, even though the corporation owns the apart-
The following discussions provide information about these ment.
requirements. Figure your depreciation deduction as follows.
1. Figure the depreciation for all the depreciable real
Property You Own property owned by the corporation in which you have
a proprietary lease or right of tenancy. If you bought
To claim depreciation, you must usually be the owner of your cooperative stock after its first offering, figure the
the property. You are considered as owning property even depreciable basis of this property as follows.
if it is subject to a debt.
a. Multiply your cost per share by the total number of
Example 1. You made a down payment to purchase outstanding shares, including any shares held by
rental property and assumed the previous owner's mort- the corporation.
gage. You own the property and you can depreciate it. b. Add to the amount figured in (a) any mortgage
Example 2. You bought a new van that you will use debt on the property on the date you bought the
only for your courier business. You will be making pay- stock.
ments on the van over the next 5 years. You own the van c. Subtract from the amount figured in (b) any mort-
and you can depreciate it. gage debt that is not for the depreciable real prop-
erty, such as the part for the land.
Leased property. You can depreciate leased property
only if you retain the incidents of ownership in the property 2. Subtract from the amount figured in (1) any deprecia-
(explained below). This means you bear the burden of ex- tion for space owned by the corporation that can be
haustion of the capital investment in the property. There- rented but cannot be lived in by tenant-stockholders.
fore, if you lease property from someone to use in your 3. Divide the number of your shares of stock by the total
trade or business or for the production of income, gener- number of outstanding shares, including any shares
ally you cannot depreciate its cost because you do not re- held by the corporation.
tain the incidents of ownership. You can, however, depre-
ciate any capital improvements you make to the property. 4. Multiply the result of (2) by the percentage you figured
See How Do You Treat Repairs and Improvements, later in in (3). This is your depreciation on the stock.
this chapter, and Additions and Improvements under
Your depreciation deduction for the year cannot be
Which Recovery Period Applies? in chapter 4.
more than the part of your adjusted basis in the stock of
If you lease property to someone, you can generally de-
the corporation that is allocable to your business or in-
preciate its cost even if the lessee (the person leasing
come-producing property. You must also reduce your de-
from you) has agreed to preserve, replace, renew, and
preciation deduction if only a portion of the property is
maintain the property. However, if the lease provides that
used in a business or for the production of income.
the lessee is to maintain the property and return to you the
same property or its equivalent in value at the expiration of Example. You figure your share of the cooperative
the lease in as good condition and value as when leased, housing corporation's depreciation to be $30,000. Your
you cannot depreciate the cost of the property. adjusted basis in the stock of the corporation is $50,000.
Incidents of ownership. Incidents of ownership in You use one-half of your apartment solely for business
property include the following. purposes. Your depreciation deduction for the stock for the
year cannot be more than $25,000 ( / of $50,000).1 2
• The legal title to the property.
• The legal obligation to pay for the property.
• The responsibility to pay maintenance and operating
expenses.
• The duty to pay any taxes on the property.

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Change to business use. If you change your cooper- you hold primarily for sale to customers in the ordinary
ative apartment to business use, figure your allowable de- course of your business.
preciation as explained earlier. The basis of all the depre- If you are a rent-to-own dealer, you may be able to treat
ciable real property owned by the cooperative housing certain property held in your business as depreciable
corporation is the smaller of the following amounts. property rather than as inventory. See Rent-to-own dealer
under Which Property Class Applies Under GDS? in
• The FMV of the property on the date you change your
chapter 4.
apartment to business use. This is considered to be
In some cases, it is not clear whether property is held
the same as the corporation's adjusted basis minus
for sale (inventory) or for use in your business. If it is un-
straight line depreciation, unless this value is unrealis-
clear, examine carefully all the facts in the operation of the
tic.
particular business. The following example shows how a
• The corporation's adjusted basis in the property on careful examination of the facts in two similar situations re-
that date. Do not subtract depreciation when figuring sults in different conclusions.
the corporation's adjusted basis.
Example. Maple Corporation is in the business of
If you bought the stock after its first offering, the corpo-
leasing cars. At the end of their useful lives, when the cars
ration's adjusted basis in the property is the amount fig-
are no longer profitable to lease, Maple sells them. Maple
ured in (1) above. The FMV of the property is considered
does not have a showroom, used car lot, or individuals to
to be the same as the corporation's adjusted basis figured
sell the cars. Instead, it sells them through wholesalers or
in this way minus straight line depreciation, unless the
by similar arrangements in which a dealer's profit is not in-
value is unrealistic.
tended or considered. Maple can depreciate the leased
For a discussion of FMV and adjusted basis, see Pub.
cars because the cars are not held primarily for sale to
551.
customers in the ordinary course of business, but are
leased.
Property Used in Your Business or If Maple buys cars at wholesale prices, leases them for
Income-Producing Activity 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
To claim depreciation on property, you must use it in your as inventory and are not depreciable property. In this sit-
business or income-producing activity. If you use property uation, the cars are held primarily for sale to customers in
to produce income (investment use), the income must be the ordinary course of business.
taxable. You cannot depreciate property that you use
solely for personal activities. Containers. Generally, containers for the products you
sell are part of inventory and you cannot depreciate them.
Partial business or investment use. If you use property However, you can depreciate containers used to ship your
for business or investment purposes and for personal pur- products if they have a life longer than 1 year and meet the
poses, you can deduct depreciation based only on the following requirements.
business or investment use. For example, you cannot de- • They qualify as property used in your business.
duct depreciation on a car used only for commuting, per-
sonal shopping trips, family vacations, driving children to • Title to the containers does not pass to the buyer.
and from school, or similar activities. To determine if these requirements are met, consider
You must keep records showing the business, in- the following questions.
vestment, and personal use of your property. For • Does your sales contract, sales invoice, or other type
RECORDS more information on the records you must keep of order acknowledgment indicate whether you have
for listed property, such as a car, see What Records Must retained title?
Be Kept? in chapter 5.
• Does your invoice treat the containers as separate
Although you can combine business and invest- items?
! ment use of property when figuring depreciation • Do any of your records state your basis in the contain-
CAUTION deductions, do not treat investment use as quali- ers?
fied business use when determining whether the busi-
ness-use requirement for listed property is met. For infor-
Property Having a Determinable
mation about qualified business use of listed property, see
What Is the Business-Use Requirement? in chapter 5. Useful Life

To be depreciable, your property must have a determina-
Office in the home. If you use part of your home as an
ble useful life. This means that it must be something that
office, you may be able to deduct depreciation on that part
wears out, decays, gets used up, becomes obsolete, or
based on its business use. For information about depreci-
loses its value from natural causes.
ating 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

Publication 946 (2023) Chapter 1 Overview of Depreciation 5

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Property Lasting More Than 1 Year Excepted Property

To be depreciable, property must have a useful life that ex- Even if the requirements explained in the preceding dis-
tends substantially beyond the year you place it in service. cussions are met, you cannot depreciate the following
property.
Example. You maintain a library for use in your profes-
sion. You can depreciate it. However, if you buy technical • Property placed in service and disposed of in the
books, journals, or information services for use in your same year. Determining when property is placed in
business that have a useful life of 1 year or less, you can- service is explained later.
not depreciate them. Instead, you deduct their cost as a • Equipment used to build capital improvements. You
business expense. must add otherwise allowable depreciation on the
equipment during the period of construction to the ba-
sis of your improvements. See Uniform Capitalization
What Property Cannot Be Rules in Pub. 551.
• Section 197 intangibles. You must amortize these
Depreciated? costs. Intangible property, such as certain computer
software, that is not section 197 intangible property,
can be depreciated if it meets certain requirements.
Terms you may need to know See Intangible Property, later.
(see Glossary):
• Certain term interests.
Amortization
Basis Certain term interests in property. You cannot depreci-
ate a term interest in property created or acquired after
Goodwill July 27, 1989, for any period during which the remainder
Intangible property interest is held, directly or indirectly, by a person related to
you. A term interest in property means a life interest in
Remainder interest property, an interest in property for a term of years, or an
Term interest income interest in a trust.
Related persons. For a description of related per-
sons, see Related Persons, later. For this purpose, how-
Certain property cannot be depreciated. This includes ever, treat as related persons only the relationships listed
land and certain excepted property. in items (1) through (10) of that discussion and substitute
“50%” for “10%” each place it appears.
Land Basis adjustments. If you would be allowed a depre-
ciation deduction for a term interest in property except that
You cannot depreciate the cost of land because land does
the holder of the remainder interest is related to you, you
not wear out, become obsolete, or get used up. The cost
must generally reduce your basis in the term interest by
of land generally includes the cost of clearing, grading,
any depreciation or amortization not allowed.
planting, and landscaping.
If you hold the remainder interest, you must generally
Although you cannot depreciate land, you can depreci- increase your basis in that interest by the depreciation not
ate certain land preparation costs, such as landscaping allowed to the term interest holder. However, do not in-
costs, incurred in preparing land for business use. These crease your basis for depreciation not allowed for periods
costs must be so closely associated with other deprecia- during which either of the following situations applies.
ble property that you can determine a life for them along The term interest is held by an organization exempt
•
with the life of the associated property. from tax.
Example. You constructed a new building for use in • The term interest is held by a nonresident alien indi-
your business and paid for grading, clearing, seeding, and vidual or foreign corporation, and the income from the
planting bushes and trees. Some of the bushes and trees term interest is not effectively connected with the con-
were planted right next to the building, while others were duct of a trade or business in the United States.
planted around the outer border of the lot. If you replace
the building, you would have to destroy the bushes and Exceptions. The above rules do not apply to the
trees right next to it. These bushes and trees are closely holder of a term interest in property acquired by gift, be-
associated with the building, so they have a determinable quest, or inheritance. They also do not apply to the holder
useful life. Therefore, you can depreciate them. Add your of dividend rights that were separated from any stripped
other land preparation costs to the basis of your land be- preferred stock if the rights were purchased after April 30,
cause they have no determinable life and you cannot de- 1993, or to a person whose basis in the stock is deter-
preciate them. mined by reference to the basis in the hands of the pur-
chaser.

6 Chapter 1 Overview of Depreciation Publication 946 (2023)

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Example. You bought a home and used it as your per-
sonal home several years before you converted it to rental
When Does Depreciation property. Although its specific use was personal and no
depreciation was allowable, you placed the home in serv-
Begin and End?
ice when you began using it as your home. You can begin
to claim depreciation in the year you converted it to rental
Terms you may need to know property because its use changed to an income-produc-
ing use at that time.
(see Glossary):
Basis
Idle Property
Exchange
Placed in service 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
You begin to depreciate your property when you place it in market for a product made with that machine, continue to
service for use in your trade or business or for the produc- deduct depreciation on the machine.
tion 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. Cost or Other Basis Fully Recovered

You stop depreciating property when you have fully recov-
Placed in Service ered your cost or other basis. You fully recover your basis
You place property in service when it is ready and availa- when your section 179 deduction, allowed or allowable
ble for a specific use, whether in a business activity, an in- depreciation deductions, and salvage value, if applicable,
come-producing activity, a tax-exempt activity, or a per- equal the cost or investment in the property. See What Is
sonal activity. Even if you are not using the property, it is in the Basis of Your Depreciable Property, later.
service when it is ready and available for its specific use.
Retired From Service
Example 1. You bought a machine for your business.
The machine was delivered last year. However, it was not You stop depreciating property when you retire it from
installed and operational until this year. It is considered service, even if you have not fully recovered its cost or
placed in service this year. If the machine had been ready other basis. You retire property from service when you
and available for use when it was delivered, it would be permanently withdraw it from use in a trade or business or
considered placed in service last year even if it was not from use in the production of income because of any of
actually used until this year. the following events.
Example 2. On April 6, Sue Thorn bought a house to • You sell or exchange the property.
use as residential rental property. Sue made several re- • You convert the property to personal use.
pairs and had it ready for rent on July 5. At that time, Sue
began to advertise it for rent in the local newspaper. The • You abandon the property.
house is considered placed in service in July when it was • You transfer the property to a supplies or scrap ac-
ready and available for rent. Sue can begin to depreciate it count.
in July.
• The property is destroyed.
Example 3. James Elm is a building contractor who If you included the property in a general asset ac-
specializes in constructing office buildings. James bought ! count, see How Do You Use General Asset Ac-
a truck last year that had to be modified to lift materials to CAUTION counts? in chapter 4 for the rules that apply when
second-story levels. The installation of the lifting equip- you dispose of that property.
ment 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. What Method Can You Use To

Conversion to business use. If you place property in Depreciate Your Property?
service in a personal activity, you cannot claim deprecia-
tion. However, if you change the property's use to use in a
business or income-producing activity, then you can begin Terms you may need to know
to depreciate it at the time of the change. You place the (see Glossary):
property in service in the business or income-producing
activity on the date of the change. Adjusted basis
Basis

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Convention service before 1987 as separate depreciable property.
Exchange Therefore, you can depreciate that improvement as sepa-
rate property under MACRS if it is the type of property that
Fiduciary otherwise qualifies for MACRS depreciation. For more in-
Grantor formation about improvements, see How Do You Treat Re-
pairs and Improvements, later, and Additions and Im-
Intangible property provements under Which Recovery Period Applies? in
Nonresidential real property chapter 4.
Placed in service
Related persons Property Owned or Used in 1986

Residential rental property You may not be able to use MACRS for property you ac-
quired and placed in service after 1986 if any of the situa-
Salvage value
tions described below apply. If you cannot use MACRS,
Section 1245 property the property must be depreciated under the methods dis-
Section 1250 property cussed in Pub. 534.
Standard mileage rate For the following discussions, do not treat prop-
erty as owned before you placed it in service. If
Straight line method CAUTION! you owned property in 1986 but did not place it in
Unit-of-production method service until 1987, you do not treat it as owned in 1986.
Useful life
Personal property. You cannot use MACRS for personal
property (section 1245 property) in any of the following sit-
uations.
You must use the Modified Accelerated Cost Recovery
System (MACRS) to depreciate most property. MACRS is 1. You or someone related to you owned or used the
discussed in chapter 4. property in 1986.
You cannot use MACRS to depreciate the following 2. You acquired the property from a person who owned it
property. in 1986 and as part of the transaction the user of the
• Property you placed in service before 1987. property did not change.
• Certain property owned or used in 1986. 3. You lease the property to a person (or someone rela-
• Intangible property. ted to this person) who owned or used the property in
1986.
• Films, videotapes, and recordings.
4. You acquired the property in a transaction in which:
• Certain corporate or partnership property acquired in
a nontaxable transfer. a. The user of the property did not change, and
• Property you elected to exclude from MACRS. b. The property was not MACRS property in the
The following discussions describe the property listed hands of the person from whom you acquired it
above and explain what depreciation method should be because of (2) or (3) above.

used. Real property. You generally cannot use MACRS for real
property (section 1250 property) in any of the following sit-
Property You Placed in Service uations.
Before 1987 • You or someone related to you owned the property in
1986.
You cannot use MACRS for property you placed in service
before 1987 (except property you placed in service after • You lease the property to a person who owned the
July 31, 1986, if MACRS was elected). Property placed in property in 1986 (or someone related to that person).
service before 1987 must be depreciated under the meth- • You acquired the property in a like-kind exchange, in-
ods discussed in Pub. 534. voluntary conversion, or repossession of property you
For a discussion of when property is placed in service, or someone related to you owned in 1986. MACRS
see When Does Depreciation Begin and End, earlier. applies only to that part of your basis in the acquired
property that represents cash paid or unlike property
Use of real property changed. You must generally use given up. It does not apply to the carried-over part of
MACRS to depreciate real property that you acquired for the basis.
personal use before 1987 and changed to business or in-
come-producing use after 1986. Exceptions. The rules above do not apply to the follow-
ing.
Improvements made after 1986. You must treat an im-
provement made after 1986 to property you placed in

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1. Residential rental property or nonresidential real prop- sections 52(a) and 52(b) of the Internal Revenue
erty. Code.
2. Any property if, in the first tax year it is placed in serv- When to determine relationship. You must deter-
ice, the deduction under the Accelerated Cost Recov- mine whether you are related to another person at the
ery System (ACRS) is more than the deduction under time you acquire the property.
MACRS using the half-year convention. For informa- A partnership acquiring property from a terminating
tion on how to figure depreciation under ACRS, see partnership must determine whether it is related to the ter-
Pub. 534. minating partnership immediately before the event caus-
ing the termination.
3. Property that was MACRS property in the hands of
the person from whom you acquired it because of (2) Constructive ownership of stock or partnership in-
above. terest. To determine whether a person directly or indi-
rectly owns any of the outstanding stock of a corporation
Related persons. For this purpose, the following are re- or an interest in a partnership, apply the following rules.
lated persons.
1. Stock or a partnership interest directly or indirectly
1. An individual and a member of their family, including owned by or for a corporation, partnership, estate, or
only a spouse, child, parent, sibling, half sibling, an- trust is considered owned proportionately by or for its
cestor, and lineal descendant. shareholders, partners, or beneficiaries. However, for
2. A corporation and an individual who directly or indi- a partnership interest owned by or for a C corporation,
rectly owns more than 10% of the value of the out- this applies only to shareholders who directly or indi-
standing stock of that corporation. rectly own 5% or more of the value of the stock of the
corporation.
3. Two corporations that are members of the same con-
trolled group. 2. An individual is considered to own the stock or part-
nership interest directly or indirectly owned by or for
4. A trust fiduciary and a corporation if more than 10% of the individual's family.
the value of the outstanding stock is directly or indi-
rectly owned by or for the trust or grantor of the trust. 3. An individual who owns, except by applying rule (2),
any stock in a corporation is considered to own the
5. The grantor and fiduciary, and the fiduciary and bene- stock directly or indirectly owned by or for the individ-
ficiary, of any trust. ual's partner.
6. The fiduciaries of two different trusts, and the fiducia- 4. For purposes of rule (1), (2), or (3), stock or a partner-
ries and beneficiaries of two different trusts, if the ship interest considered to be owned by a person un-
same person is the grantor of both trusts. der rule (1) is treated as actually owned by that per-
7. A tax-exempt educational or charitable organization son. However, stock or a partnership interest
and any person (or, if that person is an individual, a considered to be owned by an individual under rule
member of that person's family) who directly or indi- (2) or (3) is not treated as owned by that individual for
rectly controls the organization. reapplying either rule (2) or (3) to make another per-
son considered to be the owner of the same stock or
8. Two S corporations, and an S corporation and a regu- partnership interest.
lar corporation, if the same persons own more than
10% of the value of the outstanding stock of each cor-
Intangible Property
poration.
9. A corporation and a partnership if the same persons Generally, if you can depreciate intangible property, you
own both of the following. usually use the straight line method of depreciation. How-
ever, you can choose to depreciate certain intangible
a. More than 10% of the value of the outstanding
property under the income forecast method (discussed
stock of the corporation.
later).
b. More than 10% of the capital or profits interest in
You cannot depreciate intangible property that is a
the partnership.
section 197 intangible or that does not otherwise
10. The executor and beneficiary of any estate. CAUTION! meet all the requirements discussed earlier under
What Property Can Be Depreciated.
11. A partnership and a person who directly or indirectly
owns more than 10% of the capital or profits interest
in the partnership. Straight Line Method
12. Two partnerships, if the same persons directly or indi-
This method lets you deduct the same amount of depreci-
rectly own more than 10% of the capital or profits in-
ation each year over the useful life of the property. To fig-
terest in each.
ure your deduction, first determine the adjusted basis, sal-
13. The related person and a person who is engaged in vage value, and estimated useful life of your property.
trades or businesses under common control. See Subtract the salvage value, if any, from the adjusted basis.

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The balance is the total depreciation you can take over the definite duration, such as a trade association member-
useful life of the property. ship, are eligible costs.
The following are not eligible.
Divide the balance by the number of years in the useful Any intangible asset acquired from another person.
•
life. This gives you your yearly depreciation deduction. Un-
less there is a big change in adjusted basis or useful life, • Created financial interests.
this amount will stay the same throughout the time you de- • Any intangible asset that has a useful life that can be
preciate the property. If, in the first year, you use the prop- estimated with reasonable accuracy.
erty for less than a full year, you must prorate your depre-
ciation deduction for the number of months in use. • Any intangible asset that has an amortization period or
limited useful life that is specifically prescribed or pro-
Example. In April, you bought a patent for $5,100 that hibited by the Code, regulations, or other published
is not a section 197 intangible. You depreciate the patent IRS guidance.
under the straight line method, using a 17-year useful life • Any amount paid to facilitate an acquisition of a trade
and no salvage value. You divide the $5,100 basis by 17 or business, a change in the capital structure of a
years to get your $300 yearly depreciation deduction. You business entity, and certain other transactions.
only used the patent for 9 months during the first year, so
you multiply $300 by / to get your deduction of $225 for 9 12 You must also increase the 15-year safe harbor amorti-
the first year. Next year, you can deduct $300 for the full zation period to a 25-year period for certain intangibles re-
year. lated to benefits arising from the provision, production, or
improvement of real property. For this purpose, real prop-
Patents and copyrights. If you can depreciate the cost erty includes property that will remain attached to the real
of a patent or copyright, use the straight line method over property for an indefinite period of time, such as roads,
the useful life. The useful life of a patent or copyright is the bridges, tunnels, pavements, and pollution control facili-
lesser of the life granted to it by the government or the re- ties.
maining life when you acquire it. However, if the patent or
copyright becomes valueless before the end of its useful Income Forecast Method
life, you can deduct in that year any of its remaining cost or
other basis. You can choose to use the income forecast method in-
stead of the straight line method to depreciate the follow-
Computer software. Computer software is generally a ing depreciable intangibles.
section 197 intangible and cannot be depreciated if you
acquired it in connection with the acquisition of assets • Motion picture films or videotapes.
constituting a business or a substantial part of a business. • Sound recordings.
However, computer software is not a section 197 intan-
gible and can be depreciated, even if acquired in connec- • Copyrights.
tion with the acquisition of a business, if it meets all of the • Books.
following tests.
• Patents.
• It is readily available for purchase by the general pub-
lic. Under the income forecast method, each year's depre-
• It is subject to a nonexclusive license. ciation deduction is equal to the cost of the property, multi-
plied by a fraction. The numerator of the fraction is the cur-
• It has not been substantially modified. rent year's net income from the property, and the
If the software meets the tests above, it may also qualify denominator is the total income anticipated from the prop-
for the section 179 deduction and the special depreciation erty through the end of the 10th tax year following the tax
allowance, discussed later in chapters 2 and 3. If you can year the property is placed in service. For more informa-
depreciate the cost of computer software, use the straight tion, see section 167(g) of the Internal Revenue Code.
line method over a useful life of 36 months.
Films, videotapes, and recordings. You cannot use
Tax-exempt use property subject to a lease. The MACRS for motion picture films, videotapes, and sound
useful life of computer software leased under a lease recordings. For this purpose, sound recordings are discs,
agreement entered into after March 12, 2004, to a tax-ex- tapes, or other phonorecordings resulting from the fixation
empt organization, governmental unit, or foreign person or of a series of sounds. You can depreciate this property us-
entity (other than a partnership), cannot be less than ing either the straight line method or the income forecast
125% of the lease term. method.

Certain created intangibles. You can amortize certain Participations and residuals. You can include participa-
intangibles created on or after December 31, 2003, over a tions and residuals in the adjusted basis of the property
15-year period using the straight line method and no sal- for purposes of computing your depreciation deduction
vage value, even though they have a useful life that cannot under the income forecast method. The participations and
be estimated with reasonable accuracy. For example, residuals must relate to income to be derived from the
amounts paid to acquire memberships or privileges of in- property before the end of the 10th tax year after the

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property is placed in service. For this purpose, participa- automobile, you are treated as having made an election to
tions and residuals are defined as costs, which by contract exclude the automobile from MACRS. See Pub. 463 for a
vary with the amount of income earned in connection with discussion of the standard mileage rate.
the property.
Instead of including these amounts in the adjusted ba-
sis of the property, you can deduct the costs in the tax
What Is the Basis of Your
year that they are paid.
Videocassettes. If you are in the business of renting Depreciable Property?
videocassettes, you can depreciate only those videocas-
settes bought for rental. If the videocassette has a useful
life of 1 year or less, you can currently deduct the cost as a Terms you may need to know
business expense. (see Glossary):
Abstract fees
Corporate or Partnership Property Adjusted basis
Acquired in a Nontaxable Transfer Basis

MACRS does not apply to property used before 1987 and Exchange
transferred after 1986 to a corporation or partnership (ex-
Fair market value (FMV)
cept property the transferor placed in service after July 31,
1986, if MACRS was elected) to the extent its basis is car-
ried over from the property's adjusted basis in the transfer-
or's hands. You must continue to use the same deprecia- To figure your depreciation deduction, you must determine
tion method as the transferor and figure depreciation as if the basis of your property. To determine basis, you need to
the transfer had not occurred. However, if MACRS would know the cost or other basis of your property.
otherwise apply, you can use it to depreciate the part of
the property's basis that exceeds the carried-over basis. Cost as Basis
The nontaxable transfers covered by this rule include
The basis of property you buy is its cost plus amounts you
the following.
paid for items such as sales tax (see Exception below),
• A distribution in complete liquidation of a subsidiary. freight charges, and installation and testing fees. The cost
• A transfer to a corporation controlled by the transferor. includes the amount you pay in cash, debt obligations,
other property, or services.
• An exchange of property solely for corporate stock or
securities in a reorganization. Exception. You can elect to deduct state and local
general sales taxes instead of state and local income
• A contribution of property to a partnership in exchange taxes as an itemized deduction on Schedule A (Form
for a partnership interest. 1040). If you make that choice, you cannot include those
• A partnership distribution of property to a partner. sales taxes as part of your cost basis.

Assumed debt. If you buy property and assume (or buy
Election To Exclude Property
subject to) an existing mortgage or other debt on the prop-
From MACRS erty, your basis includes the amount you pay for the prop-
erty plus the amount of the assumed debt.
If you can properly depreciate any property under a
method not based on a term of years, such as the Example. You make a $20,000 down payment on
unit-of-production method, you can elect to exclude that property and assume the seller's mortgage of $120,000.
property from MACRS. You make the election by reporting Your total cost is $140,000, the cash you paid plus the
your depreciation for the property on line 15 in Part II of mortgage you assumed.
Form 4562 and attaching a statement, as described in the
Instructions for Form 4562. You must make this election by Settlement costs. The basis of real property also in-
the return due date (including extensions) for the tax year cludes certain fees and charges you pay in addition to the
you place your property in service. However, if you timely purchase price. These are generally shown on your settle-
filed your return for the year without making the election, ment statement and include the following.
you can still make the election by filing an amended return Legal and recording fees.
•
within 6 months of the due date of the return (excluding
extensions). Attach the election to the amended return • Abstract fees.
and write “Filed pursuant to section 301.9100-2” on the • Survey charges.
election statement. File the amended return at the same
address you filed the original return. • Owner's title insurance.
• Amounts the seller owes that you agree to pay, such
Use of standard mileage rate. If you use the standard as back taxes or interest, recording or mortgage fees,
mileage rate to figure your tax deduction for your business

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charges for improvements or repairs, and sales com- untary conversion. See Like-kind exchanges and involun-
missions. tary conversions under How Much Can You Deduct? in
For fees and charges you cannot include in the basis of chapter 3, and Figuring the Deduction for Property Ac-
property, see Real Property in Pub. 551. quired in a Nontaxable Exchange in chapter 4.
There are also special rules for determining the basis of
Property you construct or build. If you construct, build, MACRS property involved in a like-kind exchange or invol-
or otherwise produce property for use in your business, untary conversion when the property is contained in a
you may have to use the uniform capitalization rules to de- general asset account. See How Do You Use General As-
termine the basis of your property. For information about set Accounts? in chapter 4.
the uniform capitalization rules, see Pub. 551 and the reg-
ulations under section 263A of the Internal Revenue Adjusted Basis
Code.
To find your property's basis for depreciation, you may
Other Basis have to make certain adjustments (increases and decrea-
ses) to the basis of the property for events occurring be-
Other basis usually refers to basis that is determined by tween the time you acquired the property and the time you
the way you received the property. For example, your ba- placed it in service. These events could include the follow-
sis is other than cost if you acquired the property in ex- ing.
change for other property, as payment for services you • Installing utility lines.
performed, as a gift, or as an inheritance. If you acquired
property in this or some other way, see Pub. 551 to deter- • Paying legal fees for perfecting the title.
mine your basis. • Settling zoning issues.
Property changed from personal use. If you held prop- • Receiving rebates.
erty for personal use and later use it in your business or in- • Incurring a casualty or theft loss.
come-producing activity, your depreciable basis is the
lesser of the following. For a discussion of adjustments to the basis of your prop-
erty, see Adjusted Basis in Pub. 551.
1. The FMV of the property on the date of the change in
If you depreciate your property under MACRS, you may
use.
also have to reduce your basis by certain deductions and
2. Your original cost or other basis adjusted as follows. credits with respect to the property. For more information,
a. Increased by the cost of any permanent improve- see What Is the Basis for Depreciation? in chapter 4.

ments or additions and other costs that must be Basis adjustment for depreciation allowed or allowa-
added to basis. ble. You must reduce the basis of property by the depre-
b. Decreased by any deductions you claimed for ciation allowed or allowable, whichever is greater. Depre-
casualty and theft losses and other items that re- ciation allowed is depreciation you actually deducted
duced your basis. (from which you received a tax benefit). Depreciation al-
lowable is depreciation you are entitled to deduct.
Example. Several years ago, Nia paid $160,000 to If you do not claim depreciation you are entitled to de-
have a home built on a lot that cost $25,000. Before duct, you must still reduce the basis of the property by the
changing the property to rental use last year, Nia paid full amount of depreciation allowable.
$20,000 for permanent improvements to the house and If you deduct more depreciation than you should, you
claimed a $2,000 casualty loss deduction for damage to must reduce your basis by any amount deducted from
the house. Land is not depreciable, so Nia includes only which you received a tax benefit (the depreciation al-
the cost of the house when figuring the basis for deprecia- lowed).
tion.
The adjusted basis in the house when Nia changed its
use was $178,000 ($160,000 + $20,000 − $2,000). On the
same date, the property had an FMV of $180,000, of How Do You Treat Repairs and

which $15,000 was for the land and $165,000 was for the Improvements?
house. The basis for depreciation on the house is the FMV
on the date of change ($165,000) because it is less than If you improve depreciable property, you must treat the im-
Nia’s adjusted basis ($178,000). provement as separate depreciable property. Improve-
ment means an addition to or partial replacement of prop-
Property acquired in a nontaxable transaction. Gen-
erty that is a betterment to the property, restores the
erally, if you receive property in a nontaxable exchange,
property, or adapts it to a new or different use. See section
the basis of the property you receive is the same as the
1.263(a)-3 of the regulations.
adjusted basis of the property you gave up. Special rules
apply in determining the basis and figuring the MACRS You generally deduct the cost of repairing business
depreciation deduction and special depreciation allow- property in the same way as any other business expense.
ance for property acquired in a like-kind exchange or invol- However, if the cost is for a betterment to the property, to

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restore the property, or to adapt the property to a new or         Employee. Do not use Form 4562 if you are an employee 
different use, you must treat it as an improvement and de-         and you deduct job-related vehicle expenses using either 
preciate it.                                                       actual  expenses  (including  depreciation)  or  the  standard 
                                                                   mileage rate. Instead, use Form 2106.
  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 re-       How Do You Correct 
storation  of  the  building.  You  depreciate  the  cost  of  the 
                                                                   Depreciation Deductions?
new roof.
Improvements to rented property.  You can depreciate               If you deducted an incorrect amount of depreciation in any 
permanent improvements you make to business property               year,  you  may  be  able  to  make  a  correction  by  filing  an 
you rent from someone else.                                        amended return for that year. See     Filing an Amended Re-
                                                                   turn next. If you are not allowed to make the correction on 
                                                                   an amended return, you may be able to change your ac-
                                                                   counting method to claim the correct amount of deprecia-
Do You Have To File                                                tion. See Changing Your Accounting Method, later.
Form 4562?
                                                                   Filing an Amended Return

Terms you may need to know                                         You can file an amended return to correct the amount of 
(see Glossary):                                                    depreciation claimed for any property in any of the follow-
                                                                   ing situations.
   Amortization
                                                                   • You claimed the incorrect amount because of a math-
   Listed property                                                   ematical error made in any year.
   Placed in service                                                 You claimed the incorrect amount because of a post-
                                                                   •
   Standard mileage rate                                             ing error made in any year.
                                                                   • You have not adopted a method of accounting for 
                                                                     property placed in service by you in tax years ending 
Use Form 4562 to figure your deduction for depreciation              after December 29, 2003.
and amortization. Attach Form 4562 to your tax return for 
the current tax year if you are claiming any of the following      •   You claimed the incorrect amount on property placed 
                                                                       in service by you in tax years ending before December 
items.
                                                                       30, 2003.
 • A section 179 deduction for the current year or a sec-
   tion 179 carryover from a prior year. See chapter 2 for         Adoption  of  accounting  method  defined.            Generally, 
   information on the section 179 deduction.                       you adopt a method of accounting for depreciation by us-
                                                                   ing  a  permissible  method  of  determining  depreciation 
 • Depreciation for property placed in service during the          when you file your first tax return, or by using the same im-
   current year.                                                   permissible method of determining depreciation in two or 
 • Depreciation on any vehicle or other listed property,           more consecutively filed tax returns.
   regardless of when it was placed in service. See chap-           For  an  exception  to  the  2-year  rule,  see  sections 
   ter 5 for information on listed property.                       6.01(1)(b),  6.19(1)(b),  and  6.21(3)(b)  of  Revenue  Proce-
                                                                   dure  2022-14  on  page  502  of  Internal  Revenue  Bulletin 
 • A deduction for any vehicle if the deduction is reported 
                                                                   2022-7,   available at IRS.gov/irb/2022–7_IRB#REV-
   on a form other than Schedule C (Form 1040).
                                                                   PROC-2022-14; or any successor.
 • Amortization of costs if the current year is the first year 
   of the amortization period.                                     When to file.  If an amended return is allowed, you must 
                                                                   file it by the later of the following.
 • Depreciation or amortization on any asset on a corpo-
   rate income tax return (other than Form 1120-S, U.S.            • 3 years from the date you filed your original return for 
   Income Tax Return for an S Corporation) regardless of             the year in which you did not deduct the correct 
   when it was placed in service.                                    amount. A return filed before an unextended due date 
                                                                     is considered filed on that due date.
        You must submit a separate Form 4562 for each 
                                                                   • 2 years from the time you paid your tax for that year.
  !     business  or  activity  on  your  return  for  which  a 
CAUTION Form 4562 is required.
                                                                   Changing Your Accounting Method
  Table  1-1  presents  an  overview  of  the  purpose  of  the 
various parts of Form 4562.                                        Generally,  you  must  get  IRS  approval  to  change  your 
                                                                   method of accounting. You must generally file Form 3115, 

Publication 946 (2023)            Chapter 1           Overview of Depreciation                                             13

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Application for Change in Accounting Method, to request        letin 2015-5. If you do not qualify to use the automatic pro-
a change in your method of accounting for depreciation.        cedures to get approval, you must use the advance con-
                                                               sent  request  procedures  generally  covered  in  Revenue 
The following are examples of a change in method of            Procedure  2015-13.  Also,  see  the  Instructions  for  Form 
accounting for depreciation.                                   3115  for  more  information  on  getting  approval,  including 
•  A change from an impermissible method of determin-          lists  of  scope  limitations  and  automatic  accounting 
   ing depreciation for depreciable property if the imper-     method changes.
   missible method was used in two or more consecu-
                                                               Additional  guidance.     For  additional  guidance  and 
   tively filed tax returns.
                                                               special procedures for changing your accounting method, 
•  A change in the treatment of an asset from nondepre-        automatic change procedures, amending your return, and 
   ciable to depreciable or vice versa.                        filing  Form  3115,  see  Revenue  Procedure  2015-13  on 
•  A change in the depreciation method, period of recov-       page 419 of Internal Revenue Bulletin 2015-5, available at 
   ery, or convention of a depreciable asset.                  IRS.gov/irb/2015-05_IRB#RP-2015-13;  Revenue  Proce-
                                                               dure 2019-43 on page 1107 of Internal Revenue Bulletin 
•  A change from not claiming to claiming the special de-      2019-48,  available  at   IRS.gov/irb/2019-48_IRB#REV-
   preciation allowance if you did not make the election       PROC-2019-43;  Revenue       Procedure 2022-14            on 
   to not claim any special allowance.                         page 502 of Internal Revenue Bulletin 2022-7, available at 
•  A change from claiming a 50% special depreciation al-       IRS.gov/irb/2022-7_IRB#REV-PROC-2022-14  and  Reve-
   lowance to claiming a 100% special depreciation al-         nue Procedure 2023-34 on page 1207 of Internal Revenue 
   lowance for qualified property acquired and placed in       Bulletin 2023-28,         available at IRS.gov/irb/
   service by you after September 27, 2017 (if you did         2023-28_IRB#REV-PROC-2023-24.
   not make the election under section 168(k)(10) to 
                                                               Section  481(a)  adjustment. If  you  file  Form  3115  and 
   claim a 50% special depreciation allowance).
                                                               change  from  an  impermissible  method  to  a  permissible 
Changes  in  depreciation  that  are  not  a  change  in       method  of  accounting  for  depreciation,  you  can  make  a 
method  of  accounting  (and  may  only  be  made  on  an      section  481(a)  adjustment  for  any  unclaimed  or  excess 
amended return) include the following.                         amount  of  allowable  depreciation.  The  adjustment  is  the 
                                                               difference between the total depreciation actually deduc-
•  An adjustment in the useful life of a depreciable asset 
                                                               ted for the property and the total amount allowable prior to 
   for which depreciation is determined under section 
                                                               the year of change. If no depreciation was deducted, the 
   167.
                                                               adjustment is the total depreciation allowable prior to the 
•  A change in use of an asset in the hands of the same        year of change. A negative section 481(a) adjustment re-
   taxpayer.                                                   sults in a decrease in taxable income. It is taken into ac-
•  Making a late depreciation election or revoking a           count in the year of change and is reported on your busi-
   timely valid depreciation election (including the elec-     ness  tax  returns  as  “other  expenses.”  A  positive  section 
   tion not to deduct the special depreciation allowance).     481(a)  adjustment  results  in  an  increase  in  taxable  in-
   If you elected not to claim any special depreciation al-    come. It is generally taken into account over 4 tax years 
   lowance, a change from not claiming to claiming the         and is reported on your business tax returns as “other in-
   special depreciation allowance is a revocation of the       come.” However, you can elect to use a 1-year adjustment 
   election and is not an accounting method change.            period and report the adjustment in the year of change if 
   Generally, you must get IRS approval to make a late         the total adjustment is less than $50,000. Make the elec-
   depreciation election or revoke a depreciation elec-        tion by completing the appropriate line on Form 3115.
   tion. You must submit a request for a letter ruling to      If you file a Form 3115 and change from one permissi-
   make a late election or revoke an election.                 ble  method  to  another  permissible  method,  the  section 
                                                               481(a) adjustment is zero.
•  Any change in the placed in service date of a depreci-
   able asset.
See  sections  1.446-1(e)(2)(ii)(d)  and  1.446-1(e)(2)(iii) 
of the regulations for more information and examples.

IRS approval. If your change in method of accounting for 
depreciation is described in Revenue Procedure 2019-43, 
on  page  1107  of  Internal  Revenue  Bulletin  2019-48,  as 
modified, amplified, and superseded by Revenue Proce-
dure  2022-14,  on  page  502  of  Internal  Revenue  Bulletin 
2022-7, as modified, amplified, and superseded by Reve-
nue Procedure 2023-34, on page 1207 of Internal Reve-
nue  Bulletin  2023-28,  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 Bul-

14                                      Chapter 1    Overview of Depreciation               Publication 946 (2023)

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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
       I          • 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
       II         • 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 
                  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
       IV         • Summarizing other parts
       V          • 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
       VI         • Reporting amortization deductions

                                                                     Form (and Instructions)
                                                                        4562 4562 Depreciation and Amortization
2.
                                                                        4797 4797 Sales of Business Property
                                                                   See  How  To  Get  Tax  Help  for  information  about  getting 
Electing the Section 179                                           publications and forms.

Deduction
                                                                   What Property Qualifies?

Introduction
                                                                   Terms you may need to know 
You can elect to recover all or part of the cost of certain        (see Glossary):
qualifying property, up to a limit, by deducting it in the year 
you place the property in service. This is the section 179            Adjusted basis
deduction.  You  can  elect  the  section  179  deduction  in-        Basis
stead of recovering the cost by taking depreciation deduc-
tions.                                                                Class life
       Estates  and  trusts  cannot  elect  the  section  179         Structural components
!      deduction.                                                     Tangible property
CAUTION
                                                                    
This chapter explains what property does and does not 
qualify for the section 179 deduction, what limits apply to        To  qualify  for  the  section  179  deduction,  your  property 
the deduction (including special rules for partnerships and        must meet all the following requirements.
corporations),  and  how  to  elect  it.  It  also  explains  when 
and how to recapture the deduction.                                 • It must be eligible property.
                                                                    • It must be acquired for business use.
Useful Items
                                                                    • It must have been acquired by purchase.
You may want to see:
                                                                    • It must not be property described later under What 
Publication                                                           Property Does Not Qualify.
  537  537 Installment Sales                                         The  following  discussions  provide  information  about 
                                                                   these requirements and exceptions.
  544  544 Sales and Other Dispositions of Assets

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Eligible Property readily available for purchase by the general public, is
subject to a nonexclusive license, and has not been sub-
To qualify for the section 179 deduction, your property stantially modified. It includes any program designed to
must be one of the following types of depreciable property. cause a computer to perform a desired function. However,
a database or similar item is not considered computer
1. Tangible personal property. software unless it is in the public domain and is incidental
2. Other tangible property (except buildings and their to the operation of otherwise qualifying software.

structural components) used as: Qualified section 179 real property. You can elect to
a. An integral part of manufacturing, production, or treat certain qualified real property you placed in service
extraction, or of furnishing transportation, commu- during the tax year as section 179 property. If this election
nications, electricity, gas, water, or sewage dis- is made, the term “section 179 property” will include any
posal services; qualified real property that is:
b. A research facility used in connection with any of • Qualified improvement property, as described in sec-
the activities in (a) above; or tion 168(e)(6) of the Internal Revenue Code; and
c. A facility used in connection with any of the activi- • Any of the following improvements to nonresidential
ties in (a) for the bulk storage of fungible commod- real property placed in service after the date the non-
ities. residential real property was first placed in service.
3. Single-purpose agricultural (livestock) or horticultural 1. Roofs.
structures. See chapter 7 of Pub. 225 for definitions 2. Heating, ventilation, and air-conditioning property.
and information regarding the use requirements that
apply to these structures. 3. Fire protection and alarm systems.
4. Storage facilities (except buildings and their structural 4. Security systems.
components) used in connection with distributing pe- For more information, see Special rules for qualified sec-
troleum or any primary product of petroleum. tion 179 real property, later.
5. Off-the-shelf computer software. Qualified improvement property. Generally, this is
any improvement to an interior portion of a building that is
6. Qualified section 179 real property (described below).
nonresidential real property if the improvement is placed
Tangible personal property. Tangible personal property in service after the date the building was first placed in
is any tangible property that is not real property. It includes service.
the following property. Also, qualified improvement property does not include
the cost of any improvement attributable to the following.
• Machinery and equipment.
• The enlargement of the building.
• Property contained in or attached to a building (other
than structural components), such as refrigerators, • Any elevator or escalator.
grocery store counters, office equipment, printing • The internal structural framework of the building.
presses, testing equipment, and signs.
• Gasoline storage tanks and pumps at retail service Property Acquired for Business Use
stations.
To qualify for the section 179 deduction, your property
• Livestock, including horses, cattle, hogs, sheep,
must have been acquired for use in your trade or busi-
goats, and mink and other furbearing animals.
ness. Property you acquire only for the production of in-
• Portable air conditioners or heaters placed in service come, such as investment property, rental property (if rent-
by you in tax years beginning after 2015. ing property is not your trade or business), and property
• Certain property used predominantly to furnish lodg- that produces royalties, does not qualify.

ing or in connection with the furnishing of lodging (ex- Partial business use. When you use property for both
cept as provided in section 50(b)(2)). business and nonbusiness purposes, you can elect the
The treatment of property as tangible personal property section 179 deduction only if you use the property more
for the section 179 deduction is not controlled by its treat- than 50% for business in the year you place it in service. If
ment under local law. For example, property may not be you use the property more than 50% for business, multiply
tangible personal property for the deduction even if trea- the cost of the property by the percentage of business
ted so under local law, and some property (such as fix- use. Use the resulting business cost to figure your section
tures) may be tangible personal property for the deduction 179 deduction.
even if treated as real property under local law.
Example. May Oak bought and placed in service an
Off-the-shelf computer software. Off-the-shelf com- item of section 179 property costing $11,000. May used
puter software is qualifying property for purposes of the the property 80% for business and 20% for personal
section 179 deduction. This is computer software that is

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purposes. The business part of the cost of the property is Excepted Property
$8,800 (80% (0.80) × $11,000).
Even if the requirements explained earlier under What
Property Acquired by Purchase Property Qualifies? are met, you cannot elect the section
179 deduction for the following property.
To qualify for the section 179 deduction, your property Certain property you lease to others (if you are a non-
•
must have been acquired by purchase. For example, prop- corporate lessor).
erty acquired by gift or inheritance does not qualify.
• Property used predominantly outside the United
Property is not considered acquired by purchase in the States, except property described in section 168(g)(4)
following situations. of the Internal Revenue Code.
1. It is acquired by one component member of a control- • Property used by certain tax-exempt organizations,
led group from another component member of the except property used in connection with the produc-
same group. tion of income subject to the tax on unrelated trade or
2. Its basis is determined either: business income.
a. In whole or in part by its adjusted basis in the • Property used by governmental units or foreign per-
hands of the person from whom it was acquired, or sons or entities, except property used under a lease
with a term of less than 6 months.
b. Under the stepped-up basis rules for property ac-
quired from a decedent. Leased property. Generally, you cannot claim a section
179 deduction based on the cost of property you lease to
3. It is acquired from a related person. someone else. This rule does not apply to corporations.
However, you can claim a section 179 deduction for the
Related persons. Related persons are described under
cost of the following property.
Related persons, earlier. However, to determine whether
property qualifies for the section 179 deduction, treat as 1. Property you manufacture or produce and lease to
an individual's family only their spouse, ancestors, and lin- others.
eal descendants and substitute "50%" for "10%" each
place it appears. 2. Property you purchase and lease to others if both the
following tests are met.
Example. You are a tailor. You bought two industrial a. The term of the lease (including options to renew)
sewing machines from your father. You placed both ma- is less than 50% of the property's class life.
chines in service in the same year you bought them. They
do not qualify as section 179 property because you and b. For the first 12 months after the property is trans-
your father are related persons. You cannot claim a sec- ferred to the lessee, the total business deductions
tion 179 deduction for the cost of these machines. you are allowed on the property (other than rents
and reimbursed amounts) are more than 15% of
the rental income from the property.
What Property Does Not

Qualify? How Much Can You Deduct?

Terms you may need to know Terms you may need to know
(see Glossary): (see Glossary):
Basis Adjusted basis
Class life Basis
Placed in service

Certain property does not qualify for the section 179 de-
duction. This includes the following.
Your section 179 deduction is generally the cost of the
qualifying property. However, the total amount you can
Land and Improvements elect to deduct under section 179 is subject to a dollar
limit and a business income limit. These limits apply to
Land and land improvements do not qualify as section 179 each taxpayer, not to each business. However, see Mar-
property. Land improvements include swimming pools, ried Individuals under Dollar Limits, later. For a passenger
paved parking areas, wharves, docks, bridges, and fen- automobile, the total section 179 deduction and deprecia-
ces. tion deduction are limited. See Do the Passenger Automo-
bile Limits Apply? in chapter 5.

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If you deduct only part of the cost of qualifying property ditional dollar limits. The general dollar limit is affected by
as a section 179 deduction, you can generally depreciate any of the following situations.
the cost you do not deduct.
• The cost of your section 179 property placed in serv-
Trade-in of other property. If you buy qualifying prop- ice exceeds $2,890,000.
erty with cash and a trade-in, its cost, for purposes of the • You placed in service a sport utility or certain other ve-
section 179 deduction, includes only the cash you paid. hicles.
Example. Silver Leaf, a retail bakery, traded in two • You are married filing a joint or separate return.
ovens having a total adjusted basis of $680, for a new
oven costing $1,320. They received an $800 trade-in al- Costs Exceeding $2,890,000
lowance for the old ovens and paid $520 in cash for the
new oven. On the date that Silver Leaf traded in the two If the cost of your qualifying section 179 property placed in
old ovens for the new oven, the old ovens and the new service in a year is more than $2,890,000, you must gen-
oven are classified as real property under the law of the erally reduce the dollar limit (but not below zero) by the
state in which the old and new ovens are located and, as a amount of cost over $2,890,000. If the cost of your section
result, the old and new ovens are real property for purpo- 179 property placed in service during 2023 is $4,050,000
ses of section 1031. The new oven is section 179 prop- or more, you cannot take a section 179 deduction.
erty.
Only the portion of the new oven's basis paid by cash Example. In 2023, Jane Ash placed in service machi-
qualifies for the section 179 deduction. Therefore, Silver nery costing $2,940,000. This cost is $50,000 more than
Leaf's qualifying cost for the section 179 deduction is $2,890,000, so Jane must reduce the dollar limit to
$520. $1,110,000 ($1,160,000 − $50,000).

Sport Utility and Certain Other Vehicles
Dollar Limits
You cannot elect to expense more than $28,900 of the
The total amount you can elect to deduct under section
cost of any heavy sport utility vehicle (SUV) and certain
179 for most property placed in service in tax years begin-
other vehicles placed in service in tax years beginning in
ning in 2023 generally cannot be more than $1,160,000. If
2023. This rule applies to any 4-wheeled vehicle primarily
you acquire and place in service more than one item of
designed or used to carry passengers over public streets,
qualifying property during the year, you can allocate the
roads, or highways that is rated at more than 6,000
section 179 deduction among the items in any way, as
pounds gross vehicle weight and not more than 14,000
long as the total deduction is not more than $1,160,000.
pounds gross vehicle weight. However, the $28,900 limit
You do not have to claim the full $1,160,000.
does not apply to any vehicle:
The amount you can elect to deduct is not affec-
TIP ted if you place qualifying property in service in a • Designed to seat more than nine passengers behind
the driver's seat;
short tax year or if you place qualifying property in
service for only a part of a 12-month tax year. • Equipped with a cargo area (either open or enclosed
by a cap) of at least 6 feet in interior length that is not
After you apply the dollar limit to determine a ten- readily accessible from the passenger compartment;
! tative deduction, you must apply the business in- or
CAUTION come limit (described later) to determine your ac-
tual section 179 deduction. • 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
Example. In 2023, you bought and placed in service no body section protruding more than 30 inches
$1,160,000 in machinery and a $25,000 circular saw for ahead of the leading edge of the windshield.
your business. You elect to deduct $1,135,000 for the ma-
chinery and the entire $25,000 for the saw, a total of
Married Individuals
$1,160,000. This is the maximum amount you can deduct.
Your $25,000 deduction for the saw completely recovered If you are married, how you figure your section 179 deduc-
its cost. Your basis for depreciation is zero. The basis for tion depends on whether you file jointly or separately. If
depreciation of your machinery is $25,000. You figure this you file a joint return, you and your spouse are treated as
by subtracting your $1,135,000 section 179 deduction for one taxpayer in determining any reduction to the dollar
the machinery from the $1,160,000 cost of the machinery. limit, regardless of which of you purchased the property or
Situations affecting dollar limit. Under certain circum- placed it in service. If you and your spouse file separate
stances, the general dollar limits on the section 179 de- returns, you are treated as one taxpayer for the dollar limit,
duction may be reduced or increased or there may be ad- including the reduction for costs over $2,890,000. 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.

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Example. You are married. You and your spouse file trades and businesses you actively conducted during the
separate returns. You bought and placed in service year. Net income or loss from a trade or business includes
$2,890,000 of qualified farm machinery in 2023. Your the following items.
spouse has a separate business, and bought and placed
• Section 1231 gains (or losses).
in service $300,000 of qualified business equipment. Your
combined dollar limit is $860,000. This is because you • Interest from working capital of your trade or business.
and your spouse must figure the limit as if you were one • Wages, salaries, tips, or other pay earned as an em-
taxpayer. You reduce the $1,160,000 dollar limit by the ployee.
$300,000 excess of your costs over $2,890,000.
You elect to allocate the $860,000 dollar limit as fol- For information about section 1231 gains and losses, see
lows. chapter 3 of Pub. 544.
In addition, figure taxable income without regard to any
• $817,000 ($860,000 x 95% (0.95)) to your machinery. of the following.
• $43,000 ($860,000 x 5% (0.05)) to your spouse’s • The section 179 deduction.
equipment.
• The self-employment tax deduction.
If you did not make an election to allocate your costs in
this way, you and your spouse would have to allocate • Any net operating loss carryback or carryforward.
$430,000 ($860,000 × 50% (0.50)) to each of you. • Any unreimbursed employee business expenses.

Joint return after filing separate returns. If you and Two different taxable income limits. In addition to the
your spouse elect to amend your separate returns by filing business income limit for your section 179 deduction, you
a joint return after the due date for filing your return, the may have a taxable income limit for some other deduction.
dollar limit on the joint return is the lesser of the following You may have to figure the limit for this other deduction
amounts. taking into account the section 179 deduction. If so, com-
• The dollar limit (after reduction for any cost of section plete the following steps.
179 property over $2,890,000).
• The total cost of section 179 property you and your Step Action
spouse elected to expense on your separate returns. 1 Figure taxable income without the section 179
deduction or the other deduction.
Example. The facts are the same as in the previous
example, except that you elected to deduct $300,000 of 2 Figure a hypothetical section 179 deduction
the cost of section 179 property on your separate return using the taxable income figured in Step 1.
and your spouse elected to deduct $20,000. After the due 3 Subtract the hypothetical section 179 deduction
date of your returns, you and your spouse file a joint re- figured in Step 2 from the taxable income
turn. The dollar limit for the section 179 deduction is figured in Step 1.
$320,000. This is the lesser of the following amounts.
4 Figure a hypothetical amount for the other
• $860,000—The dollar limit less the cost of section 179 deduction using the amount figured in Step 3
property over $2,890,000. as taxable income.
• $320,000—The total you and your spouse elected to 5 Subtract the hypothetical other deduction
expense on your separate returns. figured in Step 4 from the taxable income
figured in Step 1.
Business Income Limit 6 Figure your actual section 179 deduction using
The total cost you can deduct each year after you apply the taxable income figured in Step 5.
the dollar limit is limited to the taxable income from the ac- 7 Subtract your actual section 179 deduction
tive conduct of any trade or business during the year. figured in Step 6 from the taxable income
Generally, you are considered to actively conduct a trade figured in Step 1.
or business if you meaningfully participate in the manage- 8 Figure your actual other deduction using the
ment or operations of the trade or business.
taxable income figured in Step 7.
Any cost not deductible in 1 year under section 179 be-
cause of this limit can be carried to the next year. Special Example. On February 1, 2023, the XYZ Corporation
rules apply to a deduction of qualified section 179 real purchased and placed in service qualifying section 179
property that is placed in service by you in tax years be- property that cost $1,160,000. It elects to expense the en-
ginning before 2016 and disallowed because of the busi- tire $1,160,000 cost under section 179. In June, the cor-
ness income limit. See Special rules for qualified section poration gave a charitable contribution of $10,000. A cor-
179 real property under Carryover of disallowed deduc- poration's limit on charitable contributions is figured after
tion, later. subtracting any section 179 deduction. The business in-
come limit for the section 179 deduction is figured after
Taxable income. In general, figure taxable income for
subtracting any allowable charitable contributions. XYZ's
this purpose by totaling the net income and losses from all

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taxable income figured without the section 179 deduction If there is a sale or other disposition of your prop-
or the deduction for charitable contributions is $1,180,000. TIP erty (including a transfer at death) before you can
XYZ figures its section 179 deduction and its deduction for use the full amount of any outstanding carryover
charitable contributions as follows. of your disallowed section 179 deduction, neither you nor
the new owner can deduct any of the unused amount. In-
Step 1—Taxable income figured without either deduc-
stead, you must add it back to the property's basis.
tion is $1,180,000.
Step 2—Using $1,180,000 as taxable income, XYZ's
hypothetical section 179 deduction is $1,160,000. Partnerships and Partners

Step 3—$20,000 ($1,180,000 − $1,160,000). The section 179 deduction limits apply both to the partner-
Step 4—Using $20,000 (from Step 3) as taxable in- ship and to each partner. The partnership determines its
come, XYZ's hypothetical charitable contribution (limi- section 179 deduction subject to the limits. It then allo-
ted to 10% of taxable income) is $2,000. cates the deduction among its partners.
Step 5—$1,178,000 ($1,180,000 − $2,000). Each partner adds the amount allocated from partner-
Step 6—Using $1,178,000 (from Step 5) as taxable ships (shown on Schedule K-1 (Form 1065), Partner's
income, XYZ figures the actual section 179 deduction. Share of Income, Deductions, Credits, etc.) to their non-
Because the taxable income is at least $1,160,000, partnership section 179 costs and then applies the dollar
XYZ can take a $1,160,000 section 179 deduction. limit to this total. To determine any reduction in the dollar
limit for costs over $2,890,000, the partner does not in-
Step 7—$20,000 ($1,180,000 − $1,160,000). clude any of the cost of section 179 property placed in
Step 8—Using $20,000 (from Step 7) as taxable in- service by the partnership. After the dollar limit (reduced
come, XYZ's actual charitable contribution (limited to for any nonpartnership section 179 costs over
10% of taxable income) is $2,000. $2,890,000) is applied, any remaining cost of the partner-
ship and nonpartnership section 179 property is subject to
Carryover of disallowed deduction. You can carry over the business income limit.
for an unlimited number of years the cost of any qualified
section 179 real property that you placed in service in tax Partnership's taxable income. For purposes of the
years beginning after 2015, and that you elected to ex- business income limit, figure the partnership's taxable in-
pense, but were unable to deduct because of the busi- come by adding together the net income and losses from
ness income limitation. This disallowed deduction amount all trades or businesses actively conducted by the partner-
is shown on line 13 of Form 4562. You use the amount you ship during the year. See the Instructions for Form 1065
carry over to determine your section 179 deduction in the for information on how to figure partnership net income (or
next year. Enter that amount on line 10 of your Form 4562 loss). However, figure taxable income without regard to
for the next year. credits, tax-exempt income, the section 179 deduction,
If you place more than one property in service in a year, and guaranteed payments under section 707(c) of the In-
you can select the properties for which all or a part of the ternal Revenue Code.
costs will be carried forward. Your selections must be
Partner's share of partnership's taxable income. For
shown in your books and records. For this purpose, treat
purposes of the business income limit, the taxable income
section 179 costs allocated from a partnership or an S
of a partner engaged in the active conduct of one or more
corporation as one item of section 179 property. If you do
of a partnership's trades or businesses includes their allo-
not make a selection, the total carryover will be allocated
cable share of taxable income derived from the partner-
equally among the properties you elected to expense for
ship's active conduct of any trade or business.
the year.
If costs from more than 1 year are carried forward to a Example. In 2023, Beech Partnership placed in serv-
subsequent year in which only part of the total carryover ice section 179 property with a total cost of $2,940,000.
can be deducted, you must deduct the costs being carried The partnership must reduce its dollar limit by $50,000
forward from the earliest year first. ($2,940,000 − $2,890,000). Its maximum section 179 de-
Special rules for qualified section 179 real prop- duction is $1,110,000 ($1,160,000 − $50,000), and it
erty. You can carry over to 2024 a 2023 deduction attrib- elects to expense that amount. The partnership's taxable
utable to qualified section 179 real property that you income from the active conduct of all its trades or busi-
placed in service during the tax year and that you elected nesses for the year was $1,110,000, so it can deduct the
to expense but were unable to take because of the busi- full $1,110,000. It allocates $40,000 of its section 179 de-
ness income limitation. See Carryover of disallowed de- duction and $50,000 of its taxable income to Dean, one of
duction, earlier. Thus, the amount of any 2023 disallowed its partners.
section 179 expense deduction attributable to qualified In addition to being a partner in Beech Partnership,
section 179 real property will be reported on line 13 of Dean is also a partner in Cedar Partnership, which alloca-
Form 4562. ted to Dean a $30,000 section 179 deduction and $35,000
of its taxable income from the active conduct of its busi-
ness. Dean also conducts a business as a sole proprietor
and, in 2023, placed in service in that business qualifying

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section 179 property costing $55,000. Dean had a net shareholders. The deduction limits apply to an S corpora-
loss of $5,000 from that business for the year. tion and to each shareholder. The S corporation allocates
Dean does not have to include section 179 partnership its deduction to the shareholders who then take their sec-
costs to figure any reduction in the dollar limit, so the total tion 179 deduction subject to the limits.
section 179 costs for the year are not more than
$2,890,000 and the dollar limit is not reduced. Dean’s Figuring taxable income for an S corporation. To fig-
maximum section 179 deduction is $1,160,000. Dean ure taxable income (or loss) from the active conduct by an
elects to expense all of the $70,000 in section 179 deduc- S corporation of any trade or business, you total the net in-
tions allocated from the partnerships ($40,000 from Beech come and losses from all trades or businesses actively
Partnership plus $30,000 from Cedar Partnership), plus conducted by the S corporation during the year.
$55,000 of the sole proprietorship's section 179 costs, To figure the net income (or loss) from a trade or busi-
and notes that information in the books and records. How- ness actively conducted by an S corporation, you take into
ever, Dean’s deduction is limited to the business taxable account the items from that trade or business that are
income of $80,000 ($50,000 from Beech Partnership, plus passed through to the shareholders and used in determin-
$35,000 from Cedar Partnership, minus $5,000 loss from ing each shareholder's tax liability. However, you do not
Dean’s sole proprietorship). Dean carries over $45,000 take into account any credits, tax-exempt income, the sec-
($125,000 − $80,000) of the elected section 179 costs to tion 179 deduction, and deductions for compensation paid
2024. Dean allocates the carryover amount to the cost of to shareholder-employees. For purposes of determining
section 179 property placed in service in Dean’s sole pro- the total amount of S corporation items, treat deductions
prietorship, and notes that allocation in the books and re- and losses as negative income. In figuring the taxable in-
cords. come of an S corporation, disregard any limits on the
amount of an S corporation item that must be taken into
Different tax years. For purposes of the business in- account when figuring a shareholder's taxable income.
come limit, if the partner's tax year and that of the partner-
ship differ, the partner's share of the partnership's taxable
income for a tax year is generally the partner's distributive Other Corporations

share for the partnership tax year that ends with or within A corporation's taxable income from its active conduct of
the partner's tax year. any trade or business is its taxable income figured with the
Example. John and James Oak are equal partners in following changes.
Oak Partnership. Oak Partnership uses a tax year ending 1. It is figured before deducting the section 179 deduc-
January 31. John and James both use a tax year ending tion, any net operating loss deduction, and special de-
December 31. For its tax year ending January 31, 2023, ductions (as reported on the corporation's income tax
Oak Partnership's taxable income from the active conduct return).
of its business is $80,000, of which $70,000 was earned
during 2022. John and James each include $40,000 (each 2. It is adjusted for items of income or deduction inclu-
partner's entire share) of partnership taxable income in ded in the amount figured in (1) not derived from a
computing their business income limit for the 2023 tax trade or business actively conducted by the corpora-
year. tion during the tax year.

Adjustment of partner's basis in partnership. A part-
ner must reduce the basis of their partnership interest by How Do You Elect the
the total amount of section 179 expenses allocated from
the partnership even if the partner cannot currently deduct Deduction?
the total amount. If the partner disposes of their partner-
ship interest, the partner's basis for determining gain or
loss is increased by any outstanding carryover of disal- Terms you may need to know
lowed section 179 expenses allocated from the partner- (see Glossary):
ship.
Listed property
Adjustment of partnership's basis in section 179 Placed in service
property. The basis of a partnership's section 179 prop-

erty must be reduced by the section 179 deduction elec-
ted by the partnership. This reduction of basis must be
Election. You elect to take the section 179 deduction by
made even if a partner cannot deduct all or part of the
completing Part I of Form 4562.
section 179 deduction allocated to that partner by the
partnership because of the limits. If you elect the deduction for listed property (de-
scribed in chapter 5), complete Part V of Form
S Corporations CAUTION! 4562 before completing Part I.

Generally, the rules that apply to a partnership and its
partners also apply to an S corporation and its

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For property placed in service in 2023, file Form 4562 If you sell, exchange, or otherwise dispose of the
with either of the following. ! property, do not figure the recapture amount un-
CAUTION der the rules explained in this discussion. Instead,
• Your original 2023 tax return, whether or not you file it
use the rules for recapturing depreciation explained in
timely.
chapter 3 of Pub. 544 under Section 1245 Property. For
• An amended return for 2023 filed within the time pre- qualified real property, see Notice 2013-59 for determining
scribed by law. An election made on an amended re- the portion of the gain that is attributable to section 1245
turn must specify the item of section 179 property to property upon the sale or other disposition of qualified real
which the election applies and the part of the cost of property. You can find Notice 2013-59 at IRS.gov/irb/
each such item to be taken into account. The amen- 2013-40_IRB/ar14.html.
ded return must also include any resulting adjust-
ments to taxable income. If the property is listed property (described in
chapter 5), do not figure the recapture amount un-
You must keep records that show the specific CAUTION!
der the rules explained in this discussion when
identification of each piece of qualifying section
RECORDS 179 property. These records must show how you the percentage of business use drops to 50% or less. In-
stead, use the rules for recapturing excess depreciation in
acquired the property, the person you acquired it from,
chapter 5 under What Is the Business-Use Requirement.
and when you placed it in service.

Figuring the recapture amount. To figure the amount to
Election for qualified section 179 real property. You
recapture, take the following steps.
can elect to expense certain qualified real property that
you placed in service as section 179 property for tax years 1. Figure the depreciation that would have been allowa-
beginning in 2023. For more information, see Election ble on the section 179 deduction you claimed. Begin
above. Also, see Revenue Procedure 2019-8 on page 347 with the year you placed the property in service and
of Internal Revenue Bulletin 2019-3, available at include the year of recapture.
IRS.gov/irb/2019-03_IRB#RP-2019-08.
2. Subtract the depreciation figured in (1) from the sec-
Revoking an election. An election (or any specification tion 179 deduction you claimed. The result is the
made in the election) to take a section 179 deduction for amount you must recapture.
2023 can be revoked without IRS approval by filing an
amended return. The amended return must be filed within Example. In January 2021, Paul Lamb, a calendar
the time prescribed by law. The amended return must also year taxpayer, bought and placed in service section 179
include any resulting adjustments to taxable income. property costing $10,000. The property is not listed prop-
Once made, the revocation is irrevocable. erty. The property is 3-year property. Paul elected a
$5,000 section 179 deduction for the property and also
elected not to claim a special depreciation allowance. Paul
used the property only for business in 2021 and 2022. In
When Must You Recapture the 2023, Paul used the property 40% for business and 60%
for personal use. Paul figures the recapture amount as fol-
Deduction? lows.

Terms you may need to know Section 179 deduction claimed (2019). . . . . . . . $5,000.00
(see Glossary): Minus: Allowable depreciation using Table A-1
(instead of section 179 deduction):
Disposition 2021. . . . . . . . . . . . . . . . . . . . . . . . . $1,666.50
Exchange 2022. . . . . . . . . . . . . . . . . . . . . . . . . 2,222.50
2023 ($740.50 × 40% (0.40)
Recapture (business)). . . . . . . . . . . . . . . . . . . . 296.20 4,185.20
Recovery period 2023 — Recapture amount. . . . . . . . . . . . . . . $814.80
Section 1245 property
Paul must include $814.80 in income for 2023.
If any qualified zone property placed in service
You may have to recapture the section 179 deduction if, in ! during a particular year ceases to be used in an
any year during the property's recovery period, the per- CAUTION empowerment zone by an enterprise zone busi-
centage of business use drops to 50% or less. In the year ness in a later year, the benefit of the increased section
the business use drops to 50% or less, you include the re- 179 deduction must be reported as other income on your
capture amount as ordinary income in Part IV of Form return.
4797. You also increase the basis of the property by the
recapture amount. Recovery periods for property are dis-
cussed under Which Recovery Period Applies? in chap-
ter 4.

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recycling property is any machinery or equipment (not in-
cluding buildings or real estate), along with any appurte-
3. nance, that is used exclusively to collect, distribute, or re-
cycle qualified reuse and recyclable materials (as defined
in section 168(m)(3)(B) of the Internal Revenue Code).
Claiming the Special Qualified reuse and recycling property also includes soft-
ware necessary to operate such equipment. The property
must meet the following requirements.
Depreciation Allowance
• The property must be depreciated under MACRS.
• The property must have a useful life of at least 5 years.
Introduction The original use of the property must begin with you
•
You can take a special depreciation allowance to recover after August 31, 2008.
part of the cost of qualified property (defined next) placed • You must have acquired the property by purchase (as
in service during the tax year. The allowance applies only discussed under Property Acquired by Purchase in
for the first year you place the property in service. The al- chapter 2) after August 31, 2008, with no binding writ-
lowance is an additional deduction you can take after any ten contract for the acquisition in effect before Sep-
section 179 deduction and before you figure regular de- tember 1, 2008.
preciation under MACRS for the year you place the prop-
erty in service. • The property must be placed in service for use in your
This chapter explains what is qualified property. It also trade or business after August 31, 2008.
includes rules regarding how to figure an allowance, how
to elect not to claim an allowance, and when you must re- Excepted Property
capture an allowance.
See How To Get Tax Help for information about getting Qualified reuse and recycling property does not include
publications and forms. any of the following.
• Any rolling stock or other equipment used to transport
reuse or recyclable materials.
What Is Qualified Property? • Property required to be depreciated using the Alterna-
tive Depreciation System (ADS). For other property re-
quired to be depreciated using ADS, see Required
Terms you may need to know use of ADS under Which Depreciation System (GDS
(see Glossary): or ADS) Applies? in chapter 4.
Business/investment use • Other bonus depreciation property to which section
Improvement 168(k) of the Internal Revenue Code applies.
Nonresidential real property • Property for which you elected not to claim any special
depreciation allowance (discussed later).
Placed in service
• Property placed in service and disposed of in the
Residential rental property same tax year.
Structural components 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
Your property is qualified property if it is one of the follow- tax year may be qualified reuse and recycling property.
ing.
• Qualified reuse and recycling property. Certain Qualified Property Acquired
• Certain qualified property acquired after September After September 27, 2017
27, 2017.
You can elect to take an 80% special depreciation allow-
• Certain plants bearing fruits and nuts. ance for property acquired after September 27, 2017, and
The following discussions provide information about the placed in service after December 31, 2022, and before
types of qualified property listed above for which you can January 1, 2024 (other than certain property with a long
take the special depreciation allowance. production period and certain aircraft). You can elect to
take a 100% special depreciation allowance for certain
Qualified Reuse and Recycling property with a long production period and certain aircraft
placed in service before January 1, 2024. Your property is
Property qualified property if it meets the following.
You can take a 50% special depreciation allowance for • Tangible property depreciated under MACRS with a
qualified reuse and recycling property. Qualified reuse and recovery period of 20 years or less.

Publication 946 (2023) Chapter 3 Claiming the Special Depreciation Allowance 23

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• Computer software defined in and depreciated under purchaser who at the time of the contract for purchase
section 167(f)(1) of the Internal Revenue Code. makes a nonrefundable deposit of the lesser of 10%
of the cost or $100,000.
• Water utility property.
• Qualified film, television, and live theatrical produc- • The aircraft must have an estimated production period
exceeding 4 months and a cost exceeding $200,000.
tions, as defined in sections 181(d) and (e) of the In-
ternal Revenue Code. • You must have acquired the aircraft, or acquired the
aircraft pursuant to a written contract entered into, be-
• A specified plant for which you made the election to
fore January 1, 2027.
apply section 168(k)(5) for the tax year in which the
plant is planted or grafted (explained later under Cer-
See section 168(k)(2)(C) of the Internal Revenue Code.
tain Plants Bearing Fruits and Nuts).
• It is not excepted property (explained later under Ex- Special Rules
cepted Property).
Syndicated leasing transactions. If qualified property
Qualified property must also be placed in service be- is originally placed in service by a lessor, the property is
fore January 1, 2027 (or before January 1, 2028, for cer- sold within 3 months of the date it was placed in service,
tain property with a long production period and for certain and the user of the property does not change, then the
aircraft), and can be either new property or certain used property is treated as originally placed in service by the
property. taxpayer no earlier than the date of the last sale.
Note. For certain qualified property acquired after Sep- Multiple units of property subject to the same lease will
tember 27, 2017, and placed in service after December be treated as originally placed in service no earlier than
31, 2023, and before January 1, 2025 (other than certain the date of the last sale if the property is sold within 3
property with a long production period and certain air- months after the final unit is placed in service and the pe-
craft), you can elect to take a 60% special depreciation al- riod between the time the first and last units are placed in
lowance. For certain property with a long production pe- service does not exceed 12 months.
riod and certain aircraft placed in service after December
31, 2023, and before January 1, 2025, you can elect to Excepted Property
take an 80% special depreciation allowance.
Qualified property acquired after September 27, 2017,
does not include any of the following.
Long Production Period Property
• Property placed in service, or planted or grafted, and
To be qualified property, long production period property disposed of in the same tax year.
must meet the following requirements.
• Property converted from business use to personal use
• The property has a recovery period of at least 10 in the same tax year acquired. Property converted
years or is transportation property. Transportation from personal use to business use in the same or later
property is tangible personal property used in the tax year may be qualified property.
trade or business of transporting persons or property.
• Property required to be depreciated under the Alterna-
• The property is subject to section 263A of the Internal tive Depreciation System (ADS). This includes listed
Revenue Code. property used 50% or less in a qualified business use.
• The property has an estimated production period ex- For other property required to be depreciated using
ceeding 1 year and an estimated production cost ex- ADS, see Required use of ADS under Which Depreci-
ceeding $1 million. ation System (GDS or ADS) Applies? in chapter 4.
• You must have acquired the property, or acquired the • Property for which you elected not to claim any special
property pursuant to a written contract entered into, depreciation allowance (discussed later).
before January 1, 2027. • Property described in section 168(k)(9)(A) and placed
in service in any tax year beginning after December
See section 168(k)(2)(B) of the Internal Revenue Code. 31, 2017.
• Property described in section 168(k)(9)(B) and placed
Noncommercial Aircraft
in service in any tax year beginning after December
To be qualified property, noncommercial aircraft must 31, 2017.
meet the following requirements.
• The aircraft must not be tangible personal property
used in the trade or business of transporting persons Certain Plants Bearing Fruits
or property (except for agricultural or firefighting pur-
and Nuts
poses).
• The aircraft must be purchased (as discussed under You can elect to claim an 80% special depreciation allow-
Property Acquired by Purchase in chapter 2) by a ance for the adjusted basis of certain specified plants

24 Chapter 3 Claiming the Special Depreciation Allowance Publication 946 (2023)

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(defined later) bearing fruits and nuts planted or grafted Depreciable basis. This is the property's cost or other
after December 31, 2022, and before January 1, 2024. basis multiplied by the percentage of business/investment
use, reduced by the total amount of any credits and de-
A specified plant is: ductions allocable to the property.
• Any tree or vine that bears fruits or nuts, and The following are examples of some credits and deduc-
tions that reduce depreciable basis.
• Any other plant that will have more than one yield of
fruits or nuts and generally has a pre-productive pe- • Any section 179 deduction.
riod of more than 2 years from planting or grafting to • Any deduction for removal of barriers to the disabled
the time it begins bearing fruits or nuts. and the elderly.
Any property planted or grafted outside the United • Any disabled access credit, enhanced oil recovery
States does not qualify as a specified plant. credit, and credit for employer-provided childcare fa-
cilities and services.
If you elect to claim the special depreciation allowance
for any specified plant, the special depreciation allowance • Basis adjustment to investment credit property under
applies only for the tax year in which the plant is planted or section 50(c) of the Internal Revenue Code.
grafted. The plant will not be treated as qualified property • Section 181 expense deduction.
eligible for the special depreciation allowance in the sub-
sequent tax year in which it is placed in service. For additional credits and deductions that affect basis,
see section 1016 of the Internal Revenue Code.
To make the election, attach a statement to your timely For information about how to determine the cost or
filed return (including extensions) for the tax year in which other basis of property, see What Is the Basis of Your De-
you plant or graft the specified plant(s), indicating you are preciable Property? in chapter 1. For a discussion of busi-
electing to apply section 168(k)(5) and identifying the ness/investment use, see Partial business or investment
specified plant(s) for which you are making the election. use under Property Used in Your Business or Income-Pro-
The election once made cannot be revoked without IRS ducing Activity in chapter 1.
consent.
Depreciating the remaining cost. After you figure your
Note. For certain specified plants bearing fruits and special depreciation allowance for your qualified property,
nuts planted or grafted after December 31, 2023, and be- you can use the remaining cost to figure your regular
fore January 1, 2025, you can elect to claim a 60% special MACRS depreciation deduction (discussed in chapter 4).
depreciation allowance. Therefore, you must reduce the depreciable basis of the
property by the special depreciation allowance before fig-
See section 168(k)(5) of the Internal Revenue Code. uring your regular MACRS depreciation deduction.

Example. On July 1, 2023, you placed in service in
How Much Can You Deduct? your business qualified property (that is not long produc-
tion period property or certain aircraft) that cost $450,000
and that you acquired after September 27, 2017. You did
Terms you may need to know not elect to claim a section 179 deduction. You deduct
(see Glossary): 80% of the cost ($360,000) as a special depreciation al-
lowance for 2023. You use the remaining cost of the prop-
Adjusted basis erty to figure a regular MACRS depreciation deduction for
Basis your property for 2023 and later years.

Placed in service Like-kind exchanges and involuntary conversions. If
you acquired qualified property in a like-kind exchange or
involuntary conversion after September 27, 2017, and the
Figure the special depreciation allowance by multiplying qualified property is new property, the carryover basis and
the depreciable basis of qualified reuse and recycling any excess basis of the acquired property is eligible for
property, certain qualified property acquired after Septem- the special depreciation allowance.
ber 27, 2017, and certain plants bearing fruits and nuts by If you acquired qualified property in a like-kind ex-
the applicable percentage. change or involuntary conversion after September 27,
2017, and the qualified property is used property, only the
For qualified property other than listed property, enter excess basis of the acquired property is eligible for the
the special depreciation allowance on Form 4562, Part II, special depreciation allowance. After you figure your spe-
line 14. For qualified property that is listed property, enter cial depreciation allowance, you can use the remaining
the special depreciation allowance on Form 4562, Part V, carryover basis to figure your regular MACRS depreciation
line 25. deduction. See Figuring the Deduction for Property Ac-
If you place qualified property in service in a short quired in a Nontaxable Exchange in chapter 4 under How
TIP tax year, you can take the full amount of a special Is the Depreciation Deduction Figured.
depreciation allowance.

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                                                                  Qualified  cellulosic  biomass  ethanol  plant  property, 
                                                                  qualified cellulosic biofuel plant property, and quali-
How Can You Elect Not To                                          fied  second  generation  biofuel  plant  property.    If,  in 
                                                                  any year after the year you claim the special depreciation 
Claim an Allowance?
                                                                  allowance  for  any  qualified  cellulosic  biomass  ethanol 
                                                                  plant property, qualified cellulosic biofuel plant property, or 
You can elect, for any class of property, not to deduct any 
                                                                  qualified  second  generation  biofuel  plant  property,  the 
special  depreciation  allowances  for  all  property  in  such 
                                                                  property ceases to be qualified cellulosic biomass ethanol 
class placed in service during the tax year.
                                                                  plant property, qualified cellulosic biofuel plant property, or 
To make an election, attach a statement to your return            qualified  second  generation  biofuel  plant  property,  you 
indicating what election you are making and the class of          may  have  to  recapture  as  ordinary  income  the  excess 
property for which you are making the election.                   benefit  you  received  from  claiming  the  special  deprecia-
                                                                  tion allowance.
The election must be made separately by each person 
owning  qualified  property  (for  example,  by  the  partner-    Recapture of allowance for qualified Recovery Assis-
ships, by the S corporation, or for each member of a con-         tance  property. If,  in  any  year  after  the  year  you  claim 
solidated group by the common parent of the group).               the special depreciation allowance for qualified Recovery 
                                                                  Assistance property, the property ceases to be used in the 
When to make election.  Generally, you must make the 
                                                                  Kansas disaster area, you may have to recapture as ordi-
election on a timely filed tax return (including extensions) 
                                                                  nary income the excess benefit you received from claim-
for the year in which you place the property in service.
                                                                  ing  the  special  depreciation  allowance.  For  additional 
However, if you timely filed your return for the year with-
                                                                  guidance,  see  Notice  2008-67  on  page  307  of  Internal 
out making the election, you can still make the election by 
                                                                  Revenue  Bulletin  2008-32,  available  at IRS.gov/irb/
filing an amended return within 6 months of the due date 
                                                                  2008-32_IRB/index.html.
of the original return (not including extensions). Attach the 
election statement to the amended return. On the amen-            Recapture  of  allowance  for  qualified  disaster  assis-
ded return, write “Filed pursuant to section 301.9100-2.”         tance  property. If,  in  any  year  after  the  year  you  claim 
                                                                  the  special  depreciation  allowance  for  qualified  disaster 
Revoking  an  election. Once  you  elect  not  to  deduct  a 
                                                                  assistance property, the property ceases to be used in the 
special depreciation allowance for a class of property, you 
                                                                  applicable disaster area, you may have to recapture as or-
cannot revoke the election without IRS consent. A request 
                                                                  dinary income the excess benefit you received from claim-
to revoke the election is a request for a letter ruling.
                                                                  ing the special depreciation allowance.
        If  you  elect  not  to  have  any  special  depreciation 
!       allowance apply, the property placed in service af-
CAUTION ter 2015 will not be subject to an alternative mini-
mum tax adjustment for depreciation.

                                                                  4.
When Must You Recapture an 
Allowance?                                                        Figuring Depreciation 

When  you  dispose  of  property  for  which  you  claimed  a     Under MACRS
special  depreciation  allowance,  any  gain  on  the  disposi-
tion is generally recaptured (included in income) as ordi-
nary income up to the amount of the special depreciation          Introduction
allowance previously allowed or allowable. See  When Do 
You  Recapture  MACRS  Depreciation?  in  chapter  4  for         The  Modified  Accelerated  Cost  Recovery  System 
more information.                                                 (MACRS)  is  used  to  recover  the  basis  of  most  business 
                                                                  and  investment  property  placed  in  service  after  1986. 
Recapture  of  allowance  deducted  for  qualified  GO            MACRS  consists  of  two  depreciation  systems,  the  Gen-
Zone property. If, in any year after the year you claim the       eral  Depreciation  System  (GDS)  and  the  Alternative  De-
special  depreciation  allowance  for  qualified  GO  Zone        preciation  System  (ADS).  Generally,  these  systems  pro-
property  (including  specified  GO  Zone  extension  prop-       vide  different  methods  and  recovery  periods  to  use  in 
erty), the property ceases to be used in the GO Zone, you         figuring depreciation deductions.
may  have  to  recapture  as  ordinary  income  the  excess 
                                                                          To be sure you can use MACRS to figure depreci-
benefit  you  received  from  claiming  the  special  deprecia-
                                                                          ation for your property, see What Method Can You 
tion  allowance.  For  additional  guidance,  see  Notice         CAUTION!
                                                                          Use To Depreciate Your Property? in chapter 1.
2008-25 on page 484 of Internal Revenue Bulletin 2008-9, 
available at IRS.gov/irb/2008-09_IRB/index.html.                  This chapter explains how to determine which MACRS 
                                                                  depreciation  system  applies  to  your  property.  It  also 

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discusses other information you need to know before you          GDS, and complete Section C of Part III to report depreci-
can  figure  depreciation  under  MACRS.  This  information      ation using ADS. If you placed your property in service be-
includes  the  property's  recovery  class,  placed  in  service fore 2023 and are required to file Form 4562, report depre-
date, and basis, as well as the applicable recovery period,      ciation using either GDS or ADS on line 17 in Part III.
convention,  and  depreciation  method.  It  explains  how  to 
use this information to figure your depreciation deduction       Required use of ADS. You must use ADS for the follow-
and how to use a general asset account to depreciate a           ing property.
group of properties. Finally, it explains when and how to        • Nonresidential real property, residential real property, 
recapture MACRS depreciation.                                      and qualified improvement property held by an elect-
                                                                   ing real property trade or business (as defined in sec-
Useful Items                                                       tion 163(j)(7)(B) of the Internal Revenue Code). For 
You may want to see:                                               more information, see Revenue Procedure 2019-8 on 
                                                                   page 347 of Internal Revenue Bulletin 2019-3, availa-
  Publication                                                      ble at IRS.gov/irb/2019-03_IRB#RP-2019-08, as 
                                                                   modified by Revenue Procedure 2021-28 on page 5 of 
    225 225 Farmer's Tax Guide
                                                                   Internal Revenue Bulletin 2021-27, available at 
    463 463 Travel, Gift, and Car Expenses                         IRS.gov/irb/2021-27_IRB#RP-2021-28.
    544 544 Sales and Other Dispositions of Assets               • Any property with a recovery period of 10 years or 
                                                                   more under GDS held by an electing farming business 
    551 551 Basis of Assets
                                                                   (as defined in section 163(j)(7)(C) of the Internal Rev-
    587 587 Business Use of Your Home                              enue Code). For more information, see Revenue Pro-
                                                                   cedure 2019-8 on page 347 of Internal Revenue Bulle-
  Form (and Instructions)                                          tin 2019-3, available at IRS.gov/irb/
    2106    2106 Employee Business Expenses                        2019-03_IRB#RP-2019-08.
    4562    4562 Depreciation and Amortization                   • Any tax-exempt use property.
See How  To  Get  Tax  Help  for  information  about  getting    • Any tax-exempt bond-financed property.
publications and forms.                                          • 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.
Which Depreciation System 
                                                                 • Any property imported from a foreign country for which 
(GDS or ADS) Applies?                                              an Executive order is in effect because the country 
                                                                   maintains trade restrictions or engages in other dis-
                                                                   criminatory acts.
Terms you may need to know 
(see Glossary):                                                  • Any tangible property used predominantly outside the 
                                                                   United States during the tax year.
  Listed property
                                                                 • Any listed property used 50% or less in a qualified 
  Nonresidential real property                                     business use during the tax year (discussed later in 
  Placed in service                                                chapter 5).
  Property class                                                          If you are required to use ADS to depreciate your 
                                                                          property, you cannot claim any special deprecia-
  Recovery period                                                CAUTION! tion  allowance  (discussed  in chapter  3)  for  the 
  Residential rental property                                    property.
  Tangible property
                                                                 Electing  ADS. Although  your  property  may  qualify  for 
  Tax exempt                                                     GDS, you can elect to use ADS. The election must gener-
                                                                 ally cover all property in the same property class that you 
                                                                 placed in service during the year. However, the election for 
Your use of either the General Depreciation System (GDS)         residential rental property and nonresidential real property 
or the Alternative Depreciation System (ADS) to depreci-         can be made on a property-by-property basis. Once you 
ate property under MACRS determines what depreciation            make this election, you can never revoke it.
method and recovery period you use. You must generally           You make the election by completing Form 4562, Part 
use  GDS  unless  you  are  specifically  required  by  law  to  III, line 20.
use ADS or you elect to use ADS.
  If you placed your property in service in 2023, complete 
Part III of Form 4562 to report depreciation using MACRS. 
Complete Section B of Part III to report depreciation using 

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3. 7-year property.
Which Property Class Applies a. Office furniture and fixtures (such as desks, files,
and safes).
Under GDS?
b. Used agricultural machinery and equipment
placed in service after 2017, grain bins, cotton gin-
Terms you may need to know ning assets, or fences used in a farming business
(see Glossary): (but no other land improvements).
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
Placed in service other class.
Property class e. Certain motorsports entertainment complex prop-
Recovery period erty (defined later).
Residential rental property f. Any natural gas gathering line placed in service af-
Section 1245 property ter April 11, 2005. See Natural gas gathering line
and electric transmission property, later.
Section 1250 property
4. 10-year property.

a. Vessels, barges, tugs, and similar water transpor-
The following is a list of the nine property classifications tation equipment.
under GDS and examples of the types of property inclu-
b. Any single-purpose agricultural or horticultural
ded in each class. These property classes are also listed
structure.
under column (a) in Section B of Part III of Form 4562. For
detailed information on property classes, see Appendix B, c. Any tree or vine bearing fruits or nuts.
Table of Class Lives and Recovery Periods, in this publica-
d. Qualified small electric meter and qualified smart
tion.
electric grid system (defined later) placed in serv-
1. 3-year property. ice on or after October 3, 2008.
a. Tractor units for over-the-road use. 5. 15-year property.
b. Any race horse over 2 years old when placed in a. Certain improvements made directly to land or
service. 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. Initial clearing and grading land improvements for
a. Automobiles, taxis, buses, and trucks.
gas utility property.
b. Any qualified technological equipment.
e. Electric transmission property (that is section 1245
c. Office machinery (such as typewriters, calculators, property) used in the transmission at 69 or more
and copiers). kilovolts of electricity placed in service after April
11, 2005. See Natural gas gathering line and elec-
d. Any property used in research and experimenta- tric transmission property, later.
tion.
f. Any natural gas distribution line placed in service
e. Breeding cattle and dairy cattle. after April 11, 2005, and before January 1, 2011.
f. Appliances, carpets, furniture, etc., used in a resi- g. Any telephone distribution plant and comparable
dential rental real estate activity. equipment used for 2-way exchange of voice and
g. Certain geothermal, solar, and wind energy prop- data communications.
erty. h. Qualified improvement property (defined later)
h. Any machinery equipment (other than any grain placed in service after 2017.
bin, cotton ginning asset, fence, or other land im- 6. 20-year property.
provement) used in a farming business and placed
in service after 2017, in tax years ending after a. Farm buildings (other than single-purpose agricul-
2017. The original use of the property must begin tural or horticultural structures).
with you after 2017.

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b. Municipal sewers not classified as 25-year prop- • The property is tangible personal property of a type
erty. generally used within the home for personal use.
c. Initial clearing and grading land improvements for Rent-to-own contract. This is any lease for the use of
electric utility transmission and distribution plants. consumer property between a rent-to-own dealer and a
customer who is an individual, which meets all of the fol-
7. 25-year property. This class is water utility property,
lowing requirements.
which is either of the following.
• Is titled “Rent-to-Own Agreement,” “Lease Agreement
a. Property that is an integral part of the gathering, with Ownership Option,” or other similar language.
treatment, or commercial distribution of water, and
that, without regard to this provision, would be • Provides a beginning date and a maximum period of
20-year property. time, not to exceed 156 weeks or 36 months from the
beginning date, for which the contract can be in effect
b. Municipal sewers other than property placed in (including renewals or options to extend).
service under a binding contract in effect at all
times since June 9, 1996. • Provides for regular periodic (weekly or monthly) pay-
ments that can be either level or decreasing. If the
8. Residential rental property. This is any building or payments are decreasing, no payment can be less
structure, such as a rental home (including a mobile than 40% of the largest payment.
home), if 80% or more of its gross rental income for
the tax year is from dwelling units. A dwelling unit is a • Provides for total payments that generally exceed the
house or apartment used to provide living accommo- normal retail price of the property plus interest.
dations in a building or structure. It does not include a • Provides for total payments that do not exceed
unit in a hotel, motel, or other establishment where $10,000 for each item of property.
more than half the units are used on a transient basis.
If you occupy any part of the building or structure for • Provides that the customer has no legal obligation to
make all payments outlined in the contract and that, at
personal use, its gross rental income includes the fair
the end of each weekly or monthly payment period,
rental value of the part you occupy.
the customer can either continue to use the property
9. Nonresidential real property. This is section 1250 by making the next payment or return the property in
property, such as an office building, store, or ware- good working order with no further obligations and no
house, that is neither residential rental property nor entitlement to a return of any prior payments.
property with a class life of less than 27.5 years.
• Provides that legal title to the property remains with
Qualified rent-to-own property. Qualified rent-to-own the rent-to-own dealer until the customer makes either
property is property held by a rent-to-own dealer for pur- all the required payments or the early purchase pay-
poses of being subject to a rent-to-own contract. It is tan- ments required under the contract to acquire legal ti-
gible personal property generally used in the home for tle.
personal use. It includes computers and peripheral equip- • Provides that the customer has no right to sell, sub-
ment, televisions, videocassette recorders, stereos, cam- lease, mortgage, pawn, pledge, or otherwise dispose
corders, appliances, furniture, washing machines and dry- of the property until all contract payments have been
ers, refrigerators, and other similar consumer durable made.
property. Consumer durable property does not include
real property, aircraft, boats, motor vehicles, or trailers. Motorsports entertainment complex. This is a racing
If some of the property you rent to others under a track facility permanently situated on land that hosts one
rent-to-own agreement is of a type that may be used by or more racing events for automobiles, trucks, or motorcy-
the renters for either personal or business purposes, you cles during the 36-month period after the first day of the
can still treat this property as qualified property as long as month in which the facility is placed in service. The events
it does not represent a significant portion of your leasing must be open to the public for the price of admission.
property. However, if this dual-use property does repre-
sent a significant portion of your leasing property, you Qualified smart electric grid system. A qualified smart
must prove that this property is qualified rent-to-own prop- electric grid system means any smart grid property used
erty. as part of a system for electric distribution grid communi-
cations, monitoring, and management placed in service
Rent-to-own dealer. You are a rent-to-own dealer if after October 3, 2008, by a taxpayer who is a supplier of
you meet all the following requirements. electrical energy or a provider of electrical energy serv-
• You regularly enter into rent-to-own contracts (defined ices. Smart grid property includes electronics and related
below) in the ordinary course of your business for the equipment that is capable of:
use of consumer property. • Sensing, collecting, and monitoring data of or from all
• A substantial portion of these contracts end with the portions of a utility's electric distribution grid;
customer returning the property before making all the • Providing real-time, two-way communications to moni-
payments required to transfer ownership. tor or to manage the grid; and

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• Providing real-time analysis of an event prediction erty) used in the transmission at 69 or more kilovolts of
based on collected data that can be used to provide electricity and any natural gas distribution line placed in
electric distribution system reliability, quality, and per- service after April 11, 2005, are treated as 15-year prop-
formance. erty, if the following requirements are met.
Retail motor fuels outlet. Real property is a retail motor • The original use of the property must have begun with
fuels outlet if it is used to a substantial extent in the retail you after April 11, 2005. Original use means the first
marketing of petroleum or petroleum products (whether or use to which the property is put, whether or not by
not it is also used to sell food or other convenience items) you. Therefore, property used by any person before
and meets any one of the following three tests. April 12, 2005, is not original use. Original use in-
cludes additional capital expenditures you incurred to
• It is not larger than 1,400 square feet. recondition or rebuild your property. However, original
• 50% or more of the gross revenues generated from use does not include the cost of reconditioned or re-
the property are derived from petroleum sales. built property you acquired. Property containing used
parts will not be treated as reconditioned or rebuilt if
• 50% or more of the floor space in the property is devo- the cost of the used parts is not more than 20% of the
ted to petroleum marketing sales. total cost of the property.
A retail motor fuels outlet does not include any facility rela-
ted to petroleum and natural gas trunk pipelines. • The property must not be placed in service under a
binding contract in effect before April 12, 2005.
Qualified improvement property. Generally, this is any • The property must not be self-constructed property
improvement to an interior part of a building that is nonres- (property you manufacture, construct, or produce for
idential real property, and the improvement is section 1250 your own use), if you began the manufacture, con-
property, is made by you, and is placed in service by you struction, or production of the property before April 12,
after 2017 and after the date the building was first placed 2005. Property that is manufactured, constructed, or
in service by any person. produced for your use by another person under a writ-
However, a qualified improvement does not include any ten binding contract entered into by you or a related
improvement for which the expenditure is attributable to party before the manufacture, construction, or produc-
any of the following. tion of the property is considered to be manufactured,
• The enlargement of the building. constructed, or produced by you.
• Any elevator or escalator.
• The internal structural framework of the building.
What Is the Placed in Service
Qualified smart electric meter. A qualified smart elec-
Date?
tric meter is any time-based meter and related communi-
cation equipment, which is placed in service by a supplier
of electric energy or a provider of electric energy services Terms you may need to know
and which is capable of being used by you as part of a (see Glossary):
system that meets all of the following requirements.
Placed in service
• Measures and records electricity usage data on a
time-differentiated basis in at least 24 separate time
segments per day.
You begin to claim depreciation when your property is
• Provides for the exchange of information between the placed in service for either use in a trade or business or
supplier or provider and the customer's smart electric the production of income. The placed in service date for
meter in support of time-based rates or other forms of your property is the date the property is ready and availa-
demand response. ble for a specific use. It is therefore not necessarily the
• Provides data to the supplier or provider so that the date it is first used. If you converted property held for per-
supplier or provider can provide energy usage infor- sonal use to use in a trade or business or for the produc-
mation to customers electronically. tion of income, treat the property as being placed in serv-
ice on the conversion date. See Placed in Service under
• Provides all commercial and residential customers of
When Does Depreciation Begin and End? in chapter 1 for
such supplier or provider with net metering. Net meter-
examples illustrating when property is placed in service.
ing 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.

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, and
electric transmission property (that is section 1245 prop-

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Improvement
What Is the Basis for Listed property
Nonresidential real property
Depreciation?
Placed in service
Property class
Terms you may need to know
(see Glossary): Recovery period
Basis Residential rental property
Section 1245 property

The basis for depreciation of MACRS property is the prop-
erty's cost or other basis multiplied by the percentage of The recovery period of property is the number of years
business/investment use. For a discussion of business/ over which you recover its cost or other basis. It is deter-
investment use, see Partial business or investment use mined based on the depreciation system (GDS or ADS)
under Property Used in Your Business or Income-Produc- used.
ing Activity in chapter 1. Reduce that amount by any cred-
its and deductions allocable to the property. The following
Recovery Periods Under GDS
are examples of some credits and deductions that reduce
basis. Under GDS, property is depreciated over one of the fol-
• Any deduction for section 179 property. lowing recovery periods.
• Any deduction under section 179B of the Internal Rev-
enue Code for capital costs to comply with Environ- Property Class Recovery Period
mental Protection Agency sulfur regulations. 3-year property. . . . . . . . . . . . . . . 3 years1
• Any deduction under section 179D of the Internal Rev- 5-year property. . . . . . . . . . . . . . . 5 years
enue Code for certain energy efficient commercial 7-year property. . . . . . . . . . . . . . . 7 years
building property. 10-year property. . . . . . . . . . . . . . 10 years
• Any deduction for removal of barriers to the disabled 15-year property. . . . . . . . . . . . . . 15 years2
and the elderly. 20-year property. . . . . . . . . . . . . . 20 years
25-year property. . . . . . . . . . . . . . 25 years3
• Any disabled access credit, enhanced oil recovery Residential rental property . . . . . . 27.5
credit, and credit for employer-provided childcare fa- years
cilities and services. Nonresidential real property . . . . . 39 years4

• Any special depreciation allowance. 1 5 years for qualified rent-to-own property placed in service
• Basis adjustment for investment credit property under before August 6, 1997.
section 50(c) of the Internal Revenue Code. 2 39 years for property that is a retail motor fuels outlet placed
• Basis adjustment for advanced manufacturing invest- in service before August 20, 1996 (31.5 years if placed in
ment credit property. See section 48D(d)(5) of the In- service before May 13, 1993), unless you elected to
ternal Revenue Code. depreciate it over 15 years.
For additional credits and deductions that affect basis, 3 20 years for property placed in service before June 13, 1996,
see section 1016 of the Internal Revenue Code.
or under a binding contract in effect before June 10, 1996.
Enter the basis for depreciation under column (c) in 4 31.5 years for property placed in service before May 13,
Part III of Form 4562. For information about how to deter-
1993 (or before January 1, 1994, if the purchase or
mine the cost or other basis of property, see What Is the
Basis of Your Depreciable Property? in chapter 1. construction of the property is under a binding contract in
effect before May 13, 1993, or if construction began before
May 13, 1993).

Which Recovery Period The GDS recovery periods for property not listed above
can be found in Appendix B, Table of Class Lives and Re-
Applies? covery Periods. Residential rental property and nonresi-
dential real property are defined earlier under Which Prop-
erty Class Applies Under GDS.
Terms you may need to know
(see Glossary): Enter the appropriate recovery period on Form 4562
under column (d) in Section B of Part III, unless already
Active conduct of a trade or business shown (for 25-year property, residential rental property,
Basis and nonresidential real property).

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Office in the home. If your home is a personal-use sin- Railroad grading and tunnel bore . . . . . . . 50 years
gle family residence and you begin to use part of your 1 40 years for property placed in service before January 1,
home as an office, depreciate that part of your home as 2018. Note. The ADS recovery period for residential rental
nonresidential real property over 39 years (31.5 years if property placed in service before January 1, 2018, is 30 years
you began using it for business before May 13, 1993). if the property is held by an electing real property trade or
However, if your home is an apartment in an apartment business (as defined in section 163(j)(7)(B)) and section
building that you own and the building is residential rental 168(g)(1)(A), (B), (C), (D), or (E) did not apply to the property
property, as defined earlier under Which Property Class before January 1, 2018.
Applies Under GDS, depreciate the part used as an office
as residential rental property over 27.5 years. See Pub. The ADS recovery periods for property not listed above
587 for a discussion of the tests you must meet to claim can be found in the tables in Appendix B. Rent-to-own
expenses, including depreciation, for the business use of property, residential rental property, and nonresidential
your home. real property are defined earlier under Which Property
Class Applies Under GDS.
Home changed to rental use. If you begin to rent a
home that was your personal home before 1987, you de- Tax-exempt use property subject to a lease. The ADS
preciate it as residential rental property over 27.5 years. recovery period for any property leased under a lease
agreement to a tax-exempt organization, governmental
Recovery Periods Under ADS unit, or foreign person or entity (other than a partnership)
cannot be less than 125% of the lease term.
The recovery periods for most property are generally lon-
ger under ADS than they are under GDS. The following ta-
Additions and Improvements
ble shows some of the ADS recovery periods.
An addition or improvement you make to depreciable
Recovery property is treated as separate depreciable property. See
Property Period How Do You Treat Repairs and Improvements? in chap-
ter 1 for a definition of improvements. Its property class
Rent-to-own property. . . . . . . . . . . . . . . . 4 years
and recovery period are the same as those that would ap-
Automobiles and light duty trucks. . . . . . . 5 years ply to the original property if you had placed it in service at
Computers and peripheral equipment . . . . 5 years the same time you placed the addition or improvement in
High technology telephone station service. The recovery period begins on the later of the fol-
equipment installed on customer lowing dates.
premises . . . . . . . . . . . . . . . . . . . . . . . . 5 years
High technology medical equipment . . . . . 5 years • The date you place the addition or improvement in
service.
Personal property with no class life . . . . . . 12 years
Natural gas gathering lines. . . . . . . . . . . . 14 years • The date you place in service the property to which
Single-purpose agricultural and you made the addition or improvement.
horticultural structures . . . . . . . . . . . . . . 15 years
Any tree or vine bearing fruits or nuts . . . . 20 years Example. You own a rental home that you have been
renting out since 1981. If you put an addition on the home
Initial clearing and grading land
and place the addition in service this year, you would use
improvements for gas utility property . . . 20 years
MACRS to figure your depreciation deduction for the addi-
Initial clearing and grading land
tion. Under GDS, the property class for the addition is resi-
improvements for electric utility
dential rental property and its recovery period is 27.5
transmission and distribution plants . . . 25 years years because the home to which the addition is made
Electric transmission property used in the would be residential rental property if you had placed it in
transmission at 69 or more kilovolts of service this year.
electricity. . . . . . . . . . . . . . . . . . . . . . . . 30 years
Natural gas distribution lines. . . . . . . . . . . 35 years
Nonresidential real property . . . . . . . . . . . 40 years
Residential rental property . . . . . . . . . . . . 30 years1 Which Convention Applies?
Section 1245 real property not listed in
Appendix B. . . . . . . . . . . . . . . . . . . . . . 40 years Terms you may need to know
(see Glossary):
Basis
Convention
Disposition
Nonresidential real property
Placed in service

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Recovery period If you use this convention, enter “HY” under column (e)
in Part III of Form 4562.
Residential rental property
See Figuring the Deduction for a Short Tax Year, later,
for information on the short tax year rules.
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 Which Depreciation Method
depreciation in the year you place property in service and
in the year you dispose of the property. Applies?

The mid-month convention. Use this convention for
nonresidential real property, residential rental property, Terms you may need to know
and any railroad grading or tunnel bore. (see Glossary):
Under this convention, you treat all property placed in Declining balance method
service or disposed of during a month as placed in service
or disposed of at the midpoint of the month. This means Listed property
that a one-half month of depreciation is allowed for the Nonresidential real property
month the property is placed in service or disposed of.
Placed in service
Your use of the mid-month convention is indicated by
the “MM” already shown under column (e) in Part III of Property class
Form 4562. Recovery period
The mid-quarter convention. Use this convention if the Residential rental property
mid-month convention does not apply and the total depre- Straight line method

ciable bases of MACRS property you placed in service
during the last 3 months of the tax year (excluding nonres- Tax exempt
idential real property, residential rental property, any rail-
road grading or tunnel bore, property placed in service
and disposed of in the same year, and property that is be- MACRS provides three depreciation methods under GDS
ing depreciated under a method other than MACRS) are and one depreciation method under ADS.
more than 40% of the total depreciable bases of all
MACRS property you placed in service during the entire • The 200% declining balance method over a GDS re-
year. covery period.
Under this convention, you treat all property placed in • The 150% declining balance method over a GDS re-
service or disposed of during any quarter of the tax year covery period.
as placed in service or disposed of at the midpoint of that
quarter. This means that, for a 12-month tax year, 1 /1 2 • The straight line method over a GDS recovery period.
months of depreciation is allowed for the quarter the prop- • The straight line method over an ADS recovery period.
erty is placed in service or disposed of. For property placed in service before 1999, you
If you use this convention, enter “MQ” under column (e) ! could have elected the 150% declining balance
in Part III of Form 4562. CAUTION method using the ADS recovery periods for cer-
For purposes of determining whether the tain property classes. If you made this election, continue
to use the same method and recovery period for that prop-
! mid-quarter convention applies, the depreciable
CAUTION basis of property you placed in service during the erty.
tax year reflects the reduction in basis for amounts ex-
pensed under section 179 and the part of the basis of Table 4-1 lists the types of property you can depreciate
property attributable to personal use. However, it does not under each method. It also gives a brief explanation of the
reflect any reduction in basis for any special depreciation method, including any benefits that may apply.
allowance.
Depreciation Methods for Farm
The half-year convention. Use this convention if neither
Property
the mid-quarter convention nor the mid-month convention
applies.
Under this convention, you treat all property placed in If you place personal property in service in a farming busi-
service or disposed of during a tax year as placed in serv- ness after 1988, and before 2018, you must generally de-
ice or disposed of at the midpoint of the year. This means preciate it under GDS using the 150% declining balance
that for a 12-month tax year, a one-half year of deprecia- method unless you are a farmer who must depreciate the
tion is allowed for the year the property is placed in serv- property under ADS using the straight line method or you
ice or disposed of. 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.

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Note.   For 3-, 5-, 7-, or 10-year property used in a farm-          ods are listed in Appendix B, or see the table under Re-
ing business and placed in service after 2017, in tax years          covery Periods Under ADS, earlier.
ending after 2017, the 150% declining balance method is                Make  the  election  by  completing  line  20  in  Part  III  of 
no longer required. However, the 150% declining balance              Form 4562.
method will continue to apply to any 15- or 20-year prop-
erty used in a farming business to which the straight line           15- or 20-year farm property.  Instead of using the 150% 
method does not apply or to property for which you elect             declining balance method over a GDS recovery period for 
the use of the 150% declining balance method.                        15-  or  20-year  property  you  use  in  a  farming  business 
                                                                     (other  than  real  property),  you  can  elect  to  depreciate  it 
Fruit or nut trees and vines. Depreciate trees and vines             using either of the following methods.
bearing  fruits  or  nuts  under  GDS  using  the  straight  line 
                                                                      • The straight line method over a GDS recovery period.
method over a recovery period of 10 years.
                                                                      • The straight line method over an ADS recovery period.
ADS required for some farmers. If you elect not to ap-
ply 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            How Is the Depreciation 
the election is in effect. See the regulations under section 
263A of the Internal Revenue Code for information on the             Deduction Figured?
uniform capitalization rules that apply to farm property.
                                                                     Terms you may need to know 
Electing a Different Method                                          (see Glossary):
As shown in Table 4-1, you can elect a different method                 Adjusted basis
for  depreciation  for  certain  types  of  property.  You  must        Amortization
                                                                       
make the election by the due date of the return (including 
extensions) for the year you placed the property in serv-               Basis
ice.  However,  if  you  timely  filed  your  return  for  the  year    Business/investment use
without making the election, you can still make the elec-
tion by filing an amended return within 6 months of the due             Convention
date of the return (excluding extensions). Attach the elec-             Declining balance method
tion  to  the  amended  return  and  write  “Filed  pursuant  to 
section  301.9100-2”  on  the  election  statement.  File  the          Disposition
amended return at the same address you filed the original               Exchange
return. Once you make the election, you cannot change it.
                                                                        Nonresidential real property
        If you elect to use a different method for one item 
                                                                        Placed in service
!       in  a  property  class,  you  must  apply  the  same 
CAUTION method to all property in that class placed in serv-            Property class
ice during the year of the election. However, you can make              Recovery period
the  election  on  a  property-by-property  basis  for  nonresi-
dential real and residential rental property.                           Straight line method
                                                                        Unadjusted basis
150% election. Instead of using the 200% declining bal-               
ance method over the GDS recovery period for property in 
the 3-, 5-, 7-, or 10-year property class, you can elect to          To figure your depreciation deduction under MACRS, you 
use the 150% declining balance method. Make the elec-                first  determine  the  depreciation  system,  property  class, 
tion  by  entering  “150  DB”  under  column  (f)  in  Part  III  of placed  in  service  date,  basis  amount,  recovery  period, 
Form 4562.                                                           convention,  and  depreciation  method  that  apply  to  your 
                                                                     property. Then, you are ready to figure your depreciation 
Straight line election. Instead of using either the 200% 
                                                                     deduction. You can figure it using a percentage table pro-
or 150% declining balance method over the GDS recovery 
                                                                     vided by the IRS, or you can figure it yourself without using 
period, you can elect to use the straight line method over 
                                                                     the table.
the  GDS  recovery  period.  Make  the  election  by  entering 
“S/L” under column (f) in Part III of Form 4562.
                                                                     Using the MACRS Percentage Tables
Election of ADS. As explained earlier under     Which De-
preciation System (GDS or ADS) Applies, you can elect to             To help you figure your deduction under MACRS, the IRS 
use  ADS  even  though  your  property  may  come  under             has  established  percentage  tables  that  incorporate  the 
GDS. ADS uses the straight line method of depreciation               applicable  convention  and  depreciation  method.  These 
over fixed ADS recovery periods. Most ADS recovery peri-             percentage tables are in Appendix A near the end of this 
                                                                     publication.

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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% • Nonfarm 3-, 5-, 7-, and 10-year property              • Provides a greater deduction during the 
DB             • Farm 3-, 5-, 7-, and 10-year property placed in       earlier recovery years
               service after 2017, in tax years ending after 2017      • Changes to SL when that method provides 
                                                                       an equal or greater deduction 
GDS using 150% • Farm 3-, 5-, 7-, or 10-year property placed in        • Provides a greater deduction during the 
DB             service before 2018                                     earlier recovery years
               • All 15- and 20-year property                          • Changes to SL when that method provides 
               • Nonfarm 3-, 5-, 7-, or 10-year property2              an equal or greater deduction1
               • Farm 3-, 5-, 7-, or 10-year property placed in 
               service after 20172
GDS using SL   • Nonresidential real property                          • Provides for equal yearly deductions 
               • Residential rental property                           (except for the first and last years)
               • 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) of the Internal Revenue Code for a tax year 
               beginning before January 1, 2018
               • Qualified improvement property (as defined in 
               section 168(e)(6) of the Internal Revenue Code) 
               placed in service after 2017
ADS using SL   • Listed property used 50% or less for business         • Provides for equal yearly deductions 
               • Property used predominantly outside the               (except for the first and last years)
               United States
               • 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
               • Any nonresidential real property, residential 
               rental property, or qualfied improvement property 
               held by an electing real property trade or 
               business (as defined in section 163(j)(7)(B) of 
               the Internal Revenue Code)
               • Any property that has a recovery period of 10 
               years or more under GDS that is held by an 
               electing farming business (as defined in section 
               163(j)(7)(C) of the Internal Revenue Code)
1 The MACRS percentage tables in Appendix A have the switch to the straight line method built into their rates.
2 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.

Which  table  to  use. Appendix  A  contains  the    MACRS    1. You must apply the rates in the percentage tables to 
Percentage Table Guide, which is designed to help you lo-      your property's unadjusted basis.
cate the correct percentage table to use for depreciating 
                                                              2. You cannot use the percentage tables for a short tax 
your  property.  The  percentage  tables  immediately  follow 
                                                               year. See Figuring the Deduction for a Short Tax Year, 
the guide.
                                                               later, for information on the short tax year rules.
Rules Covering the Use of the Tables                          3. Once you start using the percentage tables for any 
                                                               item of property, you must generally continue to use 
The following rules cover the use of the percentage tables.    them for the entire recovery period of the property.

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4. You must stop using the tables if you adjust the basis years. However, you do reduce your original basis by other
of the property for any reason other than: amounts, including the following.
a. Depreciation allowed or allowable, or • Any amortization taken on the property.
b. An addition or improvement to that property that is • Any section 179 deduction claimed.
depreciated as a separate item of property. • Any special depreciation allowance taken on the prop-
Basis adjustments other than those made due to the items erty.
listed in (4) include an increase in basis for the recapture
of a clean-fuel deduction or credit and a reduction in basis For business property you purchase during the year,
for a casualty loss. the unadjusted basis is its cost minus these and other ap-
plicable adjustments. If you trade property, your unadjus-
Basis adjustment due to recapture of clean-fuel vehi- ted basis in the property received is the cash paid plus the
cle deduction or credit. If you increase the basis of your adjusted basis of the property traded minus these adjust-
property because of the recapture of part or all of a deduc- ments.
tion for clean-fuel vehicles or the credit for clean-fuel vehi-
cle refueling property placed in service before January 1, MACRS Worksheet
2006, you cannot continue to use the percentage tables.
For the year of the adjustment and the remaining recovery You can use this worksheet to help you figure your depre-
period, you must figure the depreciation deduction your- ciation deduction using the percentage tables. Use a sep-
self using the property's adjusted basis at the end of the arate worksheet for each item of property. Then, use the
year. See Figuring the Deduction Without Using the Ta- information from this worksheet to prepare Form 4562.
bles, later.
Do not use this worksheet for automobiles. Use
Basis adjustment due to casualty loss. If you reduce ! the Depreciation Worksheet for Passenger Auto-
the basis of your property because of a casualty, you can- CAUTION mobiles in chapter 5.
not continue to use the percentage tables. For the year of
the adjustment and the remaining recovery period, you
MACRS Worksheet
must figure the depreciation yourself using the property's
adjusted basis at the end of the year. See Figuring the De- Keep for Your Records
duction Without Using the Tables, later. Part I
Example. On October 26, 2022, Sandra and Frank 1. MACRS system (GDS or
Elm, calendar year taxpayers, bought and placed in serv- ADS) . . . . . . . . . . . . . . . . . . . . . . . . . . .
ice in their business a new item of 7-year property. It cost 2. Property class . . . . . . . . . . . . . . . . . .
$39,000 and they elected a section 179 deduction of
$24,000. They also made an election under section 168(k) 3. Date placed in service . . . . . . . . . . .
(7) not to deduct the special depreciation allowance for 4. Recovery period . . . . . . . . . . . . . . . .
7-year property placed in service in 2022. Their unadjus- 5. Method and convention . . . . . . . . . .
ted basis after the section 179 deduction was $15,000
6. Depreciation rate (from
($39,000 – $24,000). They figured their MACRS deprecia-
tables) . . . . . . . . . . . . . . . . . . . . . . . . .
tion deduction using the percentage tables. For 2022, their
MACRS depreciation deduction was $536. Part II
In July 2023, the property was vandalized and they had 7. Cost or other basis* . . . . . . . . . . . . . $
a deductible casualty loss of $3,000. Sandra and Frank
must adjust the property's basis for the casualty loss, so 8. Business/investment use . . . . . . . . %
they can no longer use the percentage tables. Their adjus- 9. Multiply line 7 by line 8 . . . . . . . . . . . . . . . . . . $
ted basis at the end of 2023, before figuring their 2023 de- 10. Total claimed for section 179 deduction
preciation, is $11,464. They figure that amount by sub- and other items . . . . . . . . . . . . . . . . . . . . . . . . $
tracting the 2022 MACRS depreciation of $536 and the 11. Subtract line 10 from line 9. This is your
casualty loss of $3,000 from the unadjusted basis of tentative basis for depreciation . . . . . . . . . . $
$15,000. They must now figure their depreciation for 2023
12. Multiply line 11 by the applicable
without using the percentage tables.
percentage if the special depreciation
allowance applies. This is your special
Figuring the Unadjusted Basis of Your
depreciation allowance. Enter -0- if this is
Property not the year you placed the property in
You must apply the table rates to your property's unadjus- service, the property is not qualified
ted basis each year of the recovery period. Unadjusted property, or you elected not to claim a
basis is the same basis amount you would use to figure special allowance . . . . . . . . . . . . . . . . . . . . . . $
gain on a sale, but you figure it without reducing your origi- 13. Subtract line 12 from line 11. This is your
nal basis by any MACRS depreciation taken in earlier basis for depreciation . . . . . . . . . . . . . . . . . . .

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14. Depreciation rate (from line 6) . . . . . . . . . . .         You  use  the  furniture  only  for  business.  This  is  the  only 
15. Multiply line 13 by line 14. This is your                     property you placed in service this year. You did not elect 
 MACRS depreciation deduction . . . . . . . . .           $       a section 179 deduction and the property is not qualified 
                                                                  property  for  purposes  of  claiming  a  special  depreciation 
* If real estate, do not include cost (basis) of land.            allowance, so your property's unadjusted basis is its cost, 
                                                                  $10,000. You use GDS and the half-year convention to fig-
 The  following  example  shows  how  to  figure  your            ure your depreciation. You refer to the MACRS Percentage 
MACRS depreciation deduction using the percentage ta-             Table Guide in Appendix A and find that you should use 
bles and the MACRS Worksheet.                                     Table A-1. Multiply your property's unadjusted basis each 
                                                                  year by the percentage for 7-year property given in Table 
 Example.       You bought office furniture (7-year property)     A-1.  You  figure  your  depreciation  deduction  using  the 
for $10,000 and placed it in service on August 11, 2023.          MACRS Worksheet as follows.

                        MACRS Worksheet                                                                                Keep for Your Records
                                                                  Part I 
 1. MACRS system (GDS or ADS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                               GDS
 2. Property class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                            7-year
 3. Date placed in service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                  8/11/23
 4. Recovery period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                               7-year
 5. Method and convention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                     200%DB/Half-Year
 6. Depreciation rate (from tables) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                         0.1429

                                                                  Part II 
 7. Cost or other basis* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     $10,000
 8. Business/investment use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            100 %
 9. Multiply line 7 by line 8 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $10,000
 10. Total claimed for section 179 deduction and other items . . . . . . . . . . . . . . . . . . . . . . . . . . .                                -0-
 11. Subtract line 10 from line 9. This is your tentative basis for depreciation . . . . . . . . . . . . .                                        $10,000
 12. Multiply line 11 by 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 property in service, the property is not qualified property, or you elected not 
      to claim a special allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      -0-
 13. Subtract line 12 from line 11. This is your basis for depreciation . . . . . . . . . . . . . . . . . . . .                                   $10,000
 14. Depreciation rate (from line 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        0.1429
 15. Multiply line 13 by line 14. This is your MACRS depreciation deduction . . . . . . . . . . . . . .                                           $1,429

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

 If there are no adjustments to the basis of the property         Examples
other  than  depreciation,  your  depreciation  deduction  for 
each subsequent year of the recovery period will be as fol-       The following examples are provided to show you how to 
lows.                                                             use the percentage tables. In both examples, assume the 
                                                                  following.
Year                    Basis   Percentage Deduction                     • You use the property only for business.
2024. . . . . . . . . . $10,000 24.49%                  $2,449           • You use the calendar year as your tax year.
2025. . . . . . . . . .  10,000 17.49                      1,749           You use GDS for all the properties.
                                                                         •
2026. . . . . . . . . .  10,000 12.49                      1,249
2027. . . . . . . . . .  10,000 8.93                       893            Example  1.                                  You  bought  a  building  and  land  for 
2028. . . . . . . . . .  10,000 8.92                       892    $120,000 and placed it in service on March 8. The sales 
2029. . . . . . . . . .  10,000 8.93                       893    contract showed that the building cost $100,000 and the 
2030. . . . . . . . . .  10,000 4.46                       446    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 Ap-
                                                                  pendix A and find that you should use Table A-7a. March 
                                                                  is  the  third  month  of  your  tax  year,  so  multiply  the 

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building's unadjusted basis, $100,000, by the percentages conversion, or destruction. After you figure the full-year
for the third month in Table A-7a. Your depreciation deduc- depreciation amount, figure the deductible part using the
tion for each of the first 3 years is as follows. convention that applies to the property.

Half-year convention used. For property for which you
Year Basis Percentage Deduction used a half-year convention, the depreciation deduction
1st . . . . . . . . . . . . $ 100,000 2.033% $2,033 for the year of the disposition is half the depreciation de-
2nd . . . . . . . . . . . 100,000 2.564 2,564 termined for the full year.
3rd . . . . . . . . . . . 100,000 2.564 2,564
Mid-quarter convention used. For property for which
you used the mid-quarter convention, figure your depreci-
Example 2. During the year, you bought a machine ation deduction for the year of the disposition by multiply-
(7-year property) for $4,000, office furniture (7-year prop- ing a full year of depreciation by the percentage listed be-
erty) for $1,000, and a computer (5-year property) for low for the quarter in which you disposed of the property.
$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 Quarter Percentage
items is qualified property for purposes of claiming a spe- First. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5%
cial depreciation allowance. Second. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.5
You placed property in service during the last 3 months Third. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.5
of the year, so you must first determine if you have to use Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.5
the mid-quarter convention. The total bases of all property
you placed in service during the year is $10,000. The Example. On December 2, 2020, you placed in serv-
$5,000 basis of the computer, which you placed in service ice an item of 5-year property costing $10,000. You did not
during the last 3 months (the fourth quarter) of your tax claim a section 179 deduction and the property does not
year, is more than 40% of the total bases of all property qualify for a special depreciation allowance. Your unadjus-
($10,000) you placed in service during the year. There- ted basis for the property was $10,000. You used the
fore, you must use the mid-quarter convention for all three mid-quarter convention because this was the only item of
items. business property you placed in service in 2020 and it was
You refer to the MACRS Percentage Table Guide in Ap- placed in service during the last 3 months of your tax year.
pendix A to determine which table you should use under Your property is in the 5-year property class, so you used
the mid-quarter convention. The machine is 7-year prop- Table A-5 to figure your depreciation deduction. Your de-
erty placed in service in the first quarter, so you use Table ductions for 2020, 2021, and 2022 were $500 (5% of
A-2 . The furniture is 7-year property placed in service in $10,000), $3,800 (38% of $10,000), and $2,280 (22.80%
the third quarter, so you use Table A-4. Finally, because of $10,000), respectively. You disposed of the property on
the computer is 5-year property placed in service in the April 6, 2023. To determine your depreciation deduction
fourth quarter, you use Table A-5. Knowing what table to for 2023, first figure the deduction for the full year. This is
use for each property, you figure the depreciation for the $1,368 (13.68% of $10,000). April is in the second quarter
first 2 years as follows. of the year, so you multiply $1,368 by 37.5% (0.375) to get
your depreciation deduction of $513 for 2023.
Year Property Basis Percentage Deduction
Mid-month convention used. If you dispose of residen-
1st Machine $4,000 25.00 $1,000 tial rental or nonresidential real property, figure your de-
2nd Machine 4,000 21.43 857 preciation deduction for the year of the disposition by mul-
tiplying a full year of depreciation by a fraction. The
1st Furniture 1,000 10.71 107 numerator of the fraction is the number of months (includ-
2nd Furniture 1,000 25.51 255 ing partial months) in the year that the property is consid-
ered in service. The denominator is 12.
1st Computer 5,000 5.00 250
2nd Computer 5,000 38.00 1,900 Example. On July 2, 2021, you purchased and placed
in service residential rental property. The property cost
$100,000, not including the cost of land. You used Table
Sale or Other Disposition Before the A-6 to figure your MACRS depreciation for this property.
Recovery Period Ends You sold the property on March 2, 2023. You file your tax
return based on the calendar year.
If you sell or otherwise dispose of your property before the A full year of depreciation for 2023 is $3,636. This is
end of its recovery period, your depreciation deduction for $100,000 multiplied by 0.03636 (the percentage for the
the year of the disposition will be only part of the deprecia- seventh month of the third recovery year) from Table A-6.
tion amount for the full year. You have disposed of your You then apply the mid-month convention for the 2 /1 2
property if you have permanently withdrawn it from use in months of use in 2023. Treat the month of disposition as
your business or income-producing activity because of its one-half month of use. Multiply $3,636 by the fraction, 2.5
sale, exchange, retirement, abandonment, involuntary

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over 12, to get your 2023 depreciation deduction of The following table shows the declining balance rate for
$757.50. each property class and the first year for which the straight
line method gives an equal or greater deduction.
Figuring the Deduction Without Using
Property Declining Balance
the Tables
Class Method Rate Year
Instead of using the rates in the percentage tables to fig- 3-year 200% DB 66.667% 3rd
ure your depreciation deduction, you can figure it yourself. 5-year 200% DB 40.0 4th
Before making the computation each year, you must re-
7-year 200% DB 28.571 5th
duce your adjusted basis in the property by the deprecia-
tion claimed the previous year(s). 10-year 200% DB 20.0 7th
Figuring MACRS deductions without using the ta- 15-year 150% DB 10.0 7th
! bles will generally result in a slightly different 20-year 150% DB 7.5 9th
CAUTION amount than using the tables.

Straight Line Method
Declining Balance Method
When using the straight line method, you apply a different
When using a declining balance method, you apply the depreciation rate each year to the adjusted basis of your
same depreciation rate each year to the adjusted basis of property. You must use the applicable convention in the
your property. You must use the applicable convention for year you place the property in service and the year you
the first tax year and you must switch to the straight line dispose of the property.
method beginning in the first year for which it will give an
equal or greater deduction. The straight line method is ex- You figure depreciation for the year you place property
plained later. in service as follows.
1. Multiply your adjusted basis in the property by the
You figure depreciation for the year you place property straight line rate.
in service as follows.
2. Apply the applicable convention.
1. Multiply your adjusted basis in the property by the de-
clining balance rate. You figure depreciation for all other years (including the
year you switch from the declining balance method to the
2. Apply the applicable convention.
straight line method) as follows.
You figure depreciation for all other years (before the 1. Reduce your adjusted basis in the property by the de-
year you switch to the straight line method) as follows. preciation allowed or allowable in earlier years (under
any method).
1. Reduce your adjusted basis in the property by the de-
preciation allowed or allowable in earlier years. 2. Determine the depreciation rate for the year.
2. Multiply this new adjusted basis by the same declin- 3. Multiply the adjusted basis figured in (1) by the depre-
ing balance rate used in earlier years. ciation rate figured in (2).

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

Straight line rate. You determine the straight line depre-
Figuring depreciation under the declining balance
ciation rate for any tax year by dividing the number 1 by
method and switching to the straight line method is illus-
the years remaining in the recovery period at the begin-
trated in Example 1, later, under Examples.
ning of that year. When figuring the number of years re-
Declining balance rate. You figure your declining bal- maining, you must take into account the convention used
ance rate by dividing the specified declining balance per- in the year you placed the property in service. If the num-
centage (150% or 200% changed to a decimal) by the ber of years remaining is less than 1, the depreciation rate
number of years in the property's recovery period. For ex- for that tax year is 1.0 (100%).
ample, for 3-year property depreciated using the 200%
declining balance method, divide 2.00 (200%) by 3 to get Using the Applicable Convention
0.6667, or a 66.67% declining balance rate. For 15-year
property depreciated using the 150% declining balance The applicable convention (discussed earlier under Which
method, divide 1.50 (150%) by 15 to get 0.10, or a 10% Convention Applies) affects how you figure your deprecia-
declining balance rate. tion deduction for the year you place your property in serv-
ice and for the year you dispose of it. It determines how

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much of the recovery period remains at the beginning of Quarter Percentage
each year, so it also affects the depreciation rate for prop- First. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5%
Second
erty you depreciate under the straight line method. See . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.5
Straight line rate in the previous discussion. Use the appli-
Third. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.5
cable convention, as explained in the following discus-
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.5
sions.
If you hold the property for the entire recovery period,
Half-year convention. If this convention applies, you de- your depreciation deduction for the year that includes the
duct a half-year of depreciation for the first year and the final quarter of the recovery period is the amount of your
last year that you depreciate the property. You deduct a unrecovered basis in the property.
full year of depreciation for any other year during the re-
covery period. Mid-month convention. If this convention applies, the
Figure your depreciation deduction for the year you depreciation you can deduct for the first year that you de-
place the property in service by dividing the depreciation preciate the property depends on the month in which you
for a full year by 2. If you dispose of the property before place the property in service. Figure your depreciation de-
the end of the recovery period, figure your depreciation duction for the year you place the property in service by
deduction for the year of the disposition the same way. If multiplying the depreciation for a full year by a fraction.
you hold the property for the entire recovery period, your The numerator of the fraction is the number of full months
depreciation deduction for the year that includes the final in the year that the property is in service plus / (or 0.5). 1 2
6 months of the recovery period is the amount of your un- The denominator is 12.
recovered basis in the property. If you dispose of the property before the end of the re-
covery period, figure your depreciation deduction for the
Mid-quarter convention. If this convention applies, the year of the disposition the same way. If you hold the prop-
depreciation you can deduct for the first year you depreci- erty for the entire recovery period, your depreciation de-
ate the property depends on the quarter in which you duction for the year that includes the final month of the re-
place the property in service. covery period is the amount of your unrecovered basis in
A quarter of a full 12-month tax year is a period of 3 the property.
months. The first quarter in a year begins on the first day
of the tax year. The second quarter begins on the first day Example. You use the calendar year and place non-
of the fourth month of the tax year. The third quarter be- residential real property in service in August. The property
gins on the first day of the seventh month of the tax year. is in service 4 full months (September, October, Novem-
The fourth quarter begins on the first day of the tenth ber, and December). Your numerator is 4.5 (4 full months
month of the tax year. A calendar year is divided into the plus 0.5). You multiply the depreciation for a full year by
following quarters. 4.5/12, or 0.375.

Examples
Quarter Months
First. . . . . . . . . . . . . . January, February, March The following examples show how to figure depreciation
Second. . . . . . . . . . . . April, May, June under MACRS without using the percentage tables. Fig-
Third . . . . . . . . . . . . . . July, August, September ures are rounded for purposes of the examples. Assume
Fourth . . . . . . . . . . . . . October, November, December for all the examples that you use a calendar year as your
tax year.
Figure your depreciation deduction for the year you
place the property in service by multiplying the deprecia- Example 1—200% DB method and half-year con-
tion for a full year by the percentage listed below for the vention. In February, you placed in service depreciable
quarter you place the property in service. property with a 5-year recovery period and a basis of
$1,000. You do not elect to take the section 179 deduction
Quarter Percentage and the property does not qualify for a special deprecia-
tion allowance. You use GDS and the 200% DB method to
First. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.5%
figure your depreciation. When the SL method results in
Second. . . . . . . . . . . . . . . . . . . . . . . . . . . 62.5 an equal or larger deduction, you switch to the SL method.
Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.5 You did not place any property in service in the last 3
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5 months of the year, so you must use the half-year conven-
tion.
If you dispose of the property before the end of the re-
First year. You figure the depreciation rate under the
covery period, figure your depreciation deduction for the
200% DB method by dividing 2 (200%) by 5 (the number
year of the disposition by multiplying a full year of depreci-
of years in the recovery period). The result is 40%. You
ation by the percentage listed below for the quarter you
multiply the adjusted basis of the property ($1,000) by the
dispose of the property.
40% DB rate. You apply the half-year convention by divid-
ing the result ($400) by 2. Depreciation for the first year
under the 200% DB method is $200.

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You figure the depreciation rate under the SL method method, and the mid-month convention to figure your de-
by dividing 1 by 5, the number of years in the recovery pe- preciation.
riod. The result is 20%.You multiply the adjusted basis of First year. You figure the SL depreciation rate for the
the property ($1,000) by the 20% SL rate. You apply the building by dividing 1 by 39 years. The result is 0.02564.
half-year convention by dividing the result ($200) by 2. De- The depreciation for a full year is $2,564 ($100,000 ×
preciation for the first year under the SL method is $100. 0.02564). Under the mid-month convention, you treat the
The DB method provides a larger deduction, so you de- property as placed in service in the middle of January. You
duct the $200 figured under the 200% DB method. get 11.5 months of depreciation for the year. Expressed
Second year. You reduce the adjusted basis ($1,000) as a decimal, the fraction of 11.5 months divided by 12
by the depreciation claimed in the first year ($200). You months is 0.958. Your first-year depreciation for the build-
multiply the result ($800) by the DB rate (40%). Deprecia- ing is $2,456 ($2,564 × 0.958).
tion for the second year under the 200% DB method is Second year. You subtract $2,456 from $100,000 to
$320. get your adjusted basis of $97,544 for the second year.
You figure the SL depreciation rate by dividing 1 by 4.5, The SL rate is 0.02629. This is 1 divided by the remaining
the number of years remaining in the recovery period. recovery period of 38.042 years (39 years reduced by
(Based on the half-year convention, you used only half a 11.5 months or 0.958). Your depreciation for the building
year of the recovery period in the first year.) You multiply for the second year is $2,564 ($97,544 × 0.02629).
the reduced adjusted basis ($800) by the result (22.22%). Third year. The adjusted basis is $94,980 ($97,544 −
Depreciation under the SL method for the second year is $2,564). The SL rate is 0.027 (1 divided by 37.042 re-
$178. maining years). Your depreciation for the third year is
The DB method provides a larger deduction, so you de- $2,564 ($94,980 × 0.027).
duct the $320 figured under the 200% DB method.
Third year. You reduce the adjusted basis ($800) by Example 3—200% DB method and mid-quarter
the depreciation claimed in the second year ($320). You convention. During the year, you bought and placed in
multiply the result ($480) by the DB rate (40%). Deprecia- service in your business the following items.
tion for the third year under the 200% DB method is $192.
You figure the SL depreciation rate by dividing 1 by 3.5. Month Placed
You multiply the reduced adjusted basis ($480) by the re- Item in Service Cost
sult (28.57%). Depreciation under the SL method for the
third year is $137. Safe January $4,000
The DB method provides a larger deduction, so you de-
Office furniture September 1,000
duct the $192 figured under the 200% DB method.
Fourth year. You reduce the adjusted basis ($480) by Computer October 5,000
the depreciation claimed in the third year ($192). You mul-
tiply the result ($288) by the DB rate (40%). Depreciation You do not elect a section 179 deduction and these items
for the fourth year under the 200% DB method is $115. do not qualify for a special depreciation allowance. You
You figure the SL depreciation rate by dividing 1 by 2.5. use GDS and the 200% DB method to figure the deprecia-
You multiply the reduced adjusted basis ($288) by the re- tion. The total bases of all property you placed in service
sult (40%). Depreciation under the SL method for the this year is $10,000. The basis of the computer ($5,000) is
fourth year is $115. more than 40% of the total bases of all property placed in
The SL method provides an equal deduction, so you service during the year ($10,000), so you must use the
switch to the SL method and deduct the $115. mid-quarter convention. This convention applies to all
Fifth year. You reduce the adjusted basis ($288) by the three items of property. The safe and office furniture are
depreciation claimed in the fourth year ($115) to get the 7-year property and the computer is 5-year property.
reduced adjusted basis of $173. You figure the SL depre- First- and second-year depreciation for safe. The
ciation rate by dividing 1 by 1.5. You multiply the reduced 200% DB rate for 7-year property is 0.28571. You deter-
adjusted basis ($173) by the result (66.67%). Depreciation mine this by dividing 2.00 (200%) by 7 years. The depreci-
under the SL method for the fifth year is $115. ation for the safe for a full year is $1,143 ($4,000 ×
Sixth year. You reduce the adjusted basis ($173) by 0.28571). You placed the safe in service in the first quarter
the depreciation claimed in the fifth year ($115) to get the of your tax year, so you multiply $1,143 by 87.5% (the
reduced adjusted basis of $58. There is less than 1 year mid-quarter percentage for the first quarter). The result,
remaining in the recovery period, so the SL depreciation $1,000, is your deduction for depreciation on the safe for
rate for the sixth year is 100%. You multiply the reduced the first year.
adjusted basis ($58) by 100% to arrive at the depreciation For the second year, the adjusted basis of the safe is
deduction for the sixth year ($58). $3,000. You figure this by subtracting the first year's de-
preciation ($1,000) from the basis of the safe ($4,000).
Example 2—SL method and mid-month conven- Your depreciation deduction for the second year is $857
tion. In January, you bought and placed in service a ($3,000 × 0.28571).
building for $100,000 that is nonresidential real property First- and second-year depreciation for furniture.
with a recovery period of 39 years. The adjusted basis of The furniture is also 7-year property, so you use the same
the building is its cost of $100,000. You use GDS, the SL 200% DB rate of 0.28571. You multiply the basis of the

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furniture ($1,000) by 0.28571 to get the depreciation of Figuring the Deduction for Property
$286 for the full year. You placed the furniture in service in
the third quarter of your tax year, so you multiply $286 by Acquired in a Nontaxable Exchange

37.5% (the mid-quarter percentage for the third quarter). If your property has a carryover basis because you ac-
The result, $107, is your deduction for depreciation on the quired it in a nontaxable transfer such as a like-kind ex-
furniture for the first year. change or involuntary conversion, you must generally fig-
For the second year, the adjusted basis of the furniture ure depreciation for the property as if the transfer had not
is $893. You figure this by subtracting the first year's de- occurred. However, see Like-kind exchanges and involun-
preciation ($107) from the basis of the furniture ($1,000). tary conversions, earlier, in chapter 3 under How Much
Your depreciation for the second year is $255 ($893 × Can You Deduct; and Property Acquired in a Like-kind Ex-
0.28571). change or Involuntary Conversion next.
First- and second-year depreciation for computer.
The 200% DB rate for 5-year property is 0.40. You deter-
mine this by dividing 2.00 (200%) by 5 years. The depreci- Property Acquired in a Like-kind Exchange
ation for the computer for a full year is $2,000 ($5,000 × or Involuntary Conversion
0.40). You placed the computer in service in the fourth
You must generally depreciate the carryover basis of prop-
quarter of your tax year, so you multiply the $2,000 by
erty acquired in a like-kind exchange or involuntary con-
12.5% (the mid-quarter percentage for the fourth quarter).
version over the remaining recovery period of the property
The result, $250, is your deduction for depreciation on the
exchanged or involuntarily converted. You also generally
computer for the first year.
continue to use the same depreciation method and con-
For the second year, the adjusted basis of the com-
vention used for the exchanged or involuntarily converted
puter is $4,750. You figure this by subtracting the first
property. This applies only to acquired property with the
year's depreciation ($250) from the basis of the computer
same or a shorter recovery period and the same or more
($5,000). Your depreciation deduction for the second year
accelerated depreciation method than the property ex-
is $1,900 ($4,750 × 0.40).
changed or involuntarily converted. The excess basis (the
Example 4—200% DB method and half-year con- part of the acquired property's basis that exceeds its car-
vention. Last year, in July, you bought and placed in ryover basis), if any, of the acquired property is treated as
service in your business a new item of 7-year property. newly placed in service property.
This was the only item of property you placed in service
last year. The property cost $39,000 and you elected a For acquired property that has a longer recovery period
$24,000 section 179 deduction. You also made an elec- or less accelerated depreciation method than the ex-
tion under section 168(k)(7) not to deduct the special de- changed or involuntarily converted property, you must
preciation allowance for 7-year property placed in service generally depreciate the carryover basis of the acquired
last year. Your unadjusted basis for the property is property as if it were placed in service in the same tax
$15,000. Because you did not place any property in serv- year as the exchanged or involuntarily converted property.
ice in the last 3 months of your tax year, you used the You also generally continue to use the longer recovery pe-
half-year convention. You figured your deduction using the riod and less accelerated depreciation method of the ac-
percentages in Table A-1 for 7-year property. Last year, quired property.

your depreciation was $2,144 ($15,000 × 14.29% If the MACRS property you acquired in the exchange or
(0.1429)). involuntary conversion is qualified property, discussed
In July of this year, your property was vandalized. You earlier in chapter 3 under What Is Qualified Property, you
had a deductible casualty loss of $3,000. You spent can claim a special depreciation allowance on the carry-
$3,500 to put the property back in operational order. Your over basis. Special rules apply to vehicles acquired in a
adjusted basis at the end of this year is $13,356. You fig- trade-in. For information on how to figure depreciation for
ured this by first subtracting the first year's depreciation a vehicle acquired in a trade-in that is subject to the pas-
($2,144) and the casualty loss ($3,000) from the unadjus- senger automobile limits, see Deductions For Passenger
ted basis of $15,000. To this amount ($9,856), you then Automobiles Acquired in a Trade-in under Do the Passen-
added the $3,500 repair cost. ger Automobile Limits Apply? in chapter 5.
You cannot use the table percentages to figure your de-
preciation for this property for this year because of the ad- Like-kind exchanges completed after December
justments to basis. You must figure the deduction yourself. ! 31, 2017, are generally limited to exchanges of
You determine the DB rate by dividing 2.00 (200%) by 7 CAUTION real property not held primarily for sale.
years. The result is 0.28571 or 28.571%. You multiply the
adjusted basis of your property ($13,356) by the DB rate Election out. Instead of using the above rules, you
of 0.28571 to get your depreciation deduction of $3,816 can elect, for depreciation purposes, to treat the adjusted
for this year. 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 disposi-
tion of the exchanged or involuntarily converted property.

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The depreciable basis of the new property is the adjusted Using the Applicable Convention in a Short
basis of the exchanged or involuntarily converted property Tax Year
plus any additional amount you paid for it. The election, if
made, applies to both the acquired property and the ex- The applicable convention establishes the date property is
changed or involuntarily converted property. This election treated as placed in service and disposed of. Depreciation
does not affect the amount of gain or loss recognized on is allowable only for that part of the tax year the property is
the exchange or involuntary conversion. treated as in service. The recovery period begins on the
When to make the election. You must make the elec- placed in service date determined by applying the con-
tion on a timely filed return (including extensions) for the vention. The remaining recovery period at the beginning of
year of replacement. The election must be made sepa- the next tax year is the full recovery period less the part for
rately by each person acquiring replacement property. In which depreciation was allowable in the first tax year.
the case of a partnership, S corporation, or consolidated
group, the election is made by the partnership, by the S The following discussions explain how to use the appli-
corporation, or by the common parent of a consolidated cable convention in a short tax year.
group, respectively. Once made, the election may not be
Mid-month convention. Under the mid-month conven-
revoked without IRS consent.
tion, you always treat your property as placed in service or
For more information and special rules, see the Instruc-
disposed of on the midpoint of the month it is placed in
tions for Form 4562.
service or disposed of. You apply this rule without regard
to your tax year.
Property Acquired in a Nontaxable Transfer
Half-year convention. Under the half-year convention,
You must depreciate MACRS property acquired by a cor- you treat property as placed in service or disposed of on
poration or partnership in certain nontaxable transfers the midpoint of the tax year it is placed in service or dis-
over the property's remaining recovery period in the trans- posed of.
feror's hands, as if the transfer had not occurred. You must
continue to use the same depreciation method and con- First or last day of month. For a short tax year begin-
vention as the transferor. You can depreciate the part of ning on the first day of a month or ending on the last day of
the property's basis that exceeds its carryover basis (the a month, the tax year consists of the number of months in
transferor's adjusted basis in the property) as newly pur- the tax year. If the short tax year includes part of a month,
chased MACRS property. you generally include the full month in the number of
months in the tax year. You determine the midpoint of the
The nontaxable transfers covered by this rule include tax year by dividing the number of months in the tax year
the following. by 2. For the half-year convention, you treat property as
placed in service or disposed of on either the first day or
• A distribution in complete liquidation of a subsidiary.
the midpoint of a month.
• A transfer to a corporation controlled by the transferor. For example, a short tax year that begins on June 20
• An exchange of property solely for corporate stock or and ends on December 31 consists of 7 months. You use
securities in a reorganization. only full months for this determination, so you treat the tax
year as beginning on June 1 instead of June 20. The mid-
• A contribution of property to a partnership in exchange point of the tax year is the middle of September (3 /1 2
for a partnership interest. months from the beginning of the tax year). You treat prop-
• A partnership distribution of property to a partner. erty as placed in service or disposed of on this midpoint.

Example. Tara Corporation, a calendar year taxpayer,
Figuring the Deduction for a Short Tax was incorporated on March 15. For purposes of the
Year half-year convention, it has a short tax year of 10 months,
ending on December 31, 2023. During the short tax year,
You cannot use the MACRS percentage tables to deter- Tara placed property in service for which it uses the
mine depreciation for a short tax year. A short tax year is half-year convention. Tara treats this property as placed in
any tax year with less than 12 full months. This section service on the first day of the sixth month of the short tax
discusses the rules for determining the depreciation de- year, or August 1, 2023.
duction for property you place in service or dispose of in a
short tax year. It also discusses the rules for determining Not on first or last day of month. For a short tax
depreciation when you have a short tax year during the re- year not beginning on the first day of a month and not end-
covery period (other than the year the property is placed ing on the last day of a month, the tax year consists of the
in service or disposed of). number of days in the tax year. You determine the mid-
point of the tax year by dividing the number of days in the
For more information on figuring depreciation for a tax year by 2. For the half-year convention, you treat prop-
short tax year, see Revenue Procedure 89-15, 1989-1 erty as placed in service or disposed of on either the first
C.B. 816. 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

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in service or disposed of on the nearest preceding first
Quarter Midpoint Placed in
day or midpoint of a month.
Service
Mid-quarter convention. To determine if you must use 3/15 – 5/26 4/20 4/15
the mid-quarter convention, compare the basis of property
5/27 – 8/07 7/02 7/01
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 8/08 – 10/19 9/13 9/01
year. The length of your tax year does not matter. If you 10/20 – 12/31 11/25 11/15
have a short tax year of 3 months or less, use the
mid-quarter convention for all applicable property you The last quarter of the short tax year begins on October
place in service during that tax year. 20, which is 73 days from December 31, the end of the tax
You treat property under the mid-quarter convention as year. The 37th day of the last quarter is November 25,
placed in service or disposed of on the midpoint of the which is the midpoint of the quarter. November 25 is not
quarter of the tax year in which it is placed in service or the first day or the midpoint of November, so Tara Corpo-
disposed of. Divide a short tax year into 4 quarters and ration must treat the property as placed in service in the
determine the midpoint of each quarter. middle of November (the nearest preceding first day or
For a short tax year of 4 or 8 full calendar months, de- midpoint of that month).
termine quarters on the basis of whole months. The mid-
point of each quarter is either the first day or the midpoint Property Placed in Service in a Short
of a month. Treat property as placed in service or dis-
Tax Year
posed of on this midpoint.
To determine the midpoint of a quarter for a short tax To figure your MACRS depreciation deduction for the
year of other than 4 or 8 full calendar months, complete short tax year, you must first determine the depreciation
the following steps. for a full tax year. You do this by multiplying your basis in
1. Determine the number of days in your short tax year. the property by the applicable depreciation rate. Then, de-
termine the depreciation for the short tax year. Do this by
2. Determine the number of days in each quarter by di- multiplying the depreciation for a full tax year by a fraction.
viding the number of days in your short tax year by 4. The numerator (top number) of the fraction is the number
3. Determine the midpoint of each quarter by dividing of months (including parts of a month) the property is trea-
the number of days in each quarter by 2. ted as in service during the tax year (applying the applica-
ble convention). The denominator (bottom number) is 12.
If the result of (3) gives you a midpoint of a quarter that See Depreciation After a Short Tax Year, later, for informa-
is on a day other than the first day or midpoint of a month, tion on how to figure depreciation in later years.
treat the property as placed in service or disposed of on
the nearest preceding first day or midpoint of that month. Example 1—half-year convention. Tara Corporation,
with a short tax year beginning March 15 and ending De-
Example. Tara Corporation, a calendar year taxpayer, cember 31, placed in service on March 16 an item of
was incorporated and began business on March 15. It has 5-year property with a basis of $1,000. This is the only
a short tax year of 9 / months, ending on December 31. 1 2 property the corporation placed in service during the short
During December, it placed property in service for which it tax year. Tara does not elect to claim a section 179 deduc-
must use the mid-quarter convention. This is a short tax tion and the property does not qualify for a special depre-
year of other than 4 or 8 full calendar months, so it must ciation allowance. The depreciation method for this prop-
determine the midpoint of each quarter. erty is the 200% declining balance method. The
1. First, it determines that its short tax year beginning depreciation rate is 40% and Tara applies the half-year
March 15 and ending December 31 consists of 292 convention.
days. Tara treats the property as placed in service on
August 1. The determination of this August 1 date is ex-
2. Next, it divides 292 by 4 to determine the length of plained in the example illustrating the half-year convention
each quarter, 73 days. under Using the Applicable Convention in a Short Tax
3. Finally, it divides 73 by 2 to determine the midpoint of Year, earlier. Tara is allowed 5 months of depreciation for
each quarter, the 37th day. the short tax year that consists of 10 months. The corpora-
tion first multiplies the basis ($1,000) by 40% (the declin-
The following table shows the quarters of Tara Corpora- ing balance rate) to get the depreciation for a full tax year
tion's short tax year, the midpoint of each quarter, and the of $400. The corporation then multiplies $400 by / to 5 12
date in each quarter that Tara must treat its property as get the short tax year depreciation of $167.
placed in service.
Example 2—mid-quarter convention. Tara Corpora-
tion, with a short tax year beginning March 15 and ending
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

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not qualify for a special depreciation allowance. The de- of the recovery period, determine the depreciation for the
preciation method for this property is the 200% declining year of disposition by multiplying the adjusted basis of the
balance method. The depreciation rate is 40%. The cor- property at the beginning of the tax year by the applicable
poration must apply the mid-quarter convention because depreciation rate and then multiplying the result by a frac-
the property was the only item placed in service that year tion. The fraction's numerator is the number of months (in-
and it was placed in service in the last 3 months of the tax cluding parts of a month) the property is treated as in
year. service during the tax year (applying the applicable con-
Tara treats the property as placed in service on Sep- vention). Its denominator is 12.
tember 1. This date is shown in the table provided in the
example illustrating the mid-quarter convention under Us- Using the allocation method for a 12-month or short
ing the Applicable Convention in a Short Tax Year, earlier, tax year. Under the allocation method, you figure the de-
for property that Tara Corporation placed in service during preciation for each later tax year by allocating to that year
the quarter that begins on August 8 and ends on October the depreciation attributable to the parts of the recovery
19. Under MACRS, Tara is allowed 4 months of deprecia- years that fall within that year. Whether your tax year is a
tion for the short tax year that consists of 10 months. The 12-month or short tax year, you figure the depreciation by
corporation first multiplies the basis ($1,000) by 40% to determining which recovery years are included in that
get the depreciation for a full tax year of $400. The corpo- year. For each recovery year included, multiply the depre-
ration then multiplies $400 by / to get the short tax year 4 12 ciation attributable to that recovery year by a fraction. The
depreciation of $133. fraction's numerator is the number of months (including
parts of a month) that are included in both the tax year and
Property Placed in Service Before a Short the recovery year. Its denominator is 12. The allowable de-
preciation for the tax year is the sum of the depreciation
Tax Year
figured for each recovery year.

If you have a short tax year after the tax year in which you Example. Assume the same facts as in Example 1 un-
began depreciating property, you must change the way der Property Placed in Service in a Short Tax Year, earlier.
you figure depreciation for that property. If you were using The Tara Corporation's first tax year after the short tax
the percentage tables, you can no longer use them. You year is a full year of 12 months, beginning January 1 and
must figure depreciation for the short tax year and each ending December 31. The first recovery year for the
later tax year as explained next. 5-year property placed in service during the short tax year
extends from August 1 to July 31. Tara deducted 5 months
Depreciation After a Short Tax Year of the first recovery year on its short-year tax return. Seven
months of the first recovery year and 5 months of the sec-
You can use either of the following methods to figure the ond recovery year fall within the next tax year. The depre-
depreciation for years after a short tax year. ciation for the next tax year is $333, which is the sum of
• The simplified method. the following.
• The allocation method. • $233—The depreciation for the first recovery year
($400 × / ).7 12
You must use the method you choose consistently.
• $100—The depreciation for the second recovery year.
Using the simplified method for a 12-month year. Un- This is figured by multiplying the adjusted basis of
der the simplified method, you figure the depreciation for a $600 ($1,000 − $400) by 40% (0.40), then multiplying
later 12-month year in the recovery period by multiplying the $240 result by / .5 12
the adjusted basis of your property at the beginning of the
year by the applicable depreciation rate. Using the allocation method for an early disposition.
If you dispose of property before the end of the recovery
Example. Assume the same facts as in Example 1 un- period in a later tax year, determine the depreciation for
der Property Placed in Service in a Short Tax Year, earlier. the year of disposition by multiplying the depreciation fig-
The Tara Corporation claimed depreciation of $167 for its ured for each recovery year (or part of a recovery year) in-
short tax year. The adjusted basis on January 1 of the next cluded in the tax year by a fraction. The numerator of the
year is $833 ($1,000 − $167). Tara's depreciation for that fraction is the number of months (including parts of
next year is 40% of $833, or $333. months) the property is treated as in service in the tax
year (applying the applicable convention). The denomina-
Using the simplified method for a short tax year. If a
tor is 12. If there is more than one recovery year in the tax
later tax year in the recovery period is a short tax year, you
year, you add together the depreciation for each recovery
figure depreciation for that year by multiplying the adjusted
year.
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 (includ-
ing 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

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The following rules also apply when you establish a
GAA.
How Do You Use General Asset
• Mid-quarter convention. Property subject to the
Accounts? mid-quarter convention can only be grouped into a
GAA with property placed in service in the same quar-
ter of the tax year.
Terms you may need to know
• Mid-month convention. Property subject to the
(see Glossary): mid-month convention can only be grouped into a
Adjusted basis GAA with property placed in service in the same
month of the tax year.
Amortization
Amount realized • Passenger automobiles. Passenger automobiles
subject to the limits on passenger automobile depreci-
Basis ation must be grouped into a separate GAA.
Convention See section 1.168(i)-1(c)(2)(ii) of the regulations for addi-
Disposition tional rules that apply when you establish a GAA.

Exchange
Figuring Depreciation for a GAA
Placed in service
After you have set up a GAA, you generally figure the
Recovery period MACRS depreciation for it by using the applicable depre-
Section 1245 property ciation method, recovery period, and convention for the
property in the GAA. For each GAA, record the deprecia-
Unadjusted basis
tion allowance in a separate depreciation reserve account.

Example. Make & Sell, a calendar year corporation,
To make it easier to figure MACRS depreciation, you can set up a GAA for 10 machines. The machines cost a total
group separate properties into one or more general asset of $10,000 and were placed in service in June 2023. One
accounts (GAAs). You can then depreciate all the proper- of the machines cost $8,200 and the rest cost a total of
ties in each account as a single item of property. $1,800. This GAA is depreciated under the 200% declin-
ing balance method with a 5-year recovery period and a
Property you cannot include. You cannot include prop- half-year convention. Make & Sell did not claim the section
erty in a GAA if you use it in both a personal activity and a 179 deduction on the machines and the machines did not
trade or business (or for the production of income) in the qualify for a special depreciation allowance. The deprecia-
year in which you first place it in service. If property you in- tion allowance for 2023 is $2,000 [($10,000 × 40% (0.40))
cluded in a GAA is later used in a personal activity, see ÷ 2]. As of January 1, 2024, the depreciation reserve ac-
Terminating GAA Treatment, later. count is $2,000.

Property generating foreign source income. For infor- Passenger automobiles. To figure depreciation on pas-
mation on the GAA treatment of property that generates senger automobiles in a GAA, apply the deduction limits
foreign source income, see sections 1.168(i)-1(c)(1)(ii) discussed in chapter 5 under Do the Passenger Automo-
and (f) of the regulations. bile Limits Apply. Multiply the amount determined using
these limits by the number of automobiles originally inclu-
Change in use. Special rules apply to figuring deprecia-
ded in the account, reduced by the total number of auto-
tion for property in a GAA for which the use changes dur-
mobiles removed from the GAA, as discussed under Ter-
ing the tax year. Examples include a change in use result-
minating GAA Treatment, later.
ing in a shorter recovery period and/or a more accelerated
depreciation method or a change in use resulting in a lon-
ger recovery period and/or a less accelerated deprecia- Disposing of GAA Property
tion method. See sections 1.168(i)-1(h) and 1.168(i)-4 of
the regulations. When you dispose of property included in a GAA, the fol-
lowing rules generally apply.
Grouping Property • Neither the unadjusted depreciable basis (defined
later) nor the depreciation reserve account of the GAA
Each GAA must include only property you placed in serv- is affected. You continue to depreciate the account as
ice in the same tax year and that has the following in com- if the disposition had not occurred.
mon. • The property is treated as having an adjusted basis of
• Recovery period. zero, so you cannot realize a loss on the disposition. If
the property is transferred to a supplies, scrap, or simi-
• Depreciation method. lar account, its basis in that account is zero.
• Convention.

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• Any amount realized on the disposition is treated as On its 2024 tax return, Make & Sell recognizes the
ordinary income, up to the limit discussed later under $9,000 amount realized as ordinary income because it is
Treatment of amount realized. not more than the GAA's unadjusted depreciable basis
However, these rules do not apply to any disposition ($10,000) plus any expensed cost (for example, the sec-
described later under Terminating GAA Treatment. tion 179 deduction) for property in the GAA ($0), minus
any amounts previously recognized as ordinary income
Disposition. Property in a GAA is considered disposed because of dispositions of other property from the GAA
of when you do any of the following. ($0).
The unadjusted depreciable basis and depreciation re-
• Permanently withdraw it from use in your trade or busi-
serve of the GAA are not affected by the sale of the ma-
ness or from the production of income.
chine. The depreciation allowance for the GAA in 2024 is
• Transfer it to a supplies, scrap, or similar account. $3,200 [($10,000 − $2,000) × 40% (0.40)].
• Sell, exchange, retire, physically abandon, or destroy
Example 2. Assume the same facts as in Example 1.
it.
In June 2025, Make & Sell sells seven machines to an un-
The retirement of a structural component of real property related person for a total of $1,100. These machines are
is not a disposition unless it is a partial disposition. See treated as having an adjusted basis of zero.
section 1.168(i)-1(e)(1) of the regulations. On its 2025 tax return, Make & Sell recognizes $1,000
as ordinary income. This is the GAA's unadjusted depreci-
Treatment of amount realized. When you dispose of able basis ($10,000) plus the expensed costs ($0), minus
property in a GAA, you must recognize any amount real- the amount previously recognized as ordinary income
ized from the disposition as ordinary income, up to a limit. ($9,000). The remaining amount realized of $100 ($1,100
The limit is: − $1,000) is section 1231 gain (discussed in chapter 3 of
1. The unadjusted depreciable basis of the GAA, plus Pub. 544).
The unadjusted depreciable basis and depreciation re-
2. Any expensed costs for property in the GAA that are serve of the GAA are not affected by the disposition of the
subject to recapture as depreciation (not including machines. The depreciation allowance for the GAA in
any expensed costs for property that you removed 2025 is $1,920 [($10,000 − $5,200) × 40% (0.40)].
from the GAA under the rules discussed later under
Terminating GAA Treatment), minus
Terminating GAA Treatment
3. Any amount previously recognized as ordinary in-
come upon the disposition of other property from the You must remove the following property from a GAA.
GAA.
• Property held by a partnership that terminates under
Unadjusted depreciable basis. The unadjusted de- section 708(b)(1).
preciable basis of a GAA is the total of the unadjusted de-
preciable bases of all the property in the GAA. The unad- • Property you dispose of in a nonrecognition transac-
justed depreciable basis of an item of property in a GAA is tion or an abusive transaction.
the amount you would use to figure gain or loss on its sale, • Property you dispose of in a qualifying disposition or in
but figured without reducing your original basis by any de- a disposition of all the property in the GAA, if you
preciation allowed or allowable in earlier years. However, choose to terminate GAA treatment.
you do reduce your original basis by other amounts, in-
cluding any amortization deduction, section 179 deduc- • Property you dispose of in a like-kind exchange or an
involuntary conversion.
tion, special depreciation allowance, and electric vehicle
credit. • Property you change to personal use.
Expensed costs. Expensed costs that are subject to • Property for which you must recapture any allowable
recapture as depreciation include the following. credit or deduction, such as the investment credit, the
credit for qualified electric vehicles, the credit for alter-
1. The section 179 deduction. native fuel vehicle refueling property, the section 179
2. Amortization deductions for the following. deduction, or the deduction for clean-fuel vehicles and
clean-fuel vehicle refueling property placed in service
a. Pollution control facilities.
before 2006.
b. Removal of barriers for the elderly and disabled.
If you remove property from a GAA, you must make the
c. Tertiary injectants. following adjustments.
d. Reforestation expenses. 1. Reduce the unadjusted depreciable basis of the GAA
by the unadjusted depreciable basis of the property
Example 1. The facts are the same as in the example
as of the first day of the tax year in which the disposi-
under Figuring Depreciation for a GAA, earlier. In February
tion, change in use, partnership technical termination,
2024, Make & Sell sells the machine that cost $8,200 to
or recapture event occurs. You can use any reasona-
an unrelated person for $9,000. The machine is treated as
ble method that is consistently applied to determine
having an adjusted basis of zero.

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the unadjusted depreciable basis of the property you 1. A transaction with a main purpose of shifting income
remove from a GAA. or deductions among taxpayers in a way that would
not be possible without choosing to use a GAA to take
2. Reduce the depreciation reserve account by the de-
advantage of differing effective tax rates.
preciation allowed or allowable for the property (com-
puted in the same way as computed for the GAA) as 2. A choice to use a GAA with a main purpose of dispos-
of the end of the tax year immediately preceding the ing of property from the GAA so that you can use an
year in which the disposition, change in use, or recap- expiring net operating loss or credit. For example, if
ture event occurs. you have a net operating loss carryover or a credit
carryover, the following transactions will be consid-
These adjustments have no effect on the recognition and
ered abusive transactions unless there is strong evi-
character of prior dispositions subject to the rules dis-
dence to the contrary.
cussed earlier under Disposing of GAA Property.
a. A transfer of GAA property to a related person.
Nonrecognition transactions. If you dispose of GAA
property in a nonrecognition transaction, you must remove b. A transfer of GAA property under an agreement
it from the GAA. The following are nonrecognition transac- where the property continues to be used, or is
tions. available for use, by you.
• The receipt by one corporation of property distributed Figuring gain or loss. You must determine the gain,
in complete liquidation of another corporation. loss, or other deduction due to an abusive transaction by
taking into account the property's adjusted basis. The ad-
• The transfer of property to a corporation solely in ex-
justed basis of the property at the time of the disposition is
change for stock in that corporation if the transferor is
the result of the following.
in control of the corporation immediately after the ex-
change. • The unadjusted depreciable basis of the property, mi-
nus
• The transfer of property by a corporation that is a party
to a reorganization in exchange solely for stock and • The depreciation allowed or allowable for the property
securities in another corporation that is also a party to figured by using the depreciation method, recovery
the reorganization. period, and convention that applied to the GAA in
which the property was included.
• The contribution of property to a partnership in ex-
change for an interest in the partnership. If there is a gain, the amount subject to recapture as or-
dinary income is the smaller of the following.
• The distribution of property (including money) from a
partnership to a partner. 1. The depreciation allowed or allowable for the property,
• Any transaction between members of the same affili- including any expensed cost (such as section 179 de-
ated group during any year for which the group makes ductions) or the special depreciation allowance for the
a consolidated return. property.
Rules for recipient (transferee). The recipient of the 2. The result of the following.
property (the person to whom it is transferred) must in- a. The original unadjusted depreciable basis of the
clude your (the transferor's) adjusted basis in the property GAA (plus, for section 1245 property originally in-
in a GAA. If you transferred either all of the property, the cluded in the GAA, any expensed cost), minus
last item of property, or the remaining portion of the last
item of property, in a GAA, the recipient’s basis in the b. The total gain previously recognized as ordinary
property is the result of the following. income on the disposition of property from the
GAA.
• The adjusted depreciable basis of the GAA as of the
beginning of your tax year in which the transaction Qualifying dispositions. If you dispose of GAA property
takes place, minus in a qualifying disposition, you can choose to remove the
• The depreciation allowable to you for the year of the property from the GAA. A qualifying disposition is one that
transfer. does not involve all the property, or the last item of prop-
erty, remaining in a GAA and that is described by any of
For this purpose, the adjusted depreciable basis of a the following.
GAA is the unadjusted depreciable basis of the GAA mi-
nus any depreciation allowed or allowable for the GAA. 1. A disposition that is a direct result of fire, storm, ship-
wreck, other casualty, or theft.
Abusive transactions. If you dispose of GAA property in
2. A charitable contribution for which a deduction is al-
an abusive transaction, you must remove it from the GAA.
lowed.
A disposition is an abusive transaction if it is not a nonre-
cognition transaction (described earlier) or a like-kind ex- 3. A disposition that is a direct result of a cessation, ter-
change or involuntary conversion and a main purpose for mination, or disposition of a business, manufacturing
the disposition is to get a tax benefit or a result that would or other income-producing process, operation, facility,
not be available without the use of a GAA. Examples of plant, or other unit (other than by transfer to a
abusive transactions include the following. supplies, scrap, or similar account).

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4. A nontaxable transaction other than a nonrecognition each machine is $760 ($5,760 − $5,000). This loss is sub-
transaction (described earlier), a like-kind exchange ject to section 1231 treatment. See chapter 3 of Pub. 544
or involuntary conversion, a technical termination of a for information on section 1231 losses.
partnership, or a transaction that is nontaxable only
because it is a disposition from a GAA. Disposition of all property in a GAA. If you dispose of
all the property, or the last item of property, in a GAA, you
If you choose to remove the property from the GAA, fig- can choose to end the GAA. If you make this choice, you
ure your gain, loss, or other deduction resulting from the figure the gain or loss by comparing the adjusted depreci-
disposition in the manner described earlier under Abusive able basis of the GAA with the amount realized.
transactions. If there is a gain, the amount subject to recapture as or-
dinary income is limited to the result of the following.
Like-kind exchanges and involuntary conversions. If
you dispose of GAA property as a result of a like-kind ex- • The depreciation allowed or allowable for the GAA, in-
change or involuntary conversion, you must remove from cluding any expensed cost (such as section 179 de-
the GAA the property that you transferred. See chapter 1 ductions or the additional depreciation allowed or al-
of Pub. 544 for information on these transactions. Figure lowable for the GAA), minus
your gain, loss, or other deduction resulting from the dis- • The total gain previously recognized as ordinary in-
position in the manner described earlier under Abusive come on the disposition of property from the GAA.
transactions.
Like-kind exchanges and involuntary conversions.
Example. Sankofa, a calendar year corporation, main- If you dispose of all the property or the last item of prop-
tains one GAA for 12 machines. Each machine costs erty in a GAA as a result of a like-kind exchange or invol-
$15,000 and was placed in service in 2021. Of the 12 ma- untary conversion, the GAA terminates. You must figure
chines, nine cost a total of $135,000 and are used in San- the gain or loss in the manner described above under Dis-
kofa's New York plant and three machines cost $45,000 position of all property in a GAA.
and are used in Sankofa's New Jersey plant. Assume this
GAA uses the 200% declining balance depreciation Example. Duforcelf, a calendar year corporation,
method, a 5-year recovery period, and a half-year conven- maintains a GAA for 1,000 calculators that cost a total of
tion. Sankofa does not claim the section 179 deduction $60,000 and were placed in service in 2020. Assume this
and the machines do not qualify for a special depreciation GAA is depreciated under the 200% declining balance
allowance. As of January 1, 2023, the depreciation re- method, has a recovery period of 5 years, and uses a
serve account for the GAA is $93,600. half-year convention. Duforcelf does not claim the section
In May 2023, Sankofa sells its entire manufacturing 179 deduction and the calculators do not qualify for a spe-
plant in New Jersey to an unrelated person. The sales cial depreciation allowance. In 2022, Duforcelf sells 200 of
proceeds allocated to each of the three machines at the the calculators to an unrelated person for $10,000. The
New Jersey plant is $5,000. This transaction is a qualify- $10,000 is recognized as ordinary income.
ing disposition, so Sankofa chooses to remove the three In March 2023, Duforcelf sells the remaining calculators
machines from the GAA and figure the gain, loss, or other in the GAA to an unrelated person for $35,000. Duforcelf
deduction by taking into account their adjusted bases. decides to end the GAA.
For Sankofa's 2023 return, the depreciation allowance On the date of the disposition, the adjusted depreciable
for the GAA is figured as follows. As of December 31, basis of the account is $23,040 (unadjusted depreciable
2022, the depreciation allowed or allowable for the three basis of $60,000 minus the depreciation allowed or allow-
machines at the New Jersey plant is $23,400. As of Janu- able of $36,960). In 2023, Duforcelf recognizes a gain of
ary 1, 2023, the unadjusted depreciable basis of the GAA $11,960. This is the amount realized of $35,000 minus the
is reduced from $180,000 to $135,000 ($180,000 minus adjusted depreciable basis of $23,040. The gain subject
the $45,000 unadjusted depreciable bases of the three to recapture as ordinary income is limited to the deprecia-
machines), and the depreciation reserve account is de- tion allowed or allowable minus the amounts previously
creased from $93,600 to $70,200 ($93,600 minus recognized as ordinary income ($36,960 − $10,000 =
$23,400 depreciation allowed or allowable for the three $26,960). Therefore, the entire gain of $11,960 is recap-
machines as of December 31, 2022). The depreciation al- tured as ordinary income.
lowance for the GAA in 2023 is $25,920 [($135,000 −
$70,200) × 40% (0.40)]. Electing To Use a GAA
For Sankofa's 2023 return, gain or loss for each of the
three machines at the New Jersey plant is determined as An election to include property in a GAA is made sepa-
follows. The depreciation allowed or allowable in 2023 for rately by each owner of the property. This means that an
each machine is $1,440 [(($15,000 − $7,800) × 40% election to include property in a GAA must be made by
(0.40)) ÷ 2]. The adjusted basis of each machine is $5,760 each member of a consolidated group and at the partner-
(the adjusted depreciable basis of $7,200 removed from ship or S corporation level (and not by each partner or
the account less the $1,440 depreciation allowed or allow- shareholder separately).
able in 2023). As a result, the loss recognized in 2023 for
How to make the election. Make the election by com-
pleting line 18 of Form 4562.

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When to make the election. You must make the election placed in service after August 8, 2005, and before
on a timely filed tax return (including extensions) for the January 1, 2014.
year in which you place in service the property included in
• Any deduction under section 179D of the Internal Rev-
the GAA. However, if you timely filed your return for the
enue Code for certain energy efficient commercial
year without making the election, you can still make the
building property placed in service after December 31,
election by filing an amended return within 6 months of the
2005.
due date of the return (excluding extensions). Attach the
election to the amended return and write “Filed pursuant • Any deduction under section 179E of the Internal Rev-
to section 301.9100-2” on the election statement. enue Code for qualified advanced mine safety equip-
ment property placed in service after December 20,
You must maintain records that identify the prop-
2006, and before January 1, 2018.
erty included in each GAA, that establish the un-
RECORDS adjusted depreciable basis and depreciation re- • Any deduction under section 190 of the Internal Reve-
serve of the GAA, and that reflect the amount realized nue Code for removal of barriers to the disabled and
during the year upon dispositions from each GAA. How- the elderly.
ever, see chapter 2 for the recordkeeping requirements for • Any deduction under section 193 of the Internal Reve-
section 179 property. nue Code for tertiary injectants.
Revoking an election. You can revoke an election to use • Any special depreciation allowance previously allowed
or allowable for the property (unless you elected not to
a GAA only in the following situations.
claim it).
• You include in the GAA property that generates foreign
There is no recapture for residential rental and nonresi-
source income both U.S. and foreign source income,
dential real property unless that property is qualified prop-
or combined gross income of a foreign sales corpora-
erty for which you claimed a special depreciation allow-
tion, a domestic international sales corporation, or a
ance. For more information on depreciation recapture, see
possessions corporation and its related supplier, and
Pub. 544.
that inclusion results in a substantial distortion of in-
come.
• You remove property from the GAA, as described un-
der Terminating GAA Treatment, earlier.

When Do You Recapture
Additional Rules for
MACRS Depreciation?
Listed Property

Terms you may need to know
(see Glossary): Introduction
Disposition This chapter discusses the deduction limits and other spe-
Nonresidential real property cial rules that apply to certain listed property. Listed prop-
erty includes cars and other property used for transporta-
Recapture
tion, property used for entertainment, and certain
Residential rental property computers.
Deductions for listed property (other than certain
leased property) are subject to the following special rules
When you dispose of property that you depreciated using and limits.
MACRS, any gain on the disposition is generally recap- • Deduction for employees. If your use of the property
tured (included in income) as ordinary income up to the is not for your employer's convenience or is not re-
amount of the depreciation previously allowed or allowa- quired as a condition of your employment, you cannot
ble for the property. Depreciation, for this purpose, in- deduct depreciation or rent expenses for your use of
cludes the following. the property as an employee.
• Any section 179 deduction claimed on the property. • Business-use requirement. If the property is not
• Any deduction under section 179B of the Internal Rev- used predominantly (more than 50%) for qualified
enue Code for capital costs to comply with Environ- business use, you cannot claim the section 179 de-
mental Protection Agency sulfur regulations. duction or a special depreciation allowance. In addi-
tion, you must figure any depreciation deduction under
• Any deduction under section 179C of the Internal Rev- MACRS using the straight line method over the ADS
enue Code for certain qualified refinery property

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recovery period. You may also have to recapture (in- as a new item of depreciable property. The recovery pe-
clude in income) any excess depreciation claimed in riod and method of depreciation that apply to the listed
previous years. A similar inclusion amount applies to property as a whole also apply to the improvement. For
certain leased property. example, if you must depreciate the listed property using
• Passenger automobile limits and rules. Annual the straight line method, you must also depreciate the im-
limits apply to depreciation deductions (including sec- provement using the straight line method.
tion 179 deductions and any special depreciation al-
lowance) for certain passenger automobiles. You can Passenger Automobiles
continue to deduct depreciation for the unrecovered
basis resulting from these limits after the end of the re- A passenger automobile is any four-wheeled vehicle
covery period. made primarily for use on public streets, roads, and high-
ways and rated at 6,000 pounds or less of unloaded gross
This chapter defines listed property and explains the
vehicle weight (6,000 pounds or less of gross vehicle
special rules and depreciation deduction limits that apply,
weight for trucks and vans). It includes any part, compo-
including the special inclusion amount rule for leased
nent, or other item physically attached to the automobile
property. It also discusses the recordkeeping rules for lis-
at the time of purchase or usually included in the purchase
ted property and explains how to report information about
price of an automobile.
the property on your tax return.
The following vehicles are not considered passenger
Useful Items automobiles for these purposes.
You may want to see:
• An ambulance, hearse, or combination ambu-
lance-hearse used directly in a trade or business.
Publication
463 463 Travel, Gift, and Car Expenses • A vehicle used directly in the trade or business of
transporting persons or property for pay or hire.
587 587 Business Use of Your Home
• A truck or van that is a qualified nonpersonal use vehi-
Form (and Instructions) cle.

2106 2106 Employee Business Expenses Qualified nonpersonal use vehicles. Qualified nonper-
4562 4562 Depreciation and Amortization sonal use vehicles are vehicles that by their nature are not
4797 4797 Sales of Business Property likely to be used more than a minimal amount for personal
purposes. They include the trucks and vans listed as ex-
See How To Get Tax Help for information about getting cepted vehicles under Other Property Used for Transpor-
publications and forms. tation 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,
What Is Listed Property? such as by installation of permanent shelving and painting
the vehicle to display advertising or the company's name.
Terms you may need to know For a detailed discussion of passenger automobiles, in-
(see Glossary): cluding leased passenger automobiles, see Pub. 463.

Capitalized
Other Property Used for
Commuting
Transportation
Improvement
Although vehicles used to transport persons or
Recovery period ! property for pay or hire and vehicles rated at more
Straight line method CAUTION than the 6,000-pound threshold are not passen-
ger automobiles, they are still “other property used for

transportation” and are subject to the special rules for lis-
ted property.
Listed property is any of the following.

• Passenger automobiles (as defined later). Other property used for transportation includes trucks,
• Any other property used for transportation, unless it is buses, boats, airplanes, motorcycles, and any other vehi-
an excepted vehicle. cles used to transport persons or goods.

• Property generally used for entertainment, recreation, Excepted vehicles. Other property used for transporta-
or amusement (including photographic, phonographic, tion does not include the following qualified nonpersonal
communication, and video recording equipment). use vehicles (defined earlier under Passenger Automo-
biles).
Improvements to listed property. An improvement
made to listed property that must be capitalized is treated • Clearly marked police and fire vehicles.

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• Unmarked vehicles used by law enforcement officers if Qualified specialized utility repair truck. A truck is
the use is officially authorized. a qualified specialized utility repair truck if it is not a van or
pickup truck and all the following apply.
• Ambulances used as such and hearses used as such.
• Any vehicle with a loaded gross vehicle weight of over • The truck was specifically designed for and is used to
carry heavy tools, testing equipment, or parts.
14,000 pounds that is designed to carry cargo.
• Bucket trucks (cherry pickers), cement mixers, dump • Shelves, racks, or other permanent interior construc-
tion has been installed to carry and store the tools,
trucks (including garbage trucks), flatbed trucks, and
equipment, or parts and would make it unlikely that the
refrigerated trucks.
truck would be used, other than minimally, for personal
• Combines, cranes and derricks, and forklifts. purposes.
• Delivery trucks with seating only for the driver, or only • The employer requires the employee to drive the truck
for the driver plus a folding jump seat. home in order to be able to respond in emergency sit-
• Qualified moving vans. uations for purposes of restoring or maintaining elec-
tricity, gas, telephone, water, sewer, or steam utility
• Qualified specialized utility repair trucks. services.
• School buses used in transporting students and em-
ployees of schools.
• Other buses with a capacity of at least 20 passengers Can Employees Claim a
that are used as passenger buses.
Deduction?
• Tractors and other special purpose farm vehicles.
Clearly marked police or fire vehicle. A clearly If you are an employee, you can claim a depreciation de-
marked police or fire vehicle is a vehicle that meets all the duction for the use of your listed property (whether owned
following requirements. or rented) in performing services as an employee only if
your use is a business use. The use of your property in
• It is owned or leased by a governmental unit or an performing services as an employee is a business use
agency or instrumentality of a governmental unit. only if both the following requirements are met.
• It is required to be used for commuting by a police offi- • The use is for your employer's convenience.
cer or firefighter who, when not on a regular shift, is on
call at all times. • The use is required as a condition of your employ-
ment.
• It is prohibited from being used for personal use (other
than commuting) outside the limit of the police officer's If these requirements are not met, you cannot deduct
arrest powers or the firefighter's obligation to respond depreciation (including the section 179 deduction) or rent
to an emergency. expenses for your use of the property as an employee.

• It is clearly marked with painted insignia or words that Note. Employee expenses for transportation and for
make it readily apparent that it is a police or fire vehi- the depreciation of certain listed property (such as com-
cle. A marking on a license plate is not a clear marking puters placed in service before 2018) paid or incurred in a
for these purposes. tax year beginning after December 31, 2017, and before
January 1, 2026, may not be claimed as a miscellaneous
Qualified moving van. A qualified moving van is any
itemized deduction subject to the 2% floor. If you are not
truck or van used by a professional moving company for
entitled to claim these expenses as an above-the-line de-
moving household or business goods if the following re-
duction, you may not claim a deduction for the expense on
quirements are met.
your 2023 return.
• No personal use of the van is allowed other than for
travel to and from a move site or for minor personal Employer's convenience. Whether the use of listed
use, such as a stop for lunch on the way from one property is for your employer's convenience must be de-
move site to another. termined from all the facts. The use is for your employer's
convenience if it is for a substantial business reason of the
• Personal use for travel to and from a move site hap-
employer. The use of listed property during your regular
pens no more than five times a month on average.
working hours to carry on your employer's business is
• Personal use is limited to situations in which it is more generally for the employer's convenience.
convenient to the employer, because of the location of
the employee's residence in relation to the location of Condition of employment. Whether the use of listed
the move site, for the van not to be returned to the em- property is a condition of your employment depends on all
ployer's business location. the facts and circumstances. The use of property must be
required for you to perform your duties properly. Your em-
ployer does not have to require explicitly that you use the
property. However, a mere statement by the employer that

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the use of the property is a condition of your employment Nonresidential real property
is not sufficient. Placed in service

Example 1. Virginia Sycamore is employed as a cou- Recapture
rier with We Deliver, which provides local courier services. Recovery period

Virginia owns and uses a motorcycle to deliver packages
to downtown offices. We Deliver explicitly requires all de- Straight line method
livery 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 You can claim the section 179 deduction and a special de-
of employment. preciation allowance for listed property and depreciate lis-
ted property using GDS and a declining balance method if
Example 2. You are an inspector for Uplift, a construc- the property meets the business-use requirement. To
tion company with many sites in the local area. You must meet this requirement, listed property must be used pre-
travel to these sites on a regular basis. Uplift does not fur- dominantly (more than 50% of its total use) for qualified
nish an automobile or explicitly require you to use your business use. If this requirement is not met, the following
own automobile. However, it pays you for any costs you in- rules apply.
cur in traveling to the various sites. The use of your own
automobile or a rental automobile is for the convenience • Property not used predominantly for qualified busi-
of Uplift and is required as a condition of employment. ness use during the year it is placed in service does
not qualify for the section 179 deduction.
Example 3. Assume the same facts as in Example 2, Property not used predominantly for qualified busi-
•
except that Uplift furnishes a car to you, and you choose ness use during the year it is placed in service does
to use your own car and receive payment for using it. The not qualify for a special depreciation allowance.
use of your own car is neither for the convenience of Uplift
nor required as a condition of employment. • Any depreciation deduction under MACRS for prop-
erty not used predominantly for qualified business use
Example 4. Marilyn Lee is a pilot for Y Company, a during any year must be figured using the straight line
small charter airline. Y requires pilots to obtain 80 hours of method over the ADS recovery period. This rule ap-
flight time annually in addition to flight time spent with the plies each year of the recovery period.
airline. Pilots can usually obtain these hours by flying with Excess depreciation on property previously used pre-
•
the Air Force Reserve or by flying part-time with another dominantly for qualified business use must be recap-
airline. Marilyn owns an airplane. The use of that airplane tured (included in income) in the first year in which it is
to obtain the required flight hours is neither for the conven- no longer used predominantly for qualified business
ience of the employer nor required as a condition of em- use.
ployment.
• A lessee must add an inclusion amount to income in
Example 5. David Rule is employed as an engineer the first year in which the leased property is not used
with Zip, an engineering contracting firm. David occasion- predominantly for qualified business use.
ally takes work home at night rather than work late in the
Being required to use the straight line method for
office. David owns and uses a home computer, which is
an item of listed property not used predominantly
virtually identical to the office model. David’s use of the CAUTION!
for qualified business use is not the same as
computer is neither for the convenience of David’s em-
electing the straight line method. It does not mean that
ployer nor required as a condition of employment.
you have to use the straight line method for other property
in the same class as the item of listed property.

What Is the Business-Use Exception for leased property. The business-use re-
quirement generally does not apply to any listed property
Requirement? leased or held for leasing by anyone regularly engaged in
the business of leasing listed property.
You are considered regularly engaged in the business
Terms you may need to know
of leasing listed property only if you enter into contracts for
(see Glossary): the leasing of listed property with some frequency over a
Adjusted basis continuous period of time. This determination is made on
the basis of the facts and circumstances in each case and
Business/investment use
takes into account the nature of your business in its en-
Capitalized tirety. Occasional or incidental leasing activity is insuffi-
Commuting cient. For example, if you lease only one passenger auto-
mobile during a tax year, you are not regularly engaged in
Declining balance method the business of leasing automobiles. An employer who al-
Fair market value (FMV) lows an employee to use the employer's property for
personal purposes and charges the employee for the use

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is not regularly engaged in the business of leasing the is for your employer's convenience and is required as a
property used by the employee. condition of your employment. See Can Employees Claim
a Deduction, earlier.
How To Allocate Use
Qualified Business Use
To determine whether the business-use requirement is
met, you must allocate the use of any item of listed prop- Qualified business use of listed property is any use of the
erty used for more than one purpose during the year property in your trade or business. However, it does not in-
among its various uses. clude the following uses.
For passenger automobiles and other means of trans- • The leasing of property to any 5% owner or related
portation, allocate the property's use on the basis of mile- person (to the extent the property is used by a 5%
age. You determine the percentage of qualified business owner or person related to the owner or lessee of the
use by dividing the number of miles you drove the vehicle property).
for business purposes during the year by the total number
of miles you drove the vehicle for all purposes (including • The use of property as pay for the services of a 5%
owner or related person.
business miles) during the year.
• The use of property as pay for services of any person
For other listed property, allocate the property's use on (other than a 5% owner or related person), unless the
the basis of the most appropriate unit of time the property value of the use is included in that person's gross in-
is actually used (rather than merely being available for come and income tax is withheld on that amount
use). For example, you can determine the percentage of where required.
business use of an item of listed property by dividing the
number of hours you used the item of listed property for Property does not stop being used predominantly
business purposes during the year by the total number of ! for qualified business use because of a transfer at
hours you used the item of listed property for all purposes CAUTION death.
(including business use) during the year.
Exception for leasing or compensatory use of air-
Entertainment use. Treat the use of listed property for craft. Treat the leasing of any aircraft by a 5% owner or
entertainment, recreation, or amusement purposes as a related person, or the compensatory use of any aircraft,
business use only to the extent you can deduct expenses as a qualified business use if at least 25% of the total use
(other than interest and property tax expenses) due to its of the aircraft during the year is for a qualified business
use as an ordinary and necessary business expense. use.

Commuting use. The use of an automobile for commut- 5% owner. For a business entity that is not a corporation,
ing is not business use, regardless of whether work is per- a 5% owner is any person who owns more than 5% of the
formed during the trip. For example, a business telephone capital or profits interest in the business.
call made on a car telephone while commuting to work For a corporation, a 5% owner is any person who owns,
does not change the character of the trip from commuting or is considered to own, either of the following.
to business. This is also true for a business meeting held
in a car while commuting to work. Similarly, a business call • More than 5% of the outstanding stock of the corpora-
made on an otherwise personal trip does not change the tion.
character of a trip from personal to business. The fact that • Stock possessing more than 5% of the total combined
an automobile is used to display material that advertises voting power of all stock in the corporation.
the owner's or user's trade or business does not convert
an otherwise personal use into business use. Related persons. For a description of related persons,
see Related persons in the discussion on property owned
Use of your automobile by another person. If some- or used in 1986 under What Method Can You Use To De-
one else uses your automobile, do not treat that use as preciate Your Property? in chapter 1. For this purpose,
business use unless one of the following conditions ap- however, treat as related persons only the relationships
plies. listed in items (1) through (10) of that discussion and sub-
stitute “50%” for “10%” each place it appears.
1. That use is directly connected with your business.
2. You properly report the value of the use as income to Examples. The following examples illustrate whether the
the other person and withhold tax on the income use of business property is qualified business use.
where required.
Example 1. John Maple is the sole proprietor of a
3. You are paid a fair market rent. plumbing contracting business. Richard, John’s sibling, is
employed by John in the business. As part of Richard's
Treat any payment to you for the use of the automobile as
pay, Richard is allowed to use one of the company auto-
a rent payment for purposes of item (3).
mobiles for personal use. The company includes the value
Employee deductions. If you are an employee, do not of the personal use of the automobile in Richard's gross
treat your use of listed property as business use unless it income and properly withholds tax on it. The use of the

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automobile is pay for the performance of services by a re- Excess depreciation is:
lated person, so it is not a qualified business use.
1. The depreciation allowable for the property (including
Example 2. John, in Example 1, allows unrelated em- any section 179 deduction and special depreciation
ployees to use company automobiles for personal purpo- allowance claimed) for years before the first year you
ses. John does not include the value of the personal use do not use the property predominantly for qualified
of the company automobiles as part of their compensation business use, minus
and does not withhold tax on the value of the use of the 2. The depreciation that would have been allowable for
automobiles. This use of company automobiles by em- those years if you had not used the property predomi-
ployees is not a qualified business use. nantly for qualified business use in the year you
placed it in service.
Example 3. James Company Inc. owns several auto-
mobiles that its employees use for business purposes. To determine the amount in (2) above, you must refigure
The employees are also allowed to take the automobiles the depreciation using the straight line method and the
home at night. The FMV of each employee's use of an au- ADS recovery period.
tomobile for any personal purpose, such as commuting to
and from work, is reported as income to the employee and Example. In June 2019, Ellen Rye purchased and
James Company withholds tax on it. This use of company placed in service a pickup truck that cost $18,000. Ellen
automobiles by employees, even for personal purposes, is used it only for qualified business use for 2019 through
a qualified business use for the company. 2022. Ellen claimed a section 179 deduction of $10,000
based on the purchase of the truck. Ellen began depreci-
Investment Use ating it using the 200% DB method over a 5-year GDS re-
covery period. The pickup truck's gross vehicle weight
The use of property to produce income in a nonbusiness was over 6,000 pounds, so it was not subject to the pas-
activity (investment use) is not a qualified business use. senger automobile limits discussed later under Do the
However, you can treat the investment use as business Passenger Automobile Limits Apply. During 2023, Ellen
use to figure the depreciation deduction for the property in used the truck 50% for business and 50% for personal
a given year. purposes. Ellen includes $4,018 excess depreciation in
her gross income for 2023. The excess depreciation is de-
Example 1. You use an item of listed property 50% of termined as follows.
the time to manage your investments. You also use the
item of listed property 40% of the time in your part-time Total section 179 deduction ($10,000) and
consumer research business. Your item of listed property depreciation claimed ($6,618) for 2019 through
is listed property because it is not used at a regular busi- 2022. (Depreciation is from Table A-1.). . . . . . . $16,618
ness establishment. You do not use the item of listed Minus: Depreciation allowable (Table
property predominantly for qualified business use. There- A-8):
fore, you cannot elect a section 179 deduction or claim a 2019 — 10% of $18,000 . . . . . . . . . . $1,800
special depreciation allowance for the item of listed prop- 2020 — 20% of $18,000 . . . . . . . . . . 3,600
erty. You must depreciate it using the straight line method 2021 — 20% of $18,000 . . . . . . . . . . 3,600
over the ADS recovery period. Your combined business/ 2022 — 20% of $18,000 . . . . . . . . . . 3,600 12,600
Excess depreciation
investment use for determining your depreciation deduc- . . . . . . . . . . . . . . . . . . . . . $4,018
tion is 90%.
Example 2. If you use your item of listed property 30% If Ellen's use of the truck does not change to 50% for
of the time to manage your investments and 60% of the business and 50% for personal purposes until 2025, there
time in your consumer research business, it is used pre- will be no excess depreciation. The total depreciation al-
dominantly for qualified business use. You can elect a lowable using Table A-8 through 2025 will be $18,000,
section 179 deduction and, if you do not deduct all the which equals the total of the section 179 deduction and
item of listed property’s cost, you can claim a special de- depreciation Ellen will have claimed.
preciation allowance and depreciate the item of listed
Where to figure and report recapture. Use Form 4797,
property using the 200% declining balance method over
Part IV, to figure the recapture amount. Report the recap-
the GDS recovery period. Your combined business/invest-
ture amount as other income on the same form or sched-
ment use for determining your depreciation deduction is
ule on which you took the depreciation deduction. For ex-
90%.
ample, report the recapture amount as other income on
Schedule C (Form 1040) if you took the depreciation de-
Recapture of Excess Depreciation duction on Schedule C. If you took the depreciation de-
duction on Form 2106, report the recapture amount as
If you used listed property more than 50% in a qualified other income on Schedule 1 (Form 1040), line 8z.
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 ad-
justed basis of your property by the same amount.

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Lessee's Inclusion Amount                                                        6. Fair market value . . . . . . . . . . . . . . . . . . . . . . .                     
                                                                                 7. Average business/investment use for 
If you use leased listed property other than a passenger                             years property leased before the first year 
automobile for business/investment use, you must include                             business use is 50% or less . . . . . . . . . . . . .                               
an amount in your income in the first year your qualified                        8. Multiply line 6 by line 7 . . . . . . . . . . . . . . . . . .                       
business-use  percentage  is  50%  or  less.  Your  qualified 
                                                                                 9. Rate (%) from Table A-20 . . . . . . . . . . . . . . .                              
business-use percentage is the part of the property's total 
use that is qualified business use (defined earlier). For the                    10. Multiply line 8 by line 9. This is Amount 
inclusion amount rules for a leased passenger automobile,                            B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .        
see Leasing a Car in chapter 4 of Pub. 463.                                      11. Add line 5 and line 10. This is your 
                                                                                     inclusion amount. Enter here and as other 
The  inclusion  amount  is  the  sum  of  Amount  A  and                             income on the form or schedule on which 
Amount B, described next. However, see the special rules                             you originally took the deduction (for 
for the inclusion amount, later, if your lease begins in the                         example, Schedule C or F (Form 1040), 
last 9 months of your tax year or is for less than 1 year.
                                                                                     Schedule 1 (Form 1040), Form 1120, 
Amount A. Amount A is:                                                               etc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          

1. The FMV of the property, multiplied by
2. The business/investment use for the first tax year the                        Example.  On February 1, 2021, Larry House, a calen-
   qualified business-use percentage is 50% or less,                             dar year taxpayer, leased and placed in service an item of 
   multiplied by                                                                 listed property with an FMV of $3,000. The lease is for a 
                                                                                 period  of  5  years.  Larry  does  not  use  the  item  of  listed 
3. The applicable percentage from Table A-19 in Appen-                           property at a regular business establishment, so it is listed 
   dix A.                                                                        property. Larry’s business use of the property (all of which 
The FMV of the property is the value on the first day of                         is qualified business use) is 80% in 2021, 60% in 2022, 
the lease term. If the capitalized cost of an item of listed                     and 40% in 2023. Larry must add an inclusion amount to 
property  is  specified  in  the  lease  agreement,  you  must                   gross income for 2023, the first tax year Larry’s qualified 
treat that amount as the FMV.                                                    business-use percentage is 50% or less. The item of listed 
                                                                                 property  has  a  5-year  recovery  period  under  both  GDS 
Amount B. Amount B is:                                                           and ADS. 2023 is the third tax year of the lease, so the ap-
                                                                                 plicable percentage from Table A-19 is −19.8%. The appli-
1. The FMV of the property, multiplied by                                        cable percentage from Table A-20 is 22%. Larry's deducti-
2. The average of the business/investment use for all tax                        ble rent for the item of listed property for 2023 is $800.
   years the property was leased that precede the first                          Larry uses the inclusion amount worksheet to figure the 
   tax year the qualified business-use percentage is 50%                         amount that must be included in income for 2023. Larry’s 
   or less, multiplied by                                                        inclusion  amount  is  $224,  which  is  the  sum  of  −$238 
                                                                                 (Amount A) and $462 (Amount B).
3. The applicable percentage from Table A-20 in Appen-
   dix A.
                                                                                     Inclusion Amount Worksheet
Maximum  inclusion  amount.   The  inclusion  amount                                 for Leased Listed Property 
cannot be more than the sum of the deductible amounts of                             Keep for Your Records
rent for the tax year in which the lessee must include the 
amount in gross income.                                                          1. Fair market value . . . . . . . . . . . . . . . . . . . . .                  $3,000
                                                                                 2. Business/investment use for first year 
Inclusion amount worksheet.   The following worksheet                                business use is 50% or less . . . . . . . . . . .                           40%
is  provided  to  help  you  figure  the  inclusion  amount  for                 3. Multiply line 1 by line 2 . . . . . . . . . . . . . . . .                    1,200
leased listed property.
                                                                                 4. Rate (%) from Table A-19 . . . . . . . . . . . . . −19.8%
    Inclusion Amount Worksheet                                                   5. Multiply line 3 by line 4. This is Amount 
    for Leased Listed Property                                                       A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     −238
          Keep for Your Records                                                  6. Fair market value . . . . . . . . . . . . . . . . . . . . .                  3,000
                                                                                 7. Average business/investment use for 
1. Fair market value . . . . . . . . . . . . . . . . . . . . . . .                   years property leased before the first 
2. Business/investment use for first year                                            year business use is 50% or less . . . . . .                                70%
    business use is 50% or less . . . . . . . . . . . . .                        8. Multiply line 6 by line 7 . . . . . . . . . . . . . . . .                    2,100
3. Multiply line 1 by line 2 . . . . . . . . . . . . . . . . . .                 9. Rate (%) from Table A-20 . . . . . . . . . . . . .                           22.0%
4. Rate (%) from Table A-19 . . . . . . . . . . . . . . .                        10. Multiply line 8 by line 9. This is Amount 
5. Multiply line 3 by line 4. This is Amount                                         B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .     462
    A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  

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11. Add line 5 and line 10. This is your an FMV of $15,000 and a recovery period of 5 years un-
inclusion amount. Enter here and as der ADS. The lease term was 6 months (ending on March
other income on the form or schedule 31, 2023), during which John used the property 45% in
on which you originally took the business. John must include $71 in income in 2023. The
deduction (for example, Schedule C or F $71 is the sum of Amount A and Amount B. Amount A is
(Form 1040), Schedule 1 (Form 1040), $71 ($15,000 × 45% (0.45) × 2.1% (0.021) × 183/365), the
Form 1120, etc.) . . . . . . . . . . . . . . . . . . . . . $224 product of the FMV, the average business use for both
years, and the applicable percentage for year 1 from Table
A-19, prorated for the length of the lease. Amount B is
zero.
Lease beginning in the last 9 months of your tax
year. The inclusion amount is subject to a special rule if Where to report the inclusion amount. Report the in-
all the following apply. clusion amount figured (as described in the preceding dis-
• The lease term begins within 9 months before the cussions) as other income on the same form or schedule
close of your tax year. on which you took the deduction for your rental costs. For
example, report the inclusion amount as other income on
• You do not use the property predominantly (more than Schedule C (Form 1040) if you took the deduction on
50%) for qualified business use during that part of the Schedule C. If you took the deduction for rental costs on
tax year. Form 2106, report the inclusion amount as other income
• The lease term continues into your next tax year. on Schedule 1 (Form 1040), line 8z.
Under this special rule, add the inclusion amount to in-
come in the next tax year. Figure the inclusion amount by
taking into account the average of the business/invest- Do the Passenger Automobile
ment use for both tax years (line 2 of the Inclusion Amount
Worksheet for Leased Listed Property) and the applicable Limits Apply?
percentage for the tax year the lease term begins. Skip
lines 6 through 9 of the worksheet and enter zero on
Terms you may need to know
line 10.
(see Glossary):
Example 1. On August 1, 2022, Julie Rule, a calendar Basis
year taxpayer, leased and placed in service an item of lis-
ted property. The property is 5-year property with an FMV Convention
of $10,000. Julie’s property has a recovery period of 5 Placed in service
years under ADS. The lease is for 5 years. Julie’s busi-
ness use of the property was 50% in 2022 and 90% in Recovery period
2023. Julie paid rent of $3,600 for 2022, of which $3,240
is deductible. Julie must include $147 in income in 2023.
The $147 is the sum of Amount A and Amount B. Amount The depreciation deduction, including the section 179 de-
A is $147 ($10,000 × 70% (0.70) × 2.1% (0.021)), the duction and special depreciation allowance, you can claim
product of the FMV, the average business use for 2022 for a passenger automobile (defined earlier) each year is
and 2023, and the applicable percentage for year 1 from limited.
Table A-19. Amount B is zero. This section describes the maximum depreciation de-
Lease for less than 1 year. A special rule for the inclu- duction amounts for 2023 and explains how to deduct, af-
sion amount applies if the lease term is less than 1 year ter the recovery period, the unrecovered basis of your
and you do not use the property predominantly (more than property that results from applying the passenger automo-
50%) for qualified business use. The amount included in bile limits.

income is the inclusion amount (figured as described in Exception for leased cars. The passenger automobile
the preceding discussions) multiplied by a fraction. The limits generally do not apply to passenger automobiles
numerator of the fraction is the number of days in the leased or held for leasing by anyone regularly engaged in
lease term, and the denominator is 365 (or 366 for leap the business of leasing passenger automobiles. For infor-
years). mation on when you are considered regularly engaged in
The lease term for listed property includes options to the business of leasing listed property, including passen-
renew. If you have two or more successive leases that are ger automobiles, see Exception for leased property, ear-
part of the same transaction (or a series of related trans- lier, under What Is the Business-Use Requirement.
actions) for the same or substantially similar property, treat
them as one lease.

Example 2. On October 1, 2022, John Joyce, a calen-
dar year taxpayer, leased and placed in service an item of
listed property that is 3-year property. This property had

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Maximum Depreciation Deduction                                      Maximum Depreciation Deduction for Passenger Au-
                                                                       tomobiles Placed in Service Before 2018
The passenger automobile limits are the maximum depre-
ciation amounts you can deduct for a passenger automo-                 Date                                              4th &
bile.  They  are  based  on  the  date  you  placed  the             Placed             1st           2nd   3rd          Later
automobile in service.                                               in Service         Year          Year  Year         Years
                                                                       2017           $11,1601  $5,100      $3,050       $1,875
                                                                       2016           11,160
Passenger Automobiles                                                                        1        5,100 3,050        1,875
The maximum deduction amounts for most passenger au-                   2015           11,1602         5,100 3,050        1,875
tomobiles are shown in the following table.                                                  3        5,100 3,050        1,875
                                                                       2014           11,160
tomobiles (Including Trucks and Vans) Acquired Af-                     2013           11,160
Maximum Depreciation Deduction for Passenger Au-                                             3        5,100 3,050        1,875
ter September 27, 2017, and Placed in Service Before                   2012           11,1603         5,100 3,050        1,875
                         2024                                                                4        4,900 2,950        1,775
                                                                       2011           11,060
   Date                                      4th &                      2010          11,060  4       4,900 2,950        1,775
 Placed           1st    2nd       3rd       Later                     2009           10,9605         4,800 2,850        1,775
   2023        $20,200 1 $19,500   $11,700   $6,960                    2008           10,960  
 in Service       Year   Year      Year      Year                                           5         4,800 2,850        1,775
   2022         $19,2002 $18,000   $10,800   $6,460                    2007             3,060         4,900 2,850         1,775
   2021         $18,2003 $16,400   $9,800    $5,860                    2006             2,960         4,800 2,850         1,775
   2020         $18,1004 $16,100   $9,700    $5,760                 1 If you elected not to claim any special depreciation allowance or 
   2019         $18,1004 $16,100   $9,700    $5,760
                                                                    the vehicle is not qualified property, the maximum deduction is 
   2018         $18,0005 $16,000   $9,600    $5,760                 $3,160. 
1If you elected not to claim any special depreciation allowance or  2 If you elected not to claim any special depreciation allowance or 
the vehicle is not qualified property, the maximum depreciation 
deduction is $12,200.                                               the vehicle is not qualified property, the maximum deduction is 
2If you elected not to claim any special depreciation allowance or  $3,160. Also, if you placed the vehicle in service in a tax year 
the vehicle is not qualified property, the maximum depreciation     beginning in 2015 and ending in 2016, and you elected to 
deduction is $11,200.                                               accelerate certain credits in lieu of the special depreciation for 
                                                                    that tax year, 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 depreciation     3 If you elected not to claim any special depreciation allowance or 
deduction is $10,200.                                               the vehicle is not qualified property, the maximum deduction is 
4 If you elected not to claim any special depreciation allowance or $3,160.
the vehicle is not qualified property, the maximum depreciation     4 If you elected not to claim any special depreciation allowance or 
deduction is $10,100.                                               the vehicle is not qualified property, the maximum deduction is 
5 If you elected not to claim any special depreciation allowance or $3,060.
the vehicle is not qualified property, the maximum depreciation     5 If you elected not to claim any special depreciation allowance 
deduction is $10,000.
                                                                    for the vehicle or the vehicle is not qualified property, the 
Maximum Depreciation Deduction for Passenger Au-                    maximum deduction is $2,960. 
tomobiles (Including Trucks and Vans) Acquired Be-
fore September 28, 2017, and Placed in Service Be-                          If your business/investment use of the automobile 
                         fore 2020                                   !      is less than 100%, you must reduce the maximum 
                                                                    CAUTION deduction  amount  by  multiplying  the  maximum 
   Date                                      4th &                  amount by the percentage of business/investment use de-
 Placed           1st    2nd       3rd       Later                  termined on an annual basis during the tax year.

 in Service       Year   Year      Year      Year                           If you have a short tax year, you must reduce the 
   2019         $14,9001 $16,100   $9,700    $5,760                  !      maximum  deduction  amount  by  multiplying  the 
   2018         $16,4002 $16,000   $9,600    $5,760                 CAUTION maximum amount by a fraction. The numerator of 
1 If you elected not to claim any special depreciation allowance or the fraction is the number of months and partial months in 
the vehicle is not qualified property, the maximum depreciation     the short tax year, and the denominator is 12.
deduction is $10,100. 
2 If you elected not to claim any special depreciation allowance or  Example.      On April 15, 2023, you bought and placed in 
the vehicle is not qualified property, the maximum depreciation     service  a  new  car  for  $14,500.  You  used  the  car  only  in 
deduction is $10,000.                                               your business. You file your tax return based on the calen-
                                                                    dar  year.  You  do  not  elect  a  section  179  deduction  and 
                                                                    elected not to claim any special depreciation allowance for 

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the 5-year property. Under MACRS, a car is 5-year prop-                amounts for trucks and vans are shown in the following ta-
erty. Because you placed your car in service on April 15               ble.
and used it only for business, you use the percentages in 
Table A-1 to figure your MACRS depreciation on the car.                       Maximum Depreciation Deduction
You multiply the $14,500 unadjusted basis of your car by                for Trucks and Vans Placed in Service Before 2018
0.20 to get your MACRS depreciation of $2,900 for 2023. 
This $2,900 is below the maximum depreciation deduction                    Date                                                      4th &
of $12,200 for passenger automobiles placed in service in                   Placed         1st              2nd 3rd                  Later
2023. You can deduct the full $2,900.                                      in Service      Year          Year   Year                 Years
                                                                           2017            $11,5601      $5,700 $3,450   $2,075
                                                                           2016            11,560
Electric Vehicles                                                                                1       5,700  3,350                2,075
The maximum depreciation deductions for passenger au-                      2015            11,4602       5,600  3,350                1,975
tomobiles that are produced to run primarily on electricity                                      3       5,500  3,350                1,975
are  higher  than  those  for  other  automobiles.  The  maxi-             2014            11,460
mum  deduction  amounts  for  electric  vehicles  placed  in               2013            11,3604       5,400  3,250                1,975
                                                                           2012            11,360
service after August 5, 1997, and before January 1, 2007,                                        4       5,300  3,150                1,875
are shown in the following table. Owners of electric vehi-
cles  placed  in  service  after  December  31,  2006,  should             2011            11,2605       5,200  3,150                1,875
use the table of maximum deduction amounts in the previ-                   2010            11,1606       5,100  3,050                1,875
ous section titled Passenger Automobiles for electric vehi-                                      7       4,900  2,950                1,775
cles classified as passenger automobiles or use the table                  2009            11,060
of maximum deduction amounts for trucks and vans, later,                   2008            11,1608       5,100  3,050                1,875
for electric vehicles classified as trucks and vans.
                                                                           2007            3,260         5,200  3,050                1,875
         Maximum Depreciation Deduction
                    for Electric Vehicles                                  2006            3,260         5,200  3,150                1,875
                                                                       1 If you elected not to claim any special depreciation allowance or 
 Date                                                     4th &        the vehicle is not qualified property, the maximum deduction is 
  Placed             1st           2nd    3rd             Later        $3,560.
 in Service         Year           Year   Year            Years        2 If you elected not to claim any special depreciation allowance or 
 2006               $8,980        $14,400 $8,650          $5,225       the vehicle is not qualified property, the maximum deduction is 
                                                                       $3,460. Also, if you placed the vehicle in service in a tax year 
 2005                8,880         14,200 8,450           5,125
                                                                       beginning in 2015 and ending in 2016, and you elected to 
 2004               31,8301        14,300 8,550           5,125        accelerate certain credits in lieu of the special depreciation for 
 5/06/2003–         32,0302        14,600 8,750           5,225        that tax year, the maximum deduction is $3,460. 
 12/31/2003                                                            3 If you elected not to claim any special depreciation allowance or 
 1/01/2003–         22,8803        14,600 8,750           5,225        the vehicle is not qualified property, the maximum deduction is 
 5/05/2003                                                             $3,460.
                                                                       4
1 If you elected not to claim any special depreciation allowance         If you elected not to claim any special depreciation allowance or 
for the vehicle or the vehicle is not qualified property, or the       the vehicle is not qualified property, the maximum deduction is 
vehicle is qualified Liberty Zone property, the maximum                $3,360.
deduction is $8,880.                                                   5 If you elected not to claim any special depreciation allowance or 
2 If you acquired the vehicle before 5/06/03, the maximum              the vehicle is not qualified property, the maximum deduction is 
deduction is $22,880. If you elected not to claim any special          $3,260.
depreciation allowance for the vehicle, the vehicle is not qualified   6 If you elected not to claim any special depreciation allowance or 
property, or the vehicle is qualified Liberty Zone property, the       the vehicle is not qualified property, the maximum deduction is 
maximum deduction is $9,080.                                           $3,160.
3 If you elected not to claim any special depreciation allowance       7 If you elected not to claim any special depreciation allowance 
for the vehicle, the vehicle is not qualified property, or the vehicle for the vehicle or the vehicle is not qualified property, the 
is qualified Liberty Zone property, the maximum deduction is           maximum deduction is $3,060.
$9,080.                                                                8 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.
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 

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Depreciation Worksheet for                                      14. Section 179 deduction claimed 
Passenger Automobiles                                               in the year you placed the car 
                                                                    in service . . . . . . . . . . . . . . . . . . .   
You can use the following worksheet to figure your depre-       15. Subtract line 14 from line 13. 
ciation deduction using the percentage tables. Then, use            This is your tentative basis for 
the information from this worksheet to prepare Form 4562.           depreciation . . . . . . . . . . . . . . . .       
                                                                16. Multiply line 15 by the 
   Depreciation Worksheet for                                       applicable percentage if the 
       Passenger Automobiles                                        special depreciation allowance 
       Keep for Your Records                                        applies. This is your special 
                                                                    depreciation allowance. 
                          Part I 
                                                                    Enter -0- if this is not the year 
   1. MACRS system (GDS or                                          you placed the car in service, 
       ADS) . . . . . . . . . . . . . . . . . . . . . . .           the car is not qualified property, 
   2. Property class . . . . . . . . . . . . . .                    or you elected not to claim a 
   3. Date placed in service . . . . . . .                          special depreciation 
                                                                    allowance . . . . . . . . . . . . . . . . . .             
   4. Recovery period . . . . . . . . . . . .                 
   5. Method and convention . . . . . .                         Note.
                                                                1) If line 16 is equal to line 11, stop here. Your 
   6. Depreciation rate (from 
       tables) . . . . . . . . . . . . . . . . . . . . .        depreciation deduction (including your special 
                                                                depreciation allowance) is limited to the amount on 
   7. Maximum depreciation                                      line 11. 
       deduction for this year from the                         2) If line 16 is less than line 11, complete Part III.
       appropriate table . . . . . . . . . . . .             
   8. Business/investment-use                                                                     Part III
       percentage . . . . . . . . . . . . . . . . .             17. Subtract line 16 from line 11. 
   9. Multiply line 7 by line 8. This is                            This is the limit on the amount 
       your adjusted maximum                                        you can deduct for MACRS 
       depreciation deduction . . . . . .                           depreciation  . . . . . . . . . . . . . . . .     
   10. Section 179 deduction claimed                            18. Subtract line 16 from line 15. 
       this year (not more than line 9).                            This is your basis for 
       Enter -0- if this is not the year                            depreciation . . . . . . . . . . . . . . . .      
       you placed the car in                                    19. Multiply line 18 by line 6. This 
       service . . . . . . . . . . . . . . . . . . . . .            is your tentative MACRS 
                                                                    depreciation deduction . . . . . .                    
       Note.                                                    20. Enter the lesser of line 17 or 
       1) If line 10 is equal to line 9, stop here. Your            line 19. This is your MACRS 
       combined section 179 and depreciation                        depreciation deduction  . . . . . .
       deduction (including your special depreciation         1  When figuring the amount to enter on line 12, do not reduce 
       allowance) is limited to the amount on line 9.         your cost or other basis by any section 179 deduction you 
       2) If line 10 is less than line 9, complete Part II.   claimed for your car.
                                                              2 Reduce the basis by the lesser of $4,000 or 10% of the cost 
                          Part II 
                                                              of the vehicle even if the credit is less than that amount.
   11. Subtract line 10 from line 9. 
       This is the limit on the amount 
       you can deduct for 
       depreciation (including any 
                                                              Deductions After the Recovery Period
       special depreciation 
       allowance) . . . . . . . . . . . . . . . . . .         If the depreciation deductions for your automobile are re-
   12. Cost or other basis (reduced by                        duced  under  the  passenger  automobile  limits,  you  will 
       any alternative motor vehicle                          have unrecovered basis in your automobile at the end of 
       credit  or credit for electric 1                       the recovery period. If you continue to use the automobile 
       vehicles ) . . . . . . . . . . . . . . . . . . .2      for business, you can deduct that unrecovered basis after 
   13. Multiply line 12 by line 8. This                       the  recovery  period  ends.  You  can  claim  a  depreciation 
       is your business/investment                            deduction  in  each  succeeding  tax  year  until  you  recover 
       cost . . . . . . . . . . . . . . . . . . . . . . . .   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 

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percentage. See Maximum Depreciation Deduction, ear- is the additional cash paid for the new automobile in the
lier. trade-in.
Unrecovered basis is the cost or other basis of the pas- The depreciation figured for the two components of the
senger automobile reduced by any clean-fuel vehicle de- basis (carryover basis and excess basis) is subject to a
duction, electric vehicle credit, depreciation, and section single passenger automobile limit. Special rules apply in
179 deductions that would have been allowable if you had determining the passenger automobile limits. These rules
used the car 100% for business and investment use and and examples are discussed in section 1.168(i)-6(d)(3) of
the passenger automobile limits had not applied. the regulations.
You cannot claim a depreciation deduction for lis- Instead of figuring depreciation for the carryover basis
and the excess basis separately, you can elect to treat the
! ted property other than passenger automobiles
CAUTION after the recovery period ends. There is no unrec- old automobile as disposed of and both of the basis com-
overed basis at the end of the recovery period because ponents for the new automobile as if placed in service at
you are considered to have used this property 100% for the time of the trade-in. For more information, including
business and investment purposes during all of the recov- how to make this election, see Election out under Property
ery period. Acquired in a Like-Kind Exchange or Involuntary Conver-
sion in chapter 4, and sections 1.168(i)-6(i) and
Example. In May 2017, you bought and placed in 1.168(i)-6(j) of the regulations.
service a car costing $31,500. The car was 5-year prop- Like-kind exchanges completed after December
erty under GDS (MACRS). You did not elect a section 179 ! 31, 2017, are generally limited to exchanges of
deduction and elected not to claim any special deprecia- CAUTION real property not held primarily for sale. Section
tion allowance for the 5-year property. You used the car 1.168(i)-6 of the regulations does not reflect this change in
exclusively for business during the recovery period (2017 law.
through 2022). You figured your depreciation as shown
below.

Year Percentage Amount Limit Allowed What Records Must Be Kept?
2017 20.0% $6,300 $3,160 $3,160
2018 32.0 10,080 5,100 5,100 Terms you may need to know
2019 19.2 6,048 3,050 3,050 (see Glossary):
2020 11.52 3,629 1,875 1,875
2021 11.52 3,629 1,875 1,875 Business/investment use
2022 5.76 1,814 1,875 1,875 Circumstantial evidence
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,935
Documentary evidence
At the end of 2022 you had an unrecovered basis of
$14,565 ($31,500 − $16,935). If in 2023 and later years
you continue to use the car 100% for business, you can You cannot take any depreciation or section 179 deduc-
deduct each year the lesser of $1,875 or your remaining tion for the use of listed property unless you can prove
unrecovered basis. your business/investment use with adequate records or
If your business use of the car had been less than with sufficient evidence to support your own statements.
100% during any year, your depreciation deduction would For listed property, you must keep records for as long as
have been less than the maximum amount allowable for any recapture can still occur. Recapture can occur in any
that year. However, in figuring your unrecovered basis in tax year of the recovery period.
the car, you would still reduce your basis by the maximum
amount allowable as if the business use had been 100%. Adequate Records
For example, if you had used your car 60% for business
instead of 100%, your allowable depreciation deductions To meet the adequate records requirement, you
would have been $8,739 ($14,565 × 60% (0.60)), but you must maintain an account book, diary, log, state-
would still have to reduce your basis by $14,565 to deter- RECORDS ment of expense, trip sheet, or similar record or
mine your unrecovered basis. other documentary evidence that, together with the re-
ceipt, is sufficient to establish each element of an expen-
diture or use. You do not have to record information in an
Deductions for Passenger account book, diary, or similar record if the information is
Automobiles Acquired in a Trade-In already shown on the receipt. However, your records
should back up your receipts in an orderly manner.
If you acquire a passenger automobile in a trade-in, de-
preciate 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

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Elements of expenditure or use. Your records or other Although you must generally prepare an adequate writ-
documentary evidence must support all the following. ten record, you can prepare a record of the business use
of listed property in a computer memory device that uses
• The amount of each separate expenditure, such as
a logging program.
the cost of acquiring the item, maintenance and repair
costs, capital improvement costs, lease payments, Separate or combined expenditures or uses. Each
and any other expenses. use by you is normally considered a separate use. How-
• The amount of each business and investment use ever, you can combine repeated uses as a single item.
(based on an appropriate measure, such as mileage Record each expenditure as a separate item. Do not
for vehicles and time for other listed property), and the combine it with other expenditures. If you choose, how-
total use of the property for the tax year. ever, you can combine amounts you spent for the use of
listed property during a tax year, such as for gasoline or
• The date of the expenditure or use.
automobile repairs. If you combine these expenses, you
• The business or investment purpose for the expendi- do not need to support the business purpose of each ex-
ture or use. pense. Instead, you can divide the expenses based on the
Written documents of your expenditure or use are gen- total business use of the listed property.
erally better evidence than oral statements alone. You do You can account for uses that can be considered part
not have to keep a daily log. However, some type of record of a single use, such as a round trip or uninterrupted busi-
containing the elements of an expenditure or the business ness use, by a single record. For example, you can ac-
or investment use of listed property made at or near the count for the use of a truck to make deliveries at several
time of the expenditure or use and backed up by other locations that begin and end at the business premises and
documents is preferable to a statement you prepare later. can include a stop at the business in between deliveries
by a single record of miles driven. You can account for the
Timeliness. You must record the elements of an expendi- use of a passenger automobile by a salesperson for a
ture or use at the time you have full knowledge of the ele- business trip away from home over a period of time by a
ments. An expense account statement made from an ac- single record of miles traveled. Minimal personal use
count book, diary, or similar record prepared or (such as a stop for lunch between two business stops) is
maintained at or near the time of the expenditure or use is not an interruption of business use.
generally considered a timely record if, in the regular
course of business: Confidential information. If any of the information on
the elements of an expenditure or use is confidential, you
• The statement is given by an employee to the em- do not need to include it in the account book or similar re-
ployer, or cord if you record it at or near the time of the expenditure
• The statement is given by an independent contractor or use. You must keep it elsewhere and make it available
to the client or customer. as support to the IRS director for your area on request.

For example, a log maintained on a weekly basis, that Substantial compliance. If you have not fully supported
accounts for use during the week, will be considered a re- a particular element of an expenditure or use, but have
cord made at or near the time of use. complied with the adequate records requirement for the
expenditure or use to the satisfaction of the IRS director
Business purpose supported. Generally, an adequate
for your area, you can establish this element by any evi-
record of business purpose must be in the form of a writ-
dence the IRS director for your area deems adequate.
ten statement. However, the amount of detail necessary to
If you fail to establish to the satisfaction of the IRS di-
establish a business purpose depends on the facts and
rector for your area that you have substantially complied
circumstances of each case. A written explanation of the
with the adequate records requirement for an element of
business purpose will not be required if the purpose can
an expenditure or use, you must establish the element as
be determined from the surrounding facts and circumstan-
follows.
ces. For example, a salesperson visiting customers on an
established sales route will not normally need a written ex- • By your own oral or written statement containing de-
planation of the business purpose of their travel. tailed information as to the element.
Business use supported. An adequate record contains • By other evidence sufficient to establish the element.
enough information on each element of every business or If the element is the cost or amount, time, place, or date
investment use. The amount of detail required to support of an expenditure or use, its supporting evidence must be
the use depends on the facts and circumstances. For ex- direct evidence, such as oral testimony by witnesses or a
ample, a taxpayer who uses a truck for both business and written statement setting forth detailed information about
personal purposes and whose only business use of the the element or the documentary evidence. If the element
truck is to make customer deliveries on an established is the business purpose of an expenditure, its supporting
route can satisfy the requirement by recording the length evidence can be circumstantial evidence.
of the route, including the total number of miles driven dur-
ing the tax year and the date of each trip at or near the Sampling. You can maintain an adequate record for part
time of the trip. of a tax year and use that record to support your business
and investment use of listed property for the entire tax

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year if it can be shown by other evidence that the periods
for which you maintain an adequate record are represen-
tative of the use throughout the year. How Is Listed Property

Example 1. You are a sole proprietor and calendar Information Reported?
year taxpayer who operates an interior decorating busi-
ness out of your home. You use your automobile for local You must provide the information about your listed prop-
business visits to the homes or offices of clients, for meet- erty requested in Section A of Part V of Form 4562, if you
ings with suppliers and subcontractors, and to pick up and claim either of the following deductions.
deliver items to clients. There is no other business use of • Any deduction for a vehicle.
the automobile, but you and family members also use it for
personal purposes. You maintain adequate records for the • A depreciation deduction for any other listed property.
first 3 months of the year showing that 75% of the automo- If you claim any deduction for a vehicle, you must also pro-
bile use was for business. Subcontractor invoices and vide the information requested in Section B. If you provide
paid bills show that your business continued at approxi- the vehicle for your employee's use, the employee must
mately the same rate for the rest of the year. If there is no give you this information. If you provide any vehicle for use
change in circumstances, such as the purchase of a sec- by an employee, you must first answer the questions in
ond car for exclusive use in your business, the determina- Section C to see if you meet an exception to completing
tion that your combined business/investment use of the Section B for that vehicle.
automobile for the tax year is 75% rests on sufficient sup-
porting evidence. Vehicles used by your employees. You do not have to
complete Section B of Part V, for vehicles used by your
Example 2. Assume the same facts as in Example 1, employees who are not more-than-5% owners or related
except that you maintain adequate records during the first persons if you meet at least one of the following require-
week of every month showing that 75% of your use of the ments.
automobile is for business. Your business invoices show 1. You maintain a written policy statement that prohibits
that your business continued at the same rate during the one of the following uses of the vehicles.
later weeks of each month so that your weekly records are
representative of the automobile's business use through- a. All personal use, including commuting.
out the month. The determination that your business/
b. Personal use, other than commuting, by employ-
investment use of the automobile for the tax year is 75%
ees who are not officers, directors, or 1%-or-more
rests on sufficient supporting evidence.
owners.
Example 3. You are a sole proprietor and calendar 2. You treat all use of the vehicles by your employees as
year taxpayer who works as a sales representative in a personal use.
large metropolitan area for a company that manufactures
household products. For the first 3 weeks of each month, 3. You provide more than five vehicles for use by your
you occasionally used your own automobile for business employees, and you keep in your records the informa-
travel within the metropolitan area. During these weeks, tion on their use given to you by the employees.
your business use of the automobile does not follow a 4. For demonstrator automobiles provided to full-time
consistent pattern. During the fourth week of each month, salespersons, you maintain a written policy statement
you delivered all business orders taken during the previ- that limits the total mileage outside the salesperson's
ous month. The business use of your automobile, as sup- normal working hours and prohibits use of the auto-
ported by adequate records, is 70% of its total use during mobile by anyone else, for vacation trips, or to store
that fourth week. The determination based on the record personal possessions.
maintained during the fourth week of the month that your
business/investment use of the automobile for the tax year Exceptions. If you file Form 2106, and you are not re-
is 70% does not rest on sufficient supporting evidence be- quired to file Form 4562, report information about listed
cause your use during that week is not representative of property on that form and not on Form 4562. Also, if you
use during other periods. file Schedule C (Form 1040) and are claiming the stand-
ard mileage rate or actual vehicle expenses (except de-
Loss of records. When you establish that failure to pro- preciation) and you are not required to file Form 4562 for
duce adequate records is due to loss of the records any other reason, report vehicle information in Part IV of
through circumstances beyond your control, such as Schedule C and not on Form 4562.
through fire, flood, earthquake, or other casualty, you have
the right to support a deduction by reasonable reconstruc-
tion of your expenditures and use.
How To Get Tax Help

If you have questions about a tax issue; need help prepar-
ing your tax return; or want to download free publications,

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forms, or instructions, go to IRS.gov to find resources that          tax you want your employer to withhold from your pay-
can help you right away.                                              check. This is tax withholding. See how your withhold-
                                                                      ing affects your refund, take-home pay, or tax due.
Preparing and filing your tax return.  After receiving all 
your wage and earnings statements (Forms W-2, W-2G,                 • The First-Time Homebuyer Credit Account Look-up 
1099-R,  1099-MISC,  1099-NEC,  etc.);  unemployment                  (IRS.gov/HomeBuyer) tool provides information on 
compensation statements (by mail or in a digital format) or           your repayments and account balance.
other  government  payment  statements  (Form  1099-G);             • The Sales Tax Deduction Calculator IRS.gov/ (
and  interest,  dividend,  and  retirement  statements  from          SalesTax) figures the amount you can claim if you 
banks and investment firms (Forms 1099), you have sev-                itemize deductions on Schedule A (Form 1040).
eral options to choose from to prepare and file your tax re-
                                                                            Getting  answers  to  your  tax  questions.     On 
turn.  You  can  prepare  the  tax  return  yourself,  see  if  you 
                                                                            IRS.gov,  you  can  get  up-to-date  information  on 
qualify for free tax preparation, or hire a tax professional to 
                                                                            current events and changes in tax law.
prepare your return.
                                                                    • IRS.gov/Help: A variety of tools to help you get an-
Free options for tax preparation.    Your options for pre-            swers to some of the most common tax questions.
paring  and  filing  your  return  online  or  in  your  local  com-
munity, if you qualify, include the following.                      • IRS.gov/ITA: The Interactive Tax Assistant, a tool that 
                                                                      will ask you questions and, based on your input, pro-
•  Free File. This program lets you prepare and file your             vide answers on a number of tax topics.
   federal individual income tax return for free using soft-
   ware or Free File Fillable Forms. However, state tax             • IRS.gov/Forms: Find forms, instructions, and publica-
   preparation may not be available through Free File. Go             tions. You will find details on the most recent tax 
   to IRS.gov/FreeFile to see if you qualify for free online          changes and interactive links to help you find answers 
   federal tax preparation, e-filing, and direct deposit or           to your questions.
   payment options.                                                 • You may also be able to access tax information in your 
•  VITA. The Volunteer Income Tax Assistance (VITA)                   e-filing software.
   program offers free tax help to people with 
   low-to-moderate incomes, persons with disabilities,              Need someone to prepare your tax return?             There are 
   and limited-English-speaking taxpayers who need                  various  types  of  tax  return  preparers,  including  enrolled 
   help preparing their own tax returns. Go to IRS.gov/             agents, certified public accountants (CPAs), accountants, 
   VITA, download the free IRS2Go app, or call                      and many others who don’t have professional credentials. 
   800-906-9887 for information on free tax return prepa-           If  you  choose  to  have  someone  prepare  your  tax  return, 
   ration.                                                          choose that preparer wisely. A paid tax preparer is:
•  TCE. The Tax Counseling for the Elderly (TCE) pro-               • Primarily responsible for the overall substantive accu-
   gram offers free tax help for all taxpayers, particularly          racy of your return,
   those who are 60 years of age and older. TCE volun-
   teers specialize in answering questions about pen-               • Required to sign the return, and
   sions and retirement-related issues unique to seniors.           • Required to include their preparer tax identification 
   Go to IRS.gov/TCE, or download the free IRS2Go app                 number (PTIN).
   for information on free tax return preparation.
                                                                            Although the tax preparer always signs the return, 
•  MilTax. Members of the U.S. Armed Forces and quali-              !       you're  ultimately  responsible  for  providing  all  the 
   fied veterans may use MilTax, a free tax service of-             CAUTION information required for the preparer to accurately 
   fered by the Department of Defense through Military              prepare your return and for the accuracy of every item re-
   OneSource. For more information, go to                           ported on the return. Anyone paid to prepare tax returns 
   MilitaryOneSource MilitaryOneSource.mil/MilTax ( ).              for  others  should  have  a  thorough  understanding  of  tax 
      Also, the IRS offers Free Fillable Forms, which can           matters. For more information on how to choose a tax pre-
   be completed online and then e-filed regardless of in-           parer, go to Tips for Choosing a Tax Preparer on IRS.gov.
   come.
                                                                    Employers can register to use Business Services On-
Using online tools to help prepare your return.   Go to 
                                                                    line. The Social Security Administration (SSA) offers on-
IRS.gov/Tools for the following.
                                                                    line service at SSA.gov/employer for fast, free, and secure 
•  The Earned Income Tax Credit Assistant IRS.gov/ (                online  W-2  filing  options  to  CPAs,  accountants,  enrolled 
   EITCAssistant) determines if you’re eligible for the             agents,  and  individuals  who  process  Form  W-2,  Wage 
   earned income credit (EIC).                                      and Tax Statement, and Form W-2c, Corrected Wage and 
•  The Online EIN Application IRS.gov/EIN (    ) helps you          Tax Statement.

   get an employer identification number (EIN) at no                IRS social media. Go to IRS.gov/SocialMedia to see the 
   cost.                                                            various social media tools the IRS uses to share the latest 
•  The Tax Withholding Estimator IRS.gov/W4app (  )                 information on tax changes, scam alerts, initiatives, prod-
   makes it easier for you to estimate the federal income           ucts, and services. At the IRS, privacy and security are our 

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highest priority. We use these tools to share public infor- structions (including the Instructions for Form 1040) on
mation with you. Don’t post your social security number mobile devices as eBooks at IRS.gov/eBooks.
(SSN) or other confidential information on social media IRS eBooks have been tested using Apple's iBooks for
sites. Always protect your identity when using any social iPad. Our eBooks haven’t been tested on other dedicated
networking site. eBook readers, and eBook functionality may not operate
The following IRS YouTube channels provide short, in- as intended.
formative videos on various tax-related topics in English,
Spanish, and ASL. Access your online account (individual taxpayers
only). Go to IRS.gov/Account to securely access infor-
• Youtube.com/irsvideos. mation about your federal tax account.
• Youtube.com/irsvideosmultilingua. • View the amount you owe and a breakdown by tax
• Youtube.com/irsvideosASL. year.
Watching IRS videos. The IRS Video portal • See payment plan details or apply for a new payment
plan.
(IRSVideos.gov) contains video and audio presentations
for individuals, small businesses, and tax professionals. • Make a payment or view 5 years of payment history
and any pending or scheduled payments.
Online tax information in other languages. You can
find information on IRS.gov/MyLanguage if English isn’t • Access your tax records, including key data from your
your native language. most recent tax return, and transcripts.
• View digital copies of select notices from the IRS.
Free Over-the-Phone Interpreter (OPI) Service. The
IRS is committed to serving taxpayers with limited-Eng- • Approve or reject authorization requests from tax pro-
lish-proficiency (LEP) by offering OPI services. The OPI fessionals.
Service is a federally funded program and is available at • View your address on file or manage your communica-
Taxpayer Assistance Centers (TACs), most IRS offices, tion preferences.
and every VITA/TCE tax return site. The OPI Service is ac-
cessible in more than 350 languages. Get a transcript of your return. With an online account,
you can access a variety of information to help you during
Accessibility Helpline available for taxpayers with the filing season. You can get a transcript, review your
disabilities. Taxpayers who need information about ac- most recently filed tax return, and get your adjusted gross
cessibility services can call 833-690-0598. The Accessi- income. Create or access your online account at IRS.gov/
bility Helpline can answer questions related to current and Account.
future accessibility products and services available in al-
ternative media formats (for example, braille, large print, Tax Pro Account. This tool lets your tax professional
audio, etc.). The Accessibility Helpline does not have ac- submit an authorization request to access your individual
cess to your IRS account. For help with tax law, refunds, or taxpayer IRS online account. For more information, go to
account-related issues, go to IRS.gov/LetUsHelp. IRS.gov/TaxProAccount.

Note. Form 9000, Alternative Media Preference, or Using direct deposit. The safest and easiest way to re-
Form 9000(SP) allows you to elect to receive certain types ceive a tax refund is to e-file and choose direct deposit,
of written correspondence in the following formats. which securely and electronically transfers your refund di-
rectly into your financial account. Direct deposit also
• Standard Print.
avoids the possibility that your check could be lost, stolen,
• Large Print. destroyed, or returned undeliverable to the IRS. Eight in
• Braille. 10 taxpayers use direct deposit to receive their refunds. If
you don’t have a bank account, go to IRS.gov/
• Audio (MP3). DirectDeposit for more information on where to find a bank
• Plain Text File (TXT). or credit union that can open an account online.

• Braille Ready File (BRF). Reporting and resolving your tax-related identity
theft issues.
Disasters. Go to IRS.gov/DisasterRelief to review the
available disaster tax relief. • Tax-related identity theft happens when someone
steals your personal information to commit tax fraud.
Getting tax forms and publications. Go to IRS.gov/ Your taxes can be affected if your SSN is used to file a
Forms to view, download, or print all the forms, instruc- fraudulent return or to claim a refund or credit.
tions, and publications you may need. Or, you can go to
• The IRS doesn’t initiate contact with taxpayers by
IRS.gov/OrderForms to place an order.
email, text messages (including shortened links), tele-
Getting tax publications and instructions in eBook phone calls, or social media channels to request or
format. Download and view most tax publications and in- verify personal or financial information. This includes
requests for personal identification numbers (PINs),

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passwords, or similar information for credit cards, What if I can’t pay now? Go to IRS.gov/Payments for
banks, or other financial accounts. more information about your options.
• Go to IRS.gov/IdentityTheft, the IRS Identity Theft • Apply for an online payment agreement IRS.gov/ (
Central webpage, for information on identity theft and OPA) to meet your tax obligation in monthly install-
data security protection for taxpayers, tax professio- ments if you can’t pay your taxes in full today. Once
nals, and businesses. If your SSN has been lost or you complete the online process, you will receive im-
stolen or you suspect you’re a victim of tax-related mediate notification of whether your agreement has
identity theft, you can learn what steps you should been approved.
take.
• Use the Offer in Compromise Pre-Qualifier to see if
• Get an Identity Protection PIN (IP PIN). IP PINs are you can settle your tax debt for less than the full
six-digit numbers assigned to taxpayers to help pre- amount you owe. For more information on the Offer in
vent the misuse of their SSNs on fraudulent federal in- Compromise program, go to IRS.gov/OIC.
come tax returns. When you have an IP PIN, it pre-
vents someone else from filing a tax return with your Filing an amended return. Go to IRS.gov/Form1040X
SSN. To learn more, go to IRS.gov/IPPIN. for information and updates.

Ways to check on the status of your refund. Checking the status of your amended return. Go to
IRS.gov/WMAR to track the status of Form 1040-X amen-
• Go to IRS.gov/Refunds. ded returns.
• Download the official IRS2Go app to your mobile de- It can take up to 3 weeks from the date you filed
vice to check your refund status. ! your amended return for it to show up in our sys-
• Call the automated refund hotline at 800-829-1954. CAUTION tem, and processing it can take up to 16 weeks.

The IRS can’t issue refunds before mid-February
Understanding an IRS notice or letter you’ve re-
! for returns that claimed the EIC or the additional ceived. Go to IRS.gov/Notices to find additional informa-
CAUTION child tax credit (ACTC). This applies to the entire
refund, not just the portion associated with these credits. tion about responding to an IRS notice or letter.

Responding to an IRS notice or letter. You can now
Making a tax payment. Payments of U.S. tax must be upload responses to all notices and letters using the
remitted to the IRS in U.S. dollars. Digital assets are not Document Upload Tool. For notices that require additional
accepted. Go to IRS.gov/Payments for information on how action, taxpayers will be redirected appropriately on
to make a payment using any of the following options. IRS.gov to take further action. To learn more about the
• IRS Direct Pay: Pay your individual tax bill or estimated tool, go to IRS.gov/Upload.
tax payment directly from your checking or savings ac-
count at no cost to you. Note. You can use Schedule LEP (Form 1040), Re-
quest for Change in Language Preference, to state a pref-
• Debit Card, Credit Card, or Digital Wallet: Choose an erence to receive notices, letters, or other written commu-
approved payment processor to pay online or by nications from the IRS in an alternative language. You may
phone. not immediately receive written communications in the re-
• Electronic Funds Withdrawal: Schedule a payment quested language. The IRS’s commitment to LEP taxpay-
when filing your federal taxes using tax return prepara- ers is part of a multi-year timeline that began providing
tion software or through a tax professional. translations in 2023. You will continue to receive communi-
cations, including notices and letters, in English until they
• Electronic Federal Tax Payment System: Best option are translated to your preferred language.
for businesses. Enrollment is required.
• Check or Money Order: Mail your payment to the ad- Contacting your local TAC. Keep in mind, many ques-
dress listed on the notice or instructions. tions can be answered on IRS.gov without visiting a TAC.
Go to IRS.gov/LetUsHelp for the topics people ask about
• Cash: You may be able to pay your taxes with cash at most. If you still need help, TACs provide tax help when a
a participating retail store. tax issue can’t be handled online or by phone. All TACs
• Same-Day Wire: You may be able to do same-day now provide service by appointment, so you’ll know in ad-
wire from your financial institution. Contact your finan- vance that you can get the service you need without long
cial institution for availability, cost, and time frames. wait times. Before you visit, go to IRS.gov/TACLocator to
find the nearest TAC and to check hours, available serv-
Note. The IRS uses the latest encryption technology to ices, and appointment options. Or, on the IRS2Go app,
ensure that the electronic payments you make online, by under the Stay Connected tab, choose the Contact Us op-
phone, or from a mobile device using the IRS2Go app are tion and click on “Local Offices.”
safe and secure. Paying electronically is quick, easy, and
faster than mailing in a check or money order.

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The Taxpayer Advocate Service (TAS) How Can You Reach TAS?

Is Here To Help You TAS has offices in every state, the District of Columbia,
What Is TAS? and Puerto Rico. To find your advocate’s number:
• Go to TaxpayerAdvocate.IRS.gov/Contact-Us;
TAS is an independent organization within the IRS that
helps taxpayers and protects taxpayer rights. TAS strives • Download Pub. 1546, The Taxpayer Advocate Service
Is Your Voice at the IRS, available at IRS.gov/pub/irs-
to ensure that every taxpayer is treated fairly and that you
pdf/p1546.pdf
know and understand your rights under the Taxpayer Bill
of Rights. • Call the IRS toll free at 800-TAX-FORM
(800-829-3676) to order a copy of Pub. 1546;
How Can You Learn About Your Taxpayer • Check your local directory; or
Rights?
• Call TAS toll free at 877-777-4778.
The Taxpayer Bill of Rights describes 10 basic rights that
all taxpayers have when dealing with the IRS. Go to How Else Does TAS Help Taxpayers?
TaxpayerAdvocate.IRS.gov to help you understand what
TAS works to resolve large-scale problems that affect
these rights mean to you and how they apply. These are
many taxpayers. If you know of one of these broad issues,
your rights. Know them. Use them.
report it to TAS at IRS.gov/SAMS. Be sure to not include
any personal taxpayer information.
What Can TAS Do for You?
TAS can help you resolve problems that you can’t resolve Low Income Taxpayer Clinics (LITCs)

with the IRS. And their service is free. If you qualify for LITCs are independent from the IRS and TAS. LITCs rep-
their assistance, you will be assigned to one advocate resent individuals whose income is below a certain level
who will work with you throughout the process and will do and who need to resolve tax problems with the IRS. LITCs
everything possible to resolve your issue. TAS can help can represent taxpayers in audits, appeals, and tax collec-
you if: tion disputes before the IRS and in court. In addition,
• Your problem is causing financial difficulty for you, LITCs can provide information about taxpayer rights and
your family, or your business; responsibilities in different languages for individuals who
speak English as a second language. Services are offered
• You face (or your business is facing) an immediate
for free or a small fee. For more information or to find an
threat of adverse action; or
LITC near you, go to the LITC page at
• You’ve tried repeatedly to contact the IRS but no one TaxpayerAdvocate.IRS.gov/LITC or see IRS Pub. 4134,
has responded, or the IRS hasn’t responded by the Low Income Taxpayer Clinic List, at IRS.gov/pub/irs-pdf/
date promised. p4134.pdf.

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                                         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.
                                                                                         Month or
                                                                                         Quarter
MACRS    Depreciation                                                                    Placed
System   Method       Recovery Period                 Convention  Class                  in Service Table
GDS      200%         GDS/3, 5, 7, 10              Half-Year      3, 5, 7, 10            Any        A-1
GDS      200%         GDS/3, 5, 7, 10                 Mid-Quarter 3, 5, 7, 10            1st Qtr    A-2
                                                                                         2nd Qtr    A-3
                                                                                         3rd Qtr    A-4
                                                                                         4th Qtr    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    A-15
                                                                                         2nd Qtr    A-16
                                                                                         3rd Qtr    A-17
                                                                                         4th Qtr    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    A-2
                                                                                         2nd Qtr    A-3
                                                                                         3rd Qtr    A-4
                                                                                         4th Qtr    A-5
GDS            SL     GDS                             Half-Year   Any                    Any        A-8
ADS                   ADS
GDS            SL     GDS                             Mid-Quarter Any                    1st Qtr    A-9
ADS                   ADS                                                                2nd Qtr    A-10
                                                                                         3rd Qtr    A-11
                                                                                         4th Qtr    A-12
ADS      150%         ADS                             Half-Year   Any                    Any        A-14
ADS      150%         ADS                             Mid-Quarter Any                    1st Qtr    A-15
                                                                                         2nd Qtr    A-16
                                                                                         3rd Qtr    A-17
                                                                                         4th Qtr    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.
                                                                                         Month or
                                                                                         Quarter
MACRS    Depreciation                                                                    Placed
System   Method       Recovery Period                 Convention  Class                  in Service Table
GDS            SL     GDS/27.5                        Mid-Month   Residential Rental     Any        A-6
GDS            SL     GDS/31.5                        Mid-Month   Nonresidential Real    Any        A-7
               SL     GDS/39                                                                        A-7a
ADS            SL     ADS/30                          Mid-Month   Residential Rental     Any        A-13
               SL     ADS/40                          Mid-Month   Residential Rental and Any        A-13a
                                                                  Nonresidential Real

Chart 3. Income Inclusion Amount Rates
         for MACRS Leased Listed Property
                                                      Table
Amount A Percentages                                  A-19
Amount B Percentages                                  A-20

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Table A-1.             3-, 5-, 7-, 10-, 15-, and 20-Year Property
                       Half-Year Convention
                              Depreciation rate for recovery period
Year
                       3-year 5-year 7-year     10-year          15-year 20-year
1                      33.33% 20.00% 14.29%     10.00%           5.00%   3.750%
2                      44.45  32.00  24.49      18.00            9.50    7.219
3                      14.81  19.20  17.49      14.40            8.55    6.677
4                      7.41   11.52  12.49      11.52            7.70    6.177
5                             11.52        8.93 9.22             6.93    5.713

6                             5.76         8.92 7.37             6.23    5.285
7                                          8.93 6.55             5.90    4.888
8                                          4.46 6.55             5.90    4.522
9                                               6.56             5.91    4.462
10                                              6.55             5.90    4.461

11                                              3.28             5.91    4.462
12                                                               5.90    4.461
13                                                               5.91    4.462
14                                                               5.90    4.461
15                                                               5.91    4.462

16                                                               2.95    4.461
17                                                                       4.462
18                                                                       4.461
19                                                                       4.462
20                                                                       4.461

21                                                                       2.231

Table A-2.             3-, 5-, 7-, 10-, 15-, and 20-Year Property
                       Mid-Quarter Convention
                       Placed in Service in First Quarter
                              Depreciation rate for recovery period
Year
                       3-year 5-year 7-year     10-year          15-year 20-year
1                      58.33% 35.00% 25.00%     17.50%           8.75%   6.563%
2                      27.78  26.00  21.43      16.50            9.13    7.000
3                      12.35  15.60  15.31      13.20            8.21    6.482
4                      1.54   11.01  10.93      10.56            7.39    5.996
5                             11.01        8.75 8.45             6.65    5.546

6                             1.38         8.74 6.76             5.99    5.130
7                                          8.75 6.55             5.90    4.746
8                                          1.09 6.55             5.91    4.459
9                                               6.56             5.90    4.459
10                                              6.55             5.91    4.459

11                                              0.82             5.90    4.459
12                                                               5.91    4.460
13                                                               5.90    4.459
14                                                               5.91    4.460
15                                                               5.90    4.459

16                                                               0.74    4.460
17                                                                       4.459
18                                                                       4.460
19                                                                       4.459
20                                                                       4.460

21                                                                       0.565

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   Table A-3.    3-, 5-, 7-, 10-, 15-, and 20-Year Property
                 Mid-Quarter Convention
                 Placed in Service in Second Quarter
                        Depreciation rate for recovery period
   Year
                 3-year 5-year 7-year  10-year                 15-year 20-year
               1 41.67% 25.00% 17.85%  12.50%                  6.25%   4.688%
               2 38.89  30.00  23.47   17.50                   9.38    7.148
               3 14.14  18.00  16.76   14.00                   8.44    6.612
               4 5.30   11.37  11.97   11.20                   7.59    6.116
               5        11.37  8.87    8.96                    6.83    5.658
               6        4.26   8.87    7.17                    6.15    5.233
               7               8.87    6.55                    5.91    4.841
               8               3.34    6.55                    5.90    4.478
               9                       6.56                    5.91    4.463
   10                                  6.55                    5.90    4.463
   11                                  2.46                    5.91    4.463
   12                                                          5.90    4.463
   13                                                          5.91    4.463
   14                                                          5.90    4.463
   15                                                          5.91    4.462
   16                                                          2.21    4.463
   17                                                                  4.462
   18                                                                  4.463
   19                                                                  4.462
   20                                                                  4.463
   21                                                                  1.673

   Table A-4.    3-, 5-, 7-, 10-, 15-, and 20-Year Property
                 Mid-Quarter Convention
                 Placed in Service in Third Quarter
                        Depreciation rate for recovery period
   Year
                 3-year 5-year 7-year  10-year                 15-year 20-year
               1 25.00% 15.00% 10.71%  7.50%                   3.75%   2.813%
               2 50.00  34.00  25.51   18.50                   9.63    7.289
               3 16.67  20.40  18.22   14.80                   8.66    6.742
               4 8.33   12.24  13.02   11.84                   7.80    6.237
               5        11.30  9.30    9.47                    7.02    5.769
               6        7.06   8.85    7.58                    6.31    5.336
               7               8.86    6.55                    5.90    4.936
               8               5.53    6.55                    5.90    4.566
               9                       6.56                    5.91    4.460
   10                                  6.55                    5.90    4.460
   11                                  4.10                    5.91    4.460
   12                                                          5.90    4.460
   13                                                          5.91    4.461
   14                                                          5.90    4.460
   15                                                          5.91    4.461
   16                                                          3.69    4.460
   17                                                                  4.461
   18                                                                  4.460
   19                                                                  4.461
   20                                                                  4.460
   21                                                                  2.788

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Table A-5. 3-, 5-, 7-, 10-, 15-, and 20-Year Property
           Mid-Quarter Convention
           Placed in Service in Fourth Quarter
                         Depreciation rate for recovery period
Year
           3-year   5-year      7-year 10-year       15-year  20-year
1          8.33%        5.00%   3.57%  2.50%           1.25%        0.938%
2          61.11        38.00   27.55  19.50           9.88         7.430
3          20.37        22.80   19.68  15.60           8.89         6.872
4          10.19        13.68   14.06  12.48           8.00         6.357
5                       10.94   10.04  9.98            7.20         5.880
6                       9.58    8.73   7.99            6.48         5.439
7                               8.73   6.55            5.90         5.031
8                               7.64   6.55            5.90         4.654
9                                      6.56            5.90         4.458
10                                     6.55            5.91         4.458
11                                     5.74            5.90         4.458
12                                                     5.91         4.458
13                                                     5.90         4.458
14                                                     5.91         4.458
15                                                     5.90         4.458
16                                                     5.17         4.458
17                                                                  4.458
18                                                                  4.459
19                                                                  4.458
20                                                                  4.459
21                                                                  3.901

Table A-6. Residential Rental Property
           Mid-Month Convention
           Straight Line—27.5 Years
                                       Month property placed in service
Year
    1             2           3 4      5             6        789                  10     11                             12
1   3.485%        3.182% 2.879% 2.576% 2.273%  1.970%         1.667% 1.364% 1.061% 0.758% 0.455%                         0.152%
2–9 3.636         3.636  3.636  3.636  3.636   3.636          3.636  3.636  3.636  3.636  3.636                          3.636
10  3.637         3.637  3.637  3.637  3.637   3.637          3.636  3.636  3.636  3.636  3.636                          3.636
11  3.636         3.636  3.636  3.636  3.636   3.636          3.637  3.637  3.637  3.637  3.637                          3.637
12  3.637         3.637  3.637  3.637  3.637   3.637          3.636  3.636  3.636  3.636  3.636                          3.636
13  3.636         3.636  3.636  3.636  3.636   3.636          3.637  3.637  3.637  3.637  3.637                          3.637
14  3.637         3.637  3.637  3.637  3.637   3.637          3.636  3.636  3.636  3.636  3.636                          3.636
15  3.636         3.636  3.636  3.636  3.636   3.636          3.637  3.637  3.637  3.637  3.637                          3.637
16  3.637         3.637  3.637  3.637  3.637   3.637          3.636  3.636  3.636  3.636  3.636                          3.636
17  3.636         3.636  3.636  3.636  3.636   3.636          3.637  3.637  3.637  3.637  3.637                          3.637
18  3.637         3.637  3.637  3.637  3.637   3.637          3.636  3.636  3.636  3.636  3.636                          3.636
19  3.636         3.636  3.636  3.636  3.636   3.636          3.637  3.637  3.637  3.637  3.637                          3.637
20  3.637         3.637  3.637  3.637  3.637   3.637          3.636  3.636  3.636  3.636  3.636                          3.636
21  3.636         3.636  3.636  3.636  3.636   3.636          3.637  3.637  3.637  3.637  3.637                          3.637
22  3.637         3.637  3.637  3.637  3.637   3.637          3.636  3.636  3.636  3.636  3.636                          3.636
23  3.636         3.636  3.636  3.636  3.636   3.636          3.637  3.637  3.637  3.637  3.637                          3.637
24  3.637         3.637  3.637  3.637  3.637   3.637          3.636  3.636  3.636  3.636  3.636                          3.636
25  3.636         3.636  3.636  3.636  3.636   3.636          3.637  3.637  3.637  3.637  3.637                          3.637
26  3.637         3.637  3.637  3.637  3.637   3.637          3.636  3.636  3.636  3.636  3.636                          3.636
27  3.636         3.636  3.636  3.636  3.636   3.636          3.637  3.637  3.637  3.637  3.637                          3.637
28  1.97          2.273  2.576  2.879  3.182   3.485          3.636  3.636  3.636  3.636  3.636                          3.636
29                                                            0.152  0.455  0.758  1.061  1.364                          1.667

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Table A-7.  Nonresidential Real Property
            Mid-Month Convention
            Straight Line—31.5 Years
                                        Month property placed in service
   Year
       1       2     3          4       5      6      7        8        9      10     11                                 12
   1   3.042% 2.778% 2.513% 2.249%      1.984% 1.720% 1.455%   1.190%   0.926% 0.661% 0.397%                             0.132%
   2–7 3.175  3.175  3.175  3.175       3.175  3.175  3.175    3.175    3.175  3.175  3.175                              3.175
   8   3.175  3.174  3.175  3.174       3.175  3.174  3.175    3.175    3.175  3.175  3.175                              3.175
   9   3.174  3.175  3.174  3.175       3.174  3.175  3.174    3.175    3.174  3.175  3.174                              3.175
   10  3.175  3.174  3.175  3.174       3.175  3.174  3.175    3.174    3.175  3.174  3.175                              3.174
   11  3.174  3.175  3.174  3.175       3.174  3.175  3.174    3.175    3.174  3.175  3.174                              3.175
   12  3.175  3.174  3.175  3.174       3.175  3.174  3.175    3.174    3.175  3.174  3.175                              3.174
   13  3.174  3.175  3.174  3.175       3.174  3.175  3.174    3.175    3.174  3.175  3.174                              3.175
   14  3.175  3.174  3.175  3.174       3.175  3.174  3.175    3.174    3.175  3.174  3.175                              3.174
   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
   16  3.175  3.174  3.175  3.174       3.175  3.174  3.175    3.174    3.175  3.174  3.175                              3.174
   17  3.174  3.175  3.174  3.175       3.174  3.175  3.174    3.175    3.174  3.175  3.174                              3.175
   18  3.175  3.174  3.175  3.174       3.175  3.174  3.175    3.174    3.175  3.174  3.175                              3.174
   19  3.174  3.175  3.174  3.175       3.174  3.175  3.174    3.175    3.174  3.175  3.174                              3.175
   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
   21  3.174  3.175  3.174  3.175       3.174  3.175  3.174    3.175    3.174  3.175  3.174                              3.175
   22  3.175  3.174  3.175  3.174       3.175  3.174  3.175    3.174    3.175  3.174  3.175                              3.174
   23  3.174  3.175  3.174  3.175       3.174  3.175  3.174    3.175    3.174  3.175  3.174                              3.175
   24  3.175  3.174  3.175  3.174       3.175  3.174  3.175    3.174    3.175  3.174  3.175                              3.174
   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
   26  3.175  3.174  3.175  3.174       3.175  3.174  3.175    3.174    3.175  3.174  3.175                              3.174
   27  3.174  3.175  3.174  3.175       3.174  3.175  3.174    3.175    3.174  3.175  3.174                              3.175
   28  3.175  3.174  3.175  3.174       3.175  3.174  3.175    3.174    3.175  3.174  3.175                              3.174
   29  3.174  3.175  3.174  3.175       3.174  3.175  3.174    3.175    3.174  3.175  3.174                              3.175
   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
   31  3.174  3.175  3.174  3.175       3.174  3.175  3.174    3.175    3.174  3.175  3.174                              3.175
   32  1.720  1.984  2.249  2.513       2.778  3.042  3.175    3.174    3.175  3.174  3.175                              3.174
   33                                                 0.132    0.397    0.661  0.926  1.190                              1.455

Table A-7a. Nonresidential Real Property
            Mid-Month Convention
            Straight Line—39 Years
                                        Month property placed in service
   Year
       1       2     3          4       5      6      7        8        9      10     11                                 12
   1   2.461% 2.247% 2.033% 1.819%      1.605% 1.391% 1.177%   0.963%   0.749% 0.535% 0.321%                             0.107%
2–39   2.564  2.564  2.564  2.564       2.564  2.564  2.564    2.564    2.564  2.564  2.564                              2.564
   40  0.107  0.321  0.535  0.749       0.963  1.177  1.391    1.605    1.819  2.033  2.247                              2.461

72                                                                             Publication 946 (2023)

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Table A-8. Straight Line Method
           Half-Year Convention
                                          Recovery periods in years
Year
           2.5  3      3.5     4    5     6     6.5   7            7.5   8     8.5   9                                   9.5
1   20.0%       16.67% 14.29% 12.5% 10.0% 8.33% 7.69% 7.14%        6.67% 6.25% 5.88% 5.56%                               5.26%
2   40.0        33.33  28.57  25.0  20.0  16.67 15.39 14.29        13.33 12.50 11.77 11.11                               10.53
3   40.0        33.33  28.57  25.0  20.0  16.67 15.38 14.29        13.33 12.50 11.76 11.11                               10.53
4               16.67  28.57  25.0  20.0  16.67 15.39 14.28        13.33 12.50 11.77 11.11                               10.53
5                             12.5  20.0  16.66 15.38 14.29        13.34 12.50 11.76 11.11                               10.52
6                                   10.0  16.67 15.39 14.28        13.33 12.50 11.77 11.11                               10.53
7                                         8.33  15.38 14.29        13.34 12.50 11.76 11.11                               10.52
8                                                     7.14         13.33 12.50 11.77 11.11                               10.53
9                                                                        6.25  11.76 11.11                               10.52
10                                                                                   5.56                                10.53

Table A-8. ( Continued)
                                          Recovery periods in years
Year
           10   10.5   11     11.5  12    12.5  13    13.5         14    15    16    16.5                                17
1          5.0% 4.76%  4.55%  4.35% 4.17% 4.0%  3.85% 3.70%        3.57% 3.33% 3.13% 3.03%                               2.94%
2   10.0        9.52   9.09   8.70  8.33  8.0   7.69  7.41         7.14  6.67  6.25  6.06                                5.88
3   10.0        9.52   9.09   8.70  8.33  8.0   7.69  7.41         7.14  6.67  6.25  6.06                                5.88
4   10.0        9.53   9.09   8.69  8.33  8.0   7.69  7.41         7.14  6.67  6.25  6.06                                5.88
5   10.0        9.52   9.09   8.70  8.33  8.0   7.69  7.41         7.14  6.67  6.25  6.06                                5.88
6   10.0        9.53   9.09   8.69  8.33  8.0   7.69  7.41         7.14  6.67  6.25  6.06                                5.88
7   10.0        9.52   9.09   8.70  8.34  8.0   7.69  7.41         7.14  6.67  6.25  6.06                                5.88
8   10.0        9.53   9.09   8.69  8.33  8.0   7.69  7.41         7.15  6.66  6.25  6.06                                5.88
9   10.0        9.52   9.09   8.70  8.34  8.0   7.69  7.41         7.14  6.67  6.25  6.06                                5.88
10  10.0        9.53   9.09   8.69  8.33  8.0   7.70  7.40         7.15  6.66  6.25  6.06                                5.88
11         5.0  9.52   9.09   8.70  8.34  8.0   7.69  7.41         7.14  6.67  6.25  6.06                                5.89
12                     4.55   8.69  8.33  8.0   7.70  7.40         7.15  6.66  6.25  6.06                                5.88
13                                  4.17  8.0   7.69  7.41         7.14  6.67  6.25  6.06                                5.89
14                                              3.85  7.40         7.15  6.66  6.25  6.06                                5.88
15                                                                 3.57  6.67  6.25  6.06                                5.89
16                                                                       3.33  6.25  6.06                                5.88
17                                                                             3.12  6.07                                5.89
18                                                                                                                       2.94

Publication 946 (2023)                                                                                                        73

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-8. ( Continued)
                                          Recovery periods in years
   Year
           18 19       20   22     24     25   26.5   28           30     35     40    45                                50
   1   2.78%  2.63%    2.5% 2.273% 2.083% 2.0% 1.887% 1.786%       1.667% 1.429% 1.25% 1.111%                            1.0%
   2   5.56   5.26     5.0  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.50  2.222                             2.0
   3   5.56   5.26     5.0  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.50  2.222                             2.0
   4   5.55   5.26     5.0  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.50  2.222                             2.0
   5   5.56   5.26     5.0  4.546  4.167  4.0  3.774  3.571        3.333  2.857  2.50  2.222                             2.0
   6   5.55   5.26     5.0  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.50  2.222                             2.0
   7   5.56   5.26     5.0  4.546  4.167  4.0  3.773  3.572        3.333  2.857  2.50  2.222                             2.0
   8   5.55   5.26     5.0  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.50  2.222                             2.0
   9   5.56   5.27     5.0  4.546  4.167  4.0  3.773  3.572        3.333  2.857  2.50  2.222                             2.0
   10  5.55   5.26     5.0  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.50  2.222                             2.0
   11  5.56   5.27     5.0  4.546  4.166  4.0  3.773  3.572        3.333  2.857  2.50  2.222                             2.0
   12  5.55   5.26     5.0  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.50  2.222                             2.0
   13  5.56   5.27     5.0  4.546  4.166  4.0  3.773  3.572        3.334  2.857  2.50  2.222                             2.0
   14  5.55   5.26     5.0  4.545  4.167  4.0  3.773  3.571        3.333  2.857  2.50  2.222                             2.0
   15  5.56   5.27     5.0  4.546  4.166  4.0  3.774  3.572        3.334  2.857  2.50  2.222                             2.0
   16  5.55   5.26     5.0  4.545  4.167  4.0  3.773  3.571        3.333  2.857  2.50  2.222                             2.0
   17  5.56   5.27     5.0  4.546  4.166  4.0  3.774  3.572        3.334  2.857  2.50  2.222                             2.0
   18  5.55   5.26     5.0  4.545  4.167  4.0  3.773  3.571        3.333  2.857  2.50  2.222                             2.0
   19  2.78   5.27     5.0  4.546  4.166  4.0  3.774  3.572        3.334  2.857  2.50  2.222                             2.0
   20         2.63     5.0  4.545  4.167  4.0  3.773  3.571        3.333  2.857  2.50  2.222                             2.0
   21                  2.5  4.546  4.166  4.0  3.774  3.572        3.334  2.857  2.50  2.222                             2.0
   22                       4.545  4.167  4.0  3.773  3.571        3.333  2.857  2.50  2.222                             2.0
   23                       2.273  4.166  4.0  3.774  3.572        3.334  2.857  2.50  2.222                             2.0
   24                              4.167  4.0  3.773  3.571        3.333  2.857  2.50  2.222                             2.0
   25                              2.083  4.0  3.774  3.572        3.334  2.857  2.50  2.222                             2.0
   26                                     2.0  3.773  3.571        3.333  2.857  2.50  2.222                             2.0
   27                                          3.774  3.572        3.334  2.857  2.50  2.223                             2.0
   28                                                 3.571        3.333  2.858  2.50  2.222                             2.0
   29                                                 1.786        3.334  2.857  2.50  2.223                             2.0
   30                                                              3.333  2.858  2.50  2.222                             2.0
   31                                                              1.667  2.857  2.50  2.223                             2.0
   32                                                                     2.858  2.50  2.222                             2.0
   33                                                                     2.857  2.50  2.223                             2.0
   34                                                                     2.858  2.50  2.222                             2.0
   35                                                                     2.857  2.50  2.223                             2.0
   36                                                                     1.429  2.50  2.222                             2.0
   37                                                                            2.50  2.223                             2.0
   38                                                                            2.50  2.222                             2.0
   39                                                                            2.50  2.223                             2.0
   40                                                                            2.50  2.222                             2.0
   41                                                                            1.25  2.223                             2.0
   42                                                                                  2.222                             2.0
   43                                                                                  2.223                             2.0
   44                                                                                  2.222                             2.0
   45                                                                                  2.223                             2.0
   46                                                                                  1.111                             2.0
47–50                                                                                                                    2.0
   51                                                                                                                    1.0

74                                                                               Publication 946 (2023)

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-9. Straight Line Method
           Mid-Quarter Convention
           Placed in Service in First Quarter
                                             Recovery periods in years
Year
           2.5 3       3.5     4     5       6      6.5        7      7.5    8      8.5    9                             9.5
1   35.0%      29.17%  25.00% 21.88% 17.5%   14.58% 13.46% 12.50%     11.67% 10.94% 10.29% 9.72%                         9.21%
2   40.0       33.33   28.57  25.00  20.0    16.67  15.38  14.29      13.33  12.50  11.77  11.11                         10.53
3   25.0       33.33   28.57  25.00  20.0    16.67  15.39  14.28      13.33  12.50  11.76  11.11                         10.53
4              4.17    17.86  25.00  20.0    16.67  15.38  14.29      13.33  12.50  11.77  11.11                         10.53
5                             3.12   20.0    16.66  15.39  14.28      13.34  12.50  11.76  11.11                         10.52
6                                    2.5     16.67  15.38  14.29      13.33  12.50  11.77  11.11                         10.53
7                                            2.08   9.62   14.28      13.34  12.50  11.76  11.11                         10.52
8                                                          1.79       8.33   12.50  11.77  11.12                         10.53
9                                                                            1.56   7.35   11.11                         10.52
10                                                                                         1.39                          6.58

Table A-9. ( Continued)
                                             Recovery periods in years
Year
           10  10.5    11     11.5   12      12.5   13     13.5       14     15     16     16.5                          17
1   8.75%      8.33%   7.95%  7.61%  7.29%   7.0%   6.73%  6.48%      6.25%  5.83%  5.47%  5.30%                         5.15%
2   10.00      9.52    9.09   8.70   8.33    8.0    7.69   7.41       7.14   6.67   6.25   6.06                          5.88
3   10.00      9.52    9.09   8.70   8.33    8.0    7.69   7.41       7.14   6.67   6.25   6.06                          5.88
4   10.00      9.53    9.09   8.69   8.33    8.0    7.69   7.41       7.14   6.67   6.25   6.06                          5.88
5   10.00      9.52    9.09   8.70   8.33    8.0    7.69   7.41       7.14   6.67   6.25   6.06                          5.88
6   10.00      9.53    9.09   8.69   8.34    8.0    7.69   7.41       7.14   6.67   6.25   6.06                          5.88
7   10.00      9.52    9.09   8.70   8.33    8.0    7.69   7.41       7.14   6.67   6.25   6.06                          5.88
8   10.00      9.53    9.09   8.69   8.34    8.0    7.69   7.41       7.15   6.66   6.25   6.06                          5.88
9   10.00      9.52    9.09   8.70   8.33    8.0    7.70   7.40       7.14   6.67   6.25   6.06                          5.88
10  10.00      9.53    9.10   8.69   8.34    8.0    7.69   7.41       7.15   6.66   6.25   6.06                          5.88
11  1.25       5.95    9.09   8.70   8.33    8.0    7.70   7.40       7.14   6.67   6.25   6.06                          5.88
12                     1.14   5.43   8.34    8.0    7.69   7.41       7.15   6.66   6.25   6.06                          5.89
13                                   1.04    5.0    7.70   7.40       7.14   6.67   6.25   6.06                          5.88
14                                                  0.96   4.63       7.15   6.66   6.25   6.06                          5.89
15                                                                    0.89   6.67   6.25   6.06                          5.88
16                                                                           0.83   6.25   6.07                          5.89
17                                                                                  0.78   3.79                          5.88
18                                                                                                                       0.74

Publication 946 (2023)                                                                                                        75

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-9. ( Continued)
                                            Recovery periods in years
   Year
           18 19       20     22     24     25   26.5   28           30     35     40     45                             50
   1   4.86%  4.61%    4.375% 3.977% 3.646% 3.5% 3.302% 3.125%       2.917% 2.500% 2.188% 1.944%                         1.75%
   2   5.56   5.26     5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                          2.00
   3   5.56   5.26     5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                          2.00
   4   5.56   5.26     5.000  4.546  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                          2.00
   5   5.55   5.26     5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                          2.00
   6   5.56   5.26     5.000  4.546  4.167  4.0  3.774  3.572        3.333  2.857  2.500  2.222                          2.00
   7   5.55   5.26     5.000  4.545  4.167  4.0  3.773  3.571        3.333  2.857  2.500  2.222                          2.00
   8   5.56   5.26     5.000  4.546  4.167  4.0  3.774  3.572        3.333  2.857  2.500  2.222                          2.00
   9   5.55   5.26     5.000  4.545  4.167  4.0  3.773  3.571        3.333  2.857  2.500  2.222                          2.00
   10  5.56   5.27     5.000  4.546  4.166  4.0  3.774  3.572        3.333  2.857  2.500  2.222                          2.00
   11  5.55   5.26     5.000  4.545  4.167  4.0  3.773  3.571        3.333  2.857  2.500  2.222                          2.00
   12  5.56   5.27     5.000  4.546  4.166  4.0  3.774  3.572        3.333  2.857  2.500  2.222                          2.00
   13  5.55   5.26     5.000  4.545  4.167  4.0  3.773  3.571        3.334  2.857  2.500  2.222                          2.00
   14  5.56   5.27     5.000  4.546  4.166  4.0  3.774  3.572        3.333  2.857  2.500  2.222                          2.00
   15  5.55   5.26     5.000  4.545  4.167  4.0  3.773  3.571        3.334  2.857  2.500  2.222                          2.00
   16  5.56   5.27     5.000  4.546  4.166  4.0  3.774  3.572        3.333  2.857  2.500  2.222                          2.00
   17  5.55   5.26     5.000  4.545  4.167  4.0  3.773  3.571        3.334  2.857  2.500  2.222                          2.00
   18  5.56   5.27     5.000  4.546  4.166  4.0  3.774  3.572        3.333  2.857  2.500  2.222                          2.00
   19  0.69   5.26     5.000  4.545  4.167  4.0  3.773  3.571        3.334  2.857  2.500  2.222                          2.00
   20         0.66     5.000  4.546  4.166  4.0  3.774  3.572        3.333  2.857  2.500  2.222                          2.00
   21                  0.625  4.545  4.167  4.0  3.773  3.571        3.334  2.857  2.500  2.222                          2.00
   22                         4.546  4.166  4.0  3.774  3.572        3.333  2.857  2.500  2.222                          2.00
   23                         0.568  4.167  4.0  3.773  3.571        3.334  2.857  2.500  2.222                          2.00
   24                                4.166  4.0  3.774  3.572        3.333  2.857  2.500  2.222                          2.00
   25                                0.521  4.0  3.773  3.571        3.334  2.857  2.500  2.222                          2.00
   26                                       0.5  3.774  3.572        3.333  2.857  2.500  2.223                          2.00
   27                                            2.358  3.571        3.334  2.858  2.500  2.222                          2.00
   28                                                   3.572        3.333  2.857  2.500  2.223                          2.00
   29                                                   0.446        3.334  2.858  2.500  2.222                          2.00
   30                                                                3.333  2.857  2.500  2.223                          2.00
   31                                                                0.417  2.858  2.500  2.222                          2.00
   32                                                                       2.857  2.500  2.223                          2.00
   33                                                                       2.858  2.500  2.222                          2.00
   34                                                                       2.857  2.500  2.223                          2.00
   35                                                                       2.858  2.500  2.222                          2.00
   36                                                                       0.357  2.500  2.223                          2.00
   37                                                                              2.500  2.222                          2.00
   38                                                                              2.500  2.223                          2.00
   39                                                                              2.500  2.222                          2.00
   40                                                                              2.500  2.223                          2.00
   41                                                                              0.312  2.222                          2.00
   42                                                                                     2.223                          2.00
   43                                                                                     2.222                          2.00
   44                                                                                     2.223                          2.00
   45                                                                                     2.222                          2.00
   46                                                                                     0.278                          2.00
47–50                                                                                                                    2.00
   51                                                                                                                    0.25

76                                                                                 Publication 946 (2023)

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-10. Straight Line Method
            Mid-Quarter Convention
            Placed in Service in Second Quarter
                                            Recovery periods in years
Year
    2.5     3           3.5     4     5        6    6.5   7          7.5   8     8.5   9                                 9.5
1   25.0%   20.83%      17.86% 15.63% 12.5% 10.42%  9.62% 8.93%      8.33% 7.81% 7.35% 6.94%                             6.58%
2   40.0    33.33       28.57  25.00  20.0  16.67   15.38 14.29      13.33 12.50 11.77 11.11                             10.53
3   35.0    33.34       28.57  25.00  20.0  16.67   15.38 14.28      13.33 12.50 11.76 11.11                             10.53
4           12.50       25.00  25.00  20.0  16.66   15.39 14.29      13.34 12.50 11.77 11.11                             10.53
5                              9.37   20.0  16.67   15.38 14.28      13.33 12.50 11.76 11.11                             10.52
6                                     7.5   16.66   15.39 14.29      13.34 12.50 11.77 11.11                             10.53
7                                           6.25    13.46 14.28      13.33 12.50 11.76 11.11                             10.52
8                                                         5.36       11.67 12.50 11.77 11.12                             10.53
9                                                                          4.69  10.29 11.11                             10.52
10                                                                                     4.17                              9.21

Table A-10. ( Continued)
                                            Recovery periods in years
Year
    10      10.5        11     11.5   12    12.5    13    13.5       14    15    16    16.5                              17
1   6.25%   5.95%       5.68%  5.43%  5.21%    5.0% 4.81% 4.63%      4.46% 4.17% 3.91% 3.79%                             3.68%
2   10.00   9.52        9.09   8.70   8.33     8.0  7.69  7.41       7.14  6.67  6.25  6.06                              5.88
3   10.00   9.52        9.09   8.70   8.33     8.0  7.69  7.41       7.14  6.67  6.25  6.06                              5.88
4   10.00   9.53        9.09   8.70   8.33     8.0  7.69  7.41       7.14  6.67  6.25  6.06                              5.88
5   10.00   9.52        9.09   8.69   8.33     8.0  7.69  7.41       7.14  6.67  6.25  6.06                              5.88
6   10.00   9.53        9.09   8.70   8.33     8.0  7.69  7.41       7.14  6.67  6.25  6.06                              5.88
7   10.00   9.52        9.09   8.69   8.34     8.0  7.69  7.41       7.15  6.66  6.25  6.06                              5.88
8   10.00   9.53        9.09   8.70   8.33     8.0  7.69  7.41       7.14  6.67  6.25  6.06                              5.88
9   10.00   9.52        9.09   8.69   8.34     8.0  7.69  7.40       7.15  6.66  6.25  6.06                              5.88
10  10.00   9.53        9.09   8.70   8.33     8.0  7.70  7.41       7.14  6.67  6.25  6.06                              5.88
11  3.75    8.33        9.10   8.69   8.34     8.0  7.69  7.40       7.15  6.66  6.25  6.06                              5.88
12                      3.41   7.61   8.33     8.0  7.70  7.41       7.14  6.67  6.25  6.06                              5.89
13                                    3.13     7.0  7.69  7.40       7.15  6.66  6.25  6.06                              5.88
14                                                  2.89  6.48       7.14  6.67  6.25  6.06                              5.89
15                                                                   2.68  6.66  6.25  6.06                              5.88
16                                                                         2.50  6.25  6.06                              5.89
17                                                                               2.34  5.31                              5.88
18                                                                                                                       2.21

Publication 946 (2023)                                                                                                        77

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-10. ( Continued)
                                             Recovery periods in years
   Year
       18    19         20     22     24     25   26.5   28           30     35     40     45                            50
   1   3.47% 3.29%      3.125% 2.841% 2.604% 2.5% 2.358% 2.232%       2.083% 1.786% 1.563% 1.389%                        1.25%
   2   5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   3   5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   4   5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   5   5.55  5.26       5.000  4.546  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   6   5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.572        3.333  2.857  2.500  2.222                         2.00
   7   5.55  5.26       5.000  4.546  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   8   5.56  5.26       5.000  4.545  4.167  4.0  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   9   5.55  5.27       5.000  4.546  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   10  5.56  5.26       5.000  4.545  4.167  4.0  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   11  5.55  5.27       5.000  4.546  4.166  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   12  5.56  5.26       5.000  4.545  4.167  4.0  3.773  3.572        3.334  2.857  2.500  2.222                         2.00
   13  5.55  5.27       5.000  4.546  4.166  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   14  5.56  5.26       5.000  4.545  4.167  4.0  3.773  3.572        3.334  2.857  2.500  2.222                         2.00
   15  5.55  5.27       5.000  4.546  4.166  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   16  5.56  5.26       5.000  4.545  4.167  4.0  3.773  3.572        3.334  2.857  2.500  2.222                         2.00
   17  5.55  5.27       5.000  4.546  4.166  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   18  5.56  5.26       5.000  4.545  4.167  4.0  3.773  3.572        3.334  2.857  2.500  2.222                         2.00
   19  2.08  5.27       5.000  4.546  4.166  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   20        1.97       5.000  4.545  4.167  4.0  3.773  3.572        3.334  2.857  2.500  2.222                         2.00
   21                   1.875  4.546  4.166  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   22                          4.545  4.167  4.0  3.773  3.572        3.334  2.857  2.500  2.222                         2.00
   23                          1.705  4.166  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   24                                 4.167  4.0  3.773  3.572        3.334  2.857  2.500  2.222                         2.00
   25                                 1.562  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   26                                        1.5  3.773  3.572        3.334  2.857  2.500  2.222                         2.00
   27                                             3.302  3.571        3.333  2.857  2.500  2.223                         2.00
   28                                                    3.572        3.334  2.858  2.500  2.222                         2.00
   29                                                    1.339        3.333  2.857  2.500  2.223                         2.00
   30                                                                 3.334  2.858  2.500  2.222                         2.00
   31                                                                 1.250  2.857  2.500  2.223                         2.00
   32                                                                        2.858  2.500  2.222                         2.00
   33                                                                        2.857  2.500  2.223                         2.00
   34                                                                        2.858  2.500  2.222                         2.00
   35                                                                        2.857  2.500  2.223                         2.00
   36                                                                        1.072  2.500  2.222                         2.00
   37                                                                               2.500  2.223                         2.00
   38                                                                               2.500  2.222                         2.00
   39                                                                               2.500  2.223                         2.00
   40                                                                               2.500  2.222                         2.00
   41                                                                               0.937  2.223                         2.00
   42                                                                                      2.222                         2.00
   43                                                                                      2.223                         2.00
   44                                                                                      2.222                         2.00
   45                                                                                      2.223                         2.00
   46                                                                                      0.833                         2.00
47–50                                                                                                                    2.00
   51                                                                                                                    0.75

78                                                                                  Publication 946 (2023)

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-11. Straight Line Method
            Mid-Quarter Convention
            Placed in Service in Third Quarter
                                              Recovery periods in years
Year
    2.5        3        3.5     4    5        6     6.5   7            7.5   8     8.5   9                               9.5
1   15.0%   12.50%      10.71% 9.38% 7.5%     6.25% 5.77% 5.36%        5.00% 4.69% 4.41% 4.17%                           3.95%
2   40.0    33.33       28.57  25.00 20.0     16.67 15.38 14.29        13.33 12.50 11.76 11.11                           10.53
3   40.0    33.34       28.57  25.00 20.0     16.67 15.39 14.28        13.33 12.50 11.77 11.11                           10.53
4   5.0     20.83       28.58  25.00 20.0     16.66 15.38 14.29        13.33 12.50 11.76 11.11                           10.52
5                       3.57   15.62 20.0     16.67 15.39 14.28        13.34 12.50 11.77 11.11                           10.53
6                                    12.5     16.66 15.38 14.29        13.33 12.50 11.76 11.11                           10.52
7                                             10.42 15.39 14.28        13.34 12.50 11.77 11.11                           10.53
8                                                   1.92  8.93         13.33 12.50 11.76 11.11                           10.52
9                                                                      1.67  7.81  11.77 11.11                           10.53
10                                                                                 1.47  6.95                            10.52
11                                                                                                                       1.32

Table A-11. ( Continued)
                                              Recovery periods in years
Year
    10      10.5        11     11.5  12       12.5  13    13.5         14    15    16    16.5                            17
1   3.75%   3.57%       3.41%  3.26% 3.13%    3.0%  2.88% 2.78%        2.68% 2.50% 2.34% 2.27%                           2.21%
2   10.00   9.52        9.09   8.70  8.33     8.0   7.69  7.41         7.14  6.67  6.25  6.06                            5.88
3   10.00   9.52        9.09   8.70  8.33     8.0   7.69  7.41         7.14  6.67  6.25  6.06                            5.88
4   10.00   9.52        9.09   8.69  8.33     8.0   7.69  7.41         7.14  6.67  6.25  6.06                            5.88
5   10.00   9.53        9.09   8.70  8.33     8.0   7.69  7.41         7.14  6.67  6.25  6.06                            5.88
6   10.00   9.52        9.09   8.69  8.33     8.0   7.69  7.41         7.14  6.67  6.25  6.06                            5.88
7   10.00   9.53        9.09   8.70  8.34     8.0   7.69  7.41         7.14  6.66  6.25  6.06                            5.88
8   10.00   9.52        9.09   8.69  8.33     8.0   7.70  7.40         7.14  6.67  6.25  6.06                            5.88
9   10.00   9.53        9.09   8.70  8.34     8.0   7.69  7.41         7.15  6.66  6.25  6.06                            5.88
10  10.00   9.52        9.09   8.69  8.33     8.0   7.70  7.40         7.14  6.67  6.25  6.06                            5.88
11  6.25    9.53        9.10   8.70  8.34     8.0   7.69  7.41         7.15  6.66  6.25  6.06                            5.88
12          1.19        5.68   8.69  8.33     8.0   7.70  7.40         7.14  6.67  6.25  6.06                            5.89
13                             1.09  5.21     8.0   7.69  7.41         7.15  6.66  6.25  6.06                            5.88
14                                            1.0   4.81  7.40         7.14  6.67  6.25  6.06                            5.89
15                                                        0.93         4.47  6.66  6.25  6.06                            5.88
16                                                                           4.17  6.25  6.07                            5.89
17                                                                                 3.91  6.06                            5.88
18                                                                                       0.76                            3.68

Publication 946 (2023)                                                                                                        79

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-11. ( Continued)
                                             Recovery periods in years
   Year
       18    19         20     22     24     25   26.5   28           30     35     40     45                            50
   1   2.08% 1.97%      1.875% 1.705% 1.563% 1.5% 1.415% 1.339%       1.250% 1.071% 0.938% 0.833%                        0.75%
   2   5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   3   5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   4   5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   5   5.55  5.26       5.000  4.546  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   6   5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.572        3.333  2.857  2.500  2.222                         2.00
   7   5.55  5.26       5.000  4.546  4.167  4.0  3.773  3.571        3.333  2.857  2.500  2.222                         2.00
   8   5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.572        3.333  2.857  2.500  2.222                         2.00
   9   5.55  5.27       5.000  4.546  4.166  4.0  3.773  3.571        3.333  2.857  2.500  2.222                         2.00
   10  5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.572        3.333  2.857  2.500  2.222                         2.00
   11  5.55  5.27       5.000  4.546  4.166  4.0  3.773  3.571        3.333  2.857  2.500  2.222                         2.00
   12  5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.572        3.334  2.857  2.500  2.222                         2.00
   13  5.55  5.27       5.000  4.546  4.166  4.0  3.773  3.571        3.333  2.857  2.500  2.222                         2.00
   14  5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.572        3.334  2.857  2.500  2.222                         2.00
   15  5.55  5.27       5.000  4.546  4.166  4.0  3.773  3.571        3.333  2.857  2.500  2.222                         2.00
   16  5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.572        3.334  2.857  2.500  2.222                         2.00
   17  5.55  5.27       5.000  4.546  4.166  4.0  3.773  3.571        3.333  2.857  2.500  2.222                         2.00
   18  5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.572        3.334  2.857  2.500  2.222                         2.00
   19  3.47  5.27       5.000  4.546  4.166  4.0  3.773  3.571        3.333  2.857  2.500  2.222                         2.00
   20        3.29       5.000  4.545  4.167  4.0  3.774  3.572        3.334  2.857  2.500  2.222                         2.00
   21                   3.125  4.546  4.166  4.0  3.773  3.571        3.333  2.857  2.500  2.222                         2.00
   22                          4.545  4.167  4.0  3.774  3.572        3.334  2.857  2.500  2.222                         2.00
   23                          2.841  4.166  4.0  3.773  3.571        3.333  2.857  2.500  2.222                         2.00
   24                                 4.167  4.0  3.774  3.572        3.334  2.857  2.500  2.222                         2.00
   25                                 2.604  4.0  3.773  3.571        3.333  2.857  2.500  2.222                         2.00
   26                                        2.5  3.774  3.572        3.334  2.858  2.500  2.222                         2.00
   27                                             3.773  3.571        3.333  2.857  2.500  2.223                         2.00
   28                                             0.472  3.572        3.334  2.858  2.500  2.222                         2.00
   29                                                    2.232        3.333  2.857  2.500  2.223                         2.00
   30                                                                 3.334  2.858  2.500  2.222                         2.00
   31                                                                 2.083  2.857  2.500  2.223                         2.00
   32                                                                        2.858  2.500  2.222                         2.00
   33                                                                        2.857  2.500  2.223                         2.00
   34                                                                        2.858  2.500  2.222                         2.00
   35                                                                        2.857  2.500  2.223                         2.00
   36                                                                        1.786  2.500  2.222                         2.00
   37                                                                               2.500  2.223                         2.00
   38                                                                               2.500  2.222                         2.00
   39                                                                               2.500  2.223                         2.00
   40                                                                               2.500  2.222                         2.00
   41                                                                               1.562  2.223                         2.00
   42                                                                                      2.222                         2.00
   43                                                                                      2.223                         2.00
   44                                                                                      2.222                         2.00
   45                                                                                      2.223                         2.00
   46                                                                                      1.389                         2.00
47–50                                                                                                                    2.00
   51                                                                                                                    1.25

80                                                                                  Publication 946 (2023)

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-12. Straight Line Method
            Mid-Quarter Convention
            Placed in Service in Fourth Quarter
                                          Recovery periods in years
Year
    2.5        3        3.5     4   5          6     6.5   7       7.5   8     8.5   9                                   9.5
1   5.0%    4.17%       3.57% 3.13% 2.5%       2.08% 1.92% 1.79%   1.67% 1.56% 1.47% 1.39%                               1.32%
2   40.0    33.33       28.57 25.00 20.0  16.67      15.39 14.29   13.33 12.50 11.76 11.11                               10.53
3   40.0    33.33       28.57 25.00 20.0  16.67      15.38 14.28   13.33 12.50 11.77 11.11                               10.53
4   15.0    29.17       28.57 25.00 20.0  16.67      15.39 14.29   13.33 12.50 11.76 11.11                               10.52
5                       10.72 21.87 20.0  16.66      15.38 14.28   13.33 12.50 11.77 11.11                               10.53
6                                   17.5  16.67      15.39 14.29   13.34 12.50 11.76 11.11                               10.52
7                                         14.58      15.38 14.28   13.33 12.50 11.77 11.11                               10.53
8                                                    5.77  12.50   13.34 12.50 11.76 11.11                               10.52
9                                                                  5.00  10.94 11.77 11.11                               10.53
10                                                                             4.41  9.73                                10.52
11                                                                                                                       3.95

Table A-12. ( Continued)
                                          Recovery periods in years
Year
    10      10.5        11    11.5  12         12.5  13    13.5    14    15    16    16.5                                17
1   1.25%   1.19%       1.14% 1.09% 1.04%      1.0%  0.96% 0.93%   0.89% 0.83% 0.78% 0.76%                               0.74%
2   10.00   9.52        9.09  8.70  8.33       8.0   7.69  7.41    7.14  6.67  6.25  6.06                                5.88
3   10.00   9.52        9.09  8.69  8.33       8.0   7.69  7.41    7.14  6.67  6.25  6.06                                5.88
4   10.00   9.52        9.09  8.70  8.33       8.0   7.69  7.41    7.14  6.67  6.25  6.06                                5.88
5   10.00   9.53        9.09  8.69  8.33       8.0   7.69  7.41    7.14  6.67  6.25  6.06                                5.88
6   10.00   9.52        9.09  8.70  8.34       8.0   7.69  7.41    7.14  6.67  6.25  6.06                                5.88
7   10.00   9.53        9.09  8.69  8.33       8.0   7.69  7.41    7.14  6.67  6.25  6.06                                5.88
8   10.00   9.52        9.09  8.70  8.34       8.0   7.69  7.40    7.15  6.66  6.25  6.06                                5.88
9   10.00   9.53        9.09  8.69  8.33       8.0   7.70  7.41    7.14  6.67  6.25  6.06                                5.88
10  10.00   9.52        9.09  8.70  8.34       8.0   7.69  7.40    7.15  6.66  6.25  6.06                                5.88
11  8.75    9.53        9.09  8.69  8.33       8.0   7.70  7.41    7.14  6.67  6.25  6.06                                5.88
12          3.57        7.96  8.70  8.34       8.0   7.69  7.40    7.15  6.66  6.25  6.06                                5.89
13                            3.26  7.29       8.0   7.70  7.41    7.14  6.67  6.25  6.06                                5.88
14                                             3.0   6.73  7.40    7.15  6.66  6.25  6.06                                5.89
15                                                         2.78    6.25  6.67  6.25  6.06                                5.88
16                                                                       5.83  6.25  6.06                                5.89
17                                                                             5.47  6.07                                5.88
18                                                                                   2.27                                5.15

Publication 946 (2023)                                                                                                        81

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-12. ( Continued)
                                             Recovery periods in years
   Year
       18    19         20     22     24     25   26.5   28           30     35     40     45                            50
   1   0.69% 0.66%      0.625% 0.568% 0.521% 0.5% 0.472% 0.446%       0.417% 0.357% 0.313% 0.278%                        0.25%
   2   5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   3   5.56  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   4   5.56  5.26       5.000  4.546  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   5   5.55  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   6   5.56  5.26       5.000  4.546  4.167  4.0  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   7   5.55  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   8   5.56  5.26       5.000  4.546  4.167  4.0  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   9   5.55  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   10  5.56  5.27       5.000  4.546  4.166  4.0  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   11  5.55  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.333  2.857  2.500  2.222                         2.00
   12  5.56  5.27       5.000  4.546  4.166  4.0  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   13  5.55  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.334  2.857  2.500  2.222                         2.00
   14  5.56  5.27       5.000  4.546  4.166  4.0  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   15  5.55  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.334  2.857  2.500  2.222                         2.00
   16  5.56  5.27       5.000  4.546  4.166  4.0  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   17  5.55  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.334  2.857  2.500  2.222                         2.00
   18  5.56  5.27       5.000  4.546  4.166  4.0  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   19  4.86  5.26       5.000  4.545  4.167  4.0  3.774  3.571        3.334  2.857  2.500  2.222                         2.00
   20        4.61       5.000  4.546  4.166  4.0  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   21                   4.375  4.545  4.167  4.0  3.774  3.571        3.334  2.857  2.500  2.222                         2.00
   22                          4.546  4.166  4.0  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   23                          3.977  4.167  4.0  3.774  3.571        3.334  2.857  2.500  2.222                         2.00
   24                                 4.166  4.0  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   25                                 3.646  4.0  3.774  3.571        3.334  2.857  2.500  2.222                         2.00
   26                                        3.5  3.773  3.572        3.333  2.857  2.500  2.222                         2.00
   27                                             3.774  3.571        3.334  2.858  2.500  2.222                         2.00
   28                                             1.415  3.572        3.333  2.857  2.500  2.223                         2.00
   29                                                    3.125        3.334  2.858  2.500  2.222                         2.00
   30                                                                 3.333  2.857  2.500  2.223                         2.00
   31                                                                 2.917  2.858  2.500  2.222                         2.00
   32                                                                        2.857  2.500  2.223                         2.00
   33                                                                        2.858  2.500  2.222                         2.00
   34                                                                        2.857  2.500  2.223                         2.00
   35                                                                        2.858  2.500  2.222                         2.00
   36                                                                        2.500  2.500  2.223                         2.00
   37                                                                               2.500  2.222                         2.00
   38                                                                               2.500  2.223                         2.00
   39                                                                               2.500  2.222                         2.00
   40                                                                               2.500  2.223                         2.00
   41                                                                               2.187  2.222                         2.00
   42                                                                                      2.223                         2.00
   43                                                                                      2.222                         2.00
   44                                                                                      2.223                         2.00
   45                                                                                      2.222                         2.00
   46                                                                                      1.945                         2.00
47–50                                                                                                                    2.00
   51                                                                                                                    1.75

82                                                                                  Publication 946 (2023)

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-13.   Residential Rental Property Placed in Service After 2017
              Straight Line—30 Years
              Mid-Month Convention
                                                   Month property placed in service
Year
              1          2         3       4       5       6       7         8         9      10     11     12
1           3.204%     2.926% 2.649%   2.371%   2.093%    1.815%  1.528%     1.250%    0.972% 0.694% 0.417% 0.139%
2–30        3.333      3.333  3.333    3.333    3.333     3.333   3.333      3.333     3.333  3.333  3.333  3.333
31          0.139      0.417  0.694    0.972    1.250     1.528   1.815      2.093     2.371  2.649  2.926  3.204

Table A-13a. Straight Line—40 Years
            Mid-Month Convention
                                                   Month property placed in service
Year
              1          2         3       4       5       6       7         8         9      10     11     12
1    2.396%            2.188% 1.979%   1.771%   1.563%    1.354%  1.146%     0.938%    0.729% 0.521% 0.313% 0.104%
2–40 2.500             2.500  2.500    2.500    2.500     2.500   2.500      2.500     2.500  2.500  2.500  2.500
41   0.104             0.312  0.521    0.729    0.937     1.146   1.354      1.562     1.771  1.979  2.187  2.396

Table A-14. 150% Declining Balance Method
            Half-Year Convention
                                                    Recovery periods in years
Year
     2.5               3     3.5     4       5        6      6.5     7             7.5   8    8.5    9      9.5
1    30.0%             25.0% 21.43%  18.75%  15.00% 12.50% 11.54%  10.71%    10.00%    9.38%  8.82%  8.33%  7.89%
2    42.0              37.5  33.67   30.47   25.50  21.88  20.41   19.13     18.00     16.99  16.09  15.28  14.54
3    28.0              25.0  22.45   20.31   17.85  16.41  15.70   15.03     14.40     13.81  13.25  12.73  12.25
4                      12.5  22.45   20.31   16.66  14.06  13.09   12.25     11.52     11.22  10.91  10.61  10.31
5                                    10.16   16.66  14.06  13.09   12.25     11.52     10.80  10.19  9.65   9.17
6                                            8.33   14.06  13.09   12.25     11.52     10.80  10.19  9.64   9.17
7                                                    7.03  13.08   12.25     11.52     10.80  10.18  9.65   9.17
8                                                                  6.13      11.52     10.80  10.19  9.64   9.17
9                                                                                      5.40   10.18  9.65   9.17
10                                                                                                   4.82   9.16

Table A-14. ( Continued)
                                                    Recovery periods in years
Year
     10                10.5  11      11.5    12      12.5    13    13.5            14  15     16     16.5   17
1    7.50%             7.14% 6.82%   6.52%   6.25%   6.00%   5.77% 5.56%     5.36%     5.00%  4.69%  4.55%  4.41%
2    13.88        13.27      12.71   12.19   11.72  11.28  10.87   10.49     10.14     9.50   8.94   8.68   8.43
3    11.79        11.37      10.97   10.60   10.25   9.93    9.62  9.33      9.05      8.55   8.10   7.89   7.69
4    10.02             9.75  9.48    9.22    8.97    8.73    8.51  8.29      8.08      7.70   7.34   7.17   7.01
5    8.74              8.35  8.18    8.02    7.85    7.69    7.53  7.37      7.22      6.93   6.65   6.52   6.39
6    8.74              8.35  7.98    7.64    7.33    7.05    6.79  6.55      6.44      6.23   6.03   5.93   5.83
7    8.74              8.35  7.97    7.64    7.33    7.05    6.79  6.55      6.32      5.90   5.55   5.39   5.32
8    8.74              8.35  7.98    7.63    7.33    7.05    6.79  6.55      6.32      5.90   5.55   5.39   5.23
9    8.74              8.36  7.97    7.64    7.33    7.04    6.79  6.55      6.32      5.91   5.55   5.39   5.23
10   8.74              8.35  7.98    7.63    7.33    7.05    6.79  6.55      6.32      5.90   5.55   5.39   5.23
11   4.37              8.36  7.97    7.64    7.32    7.04    6.79  6.55      6.32      5.91   5.55   5.39   5.23
12                           3.99    7.63    7.33    7.05    6.78  6.55      6.32      5.90   5.55   5.39   5.23
13                                           3.66    7.04    6.79  6.56      6.32      5.91   5.54   5.38   5.23
14                                                           3.39  6.55      6.31      5.90   5.55   5.39   5.23
15                                                                           3.16      5.91   5.54   5.38   5.23
16                                                                                     2.95   5.55   5.39   5.23
17                                                                                            2.77   5.38   5.23
18                                                                                                          2.62

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-14. ( Continued)
                                             Recovery periods in years
   Year
       18    19         20     22     24     25     26.5   28         30     35     40     45                            50
   1   4.17% 3.95%      3.750% 3.409% 3.125% 3.000% 2.830% 2.679%     2.500% 2.143% 1.875% 1.667%                        1.500%
   2   7.99  7.58       7.219  6.586  6.055  5.820  5.500  5.214      4.875  4.194  3.680  3.278                         2.955
   3   7.32  6.98       6.677  6.137  5.676  5.471  5.189  4.934      4.631  4.014  3.542  3.169                         2.866
   4   6.71  6.43       6.177  5.718  5.322  5.143  4.895  4.670      4.400  3.842  3.409  3.063                         2.780
   5   6.15  5.93       5.713  5.328  4.989  4.834  4.618  4.420      4.180  3.677  3.281  2.961                         2.697
   6   5.64  5.46       5.285  4.965  4.677  4.544  4.357  4.183      3.971  3.520  3.158  2.862                         2.616
   7   5.17  5.03       4.888  4.627  4.385  4.271  4.110  3.959      3.772  3.369  3.040  2.767                         2.538
   8   4.94  4.69       4.522  4.311  4.111  4.015  3.877  3.747      3.584  3.225  2.926  2.674                         2.461
   9   4.94  4.69       4.462  4.063  3.854  3.774  3.658  3.546      3.404  3.086  2.816  2.585                         2.388
   10  4.94  4.69       4.461  4.063  3.729  3.584  3.451  3.356      3.234  2.954  2.710  2.499                         2.316
   11  4.94  4.69       4.462  4.063  3.729  3.583  3.383  3.205      3.072  2.828  2.609  2.416                         2.246
   12  4.95  4.69       4.461  4.063  3.729  3.584  3.383  3.205      2.994  2.706  2.511  2.335                         2.179
   13  4.94  4.69       4.462  4.064  3.730  3.583  3.383  3.205      2.994  2.590  2.417  2.257                         2.114
   14  4.95  4.69       4.461  4.063  3.729  3.584  3.383  3.205      2.994  2.571  2.326  2.182                         2.050
   15  4.94  4.69       4.462  4.064  3.730  3.583  3.383  3.205      2.994  2.571  2.253  2.110                         1.989
   16  4.95  4.69       4.461  4.063  3.729  3.584  3.383  3.205      2.994  2.571  2.253  2.039                         1.929
   17  4.94  4.69       4.462  4.064  3.730  3.583  3.383  3.205      2.994  2.571  2.253  2.005                         1.871
   18  4.95  4.70       4.461  4.063  3.729  3.584  3.383  3.205      2.994  2.571  2.253  2.005                         1.815
   19  2.47  4.69       4.462  4.064  3.730  3.583  3.383  3.205      2.994  2.571  2.253  2.005                         1.806
   20        2.35       4.461  4.063  3.729  3.584  3.384  3.205      2.993  2.571  2.253  2.005                         1.806
   21                   2.231  4.064  3.730  3.583  3.383  3.205      2.994  2.571  2.253  2.005                         1.806
   22                          4.063  3.729  3.584  3.384  3.205      2.993  2.571  2.253  2.005                         1.806
   23                          2.032  3.730  3.583  3.383  3.205      2.994  2.571  2.253  2.005                         1.806
   24                                 3.729  3.584  3.384  3.205      2.993  2.571  2.253  2.004                         1.806
   25                                 1.865  3.583  3.383  3.205      2.994  2.571  2.253  2.005                         1.806
   26                                        1.792  3.384  3.205      2.993  2.571  2.253  2.004                         1.806
   27                                               3.383  3.205      2.994  2.571  2.253  2.005                         1.806
   28                                                      3.205      2.993  2.572  2.253  2.004                         1.806
   29                                                      1.602      2.994  2.571  2.253  2.005                         1.806
   30                                                                 2.993  2.572  2.253  2.004                         1.806
   31                                                                 1.497  2.571  2.253  2.005                         1.806
   32                                                                        2.572  2.253  2.004                         1.806
   33                                                                        2.571  2.252  2.005                         1.806
   34                                                                        2.572  2.253  2.004                         1.806
   35                                                                        2.571  2.252  2.005                         1.806
   36                                                                        1.286  2.253  2.004                         1.806
   37                                                                               2.252  2.005                         1.806
   38                                                                               2.253  2.004                         1.806
   39                                                                               2.252  2.005                         1.806
   40                                                                               2.253  2.004                         1.806
   41                                                                               1.126  2.005                         1.806
   42                                                                                      2.004                         1.805
   43                                                                                      2.005                         1.806
   44                                                                                      2.004                         1.805
   45                                                                                      2.005                         1.806
   46                                                                                      1.002                         1.805
   47                                                                                                                    1.806
   48                                                                                                                    1.805
   49                                                                                                                    1.806
   50                                                                                                                    1.805
   51                                                                                                                    0.903

84                                                                                  Publication 946 (2023)

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-15. 150% Declining Balance Method
            Mid-Quarter Convention
            Property Placed in Service in First Quarter
                                             Recovery periods in years
Year
    2.5     3           3.5    4      5      6         6.5    7       7.5    8      8.5    9                             9.5
1   52.50%  43.75%      37.50% 32.81% 26.25% 21.88%    20.19% 18.75%  17.50% 16.41% 15.44% 14.58%                        13.82%
2   29.23   28.13       26.79  25.20  22.13  19.53     18.42  17.41   16.50  15.67  14.92  14.24                         13.61
3   18.27   25.00       21.98  19.76  16.52  14.65     14.17  13.68   13.20  12.74  12.29  11.86                         11.46
4           3.12        13.73  19.76  16.52  14.06     13.03  12.16   11.42  10.77  10.20  9.89                          9.65
5                              2.47   16.52  14.06     13.02  12.16   11.42  10.77  10.19  9.64                          9.15
6                                     2.06   14.06     13.03  12.16   11.41  10.76  10.20  9.65                          9.15
7                                            1.76      8.14   12.16   11.42  10.77  10.19  9.64                          9.15
8                                                             1.52    7.13   10.76  10.20  9.65                          9.15
9                                                                            1.35   6.37   9.64                          9.14
10                                                                                         1.21                          5.72

Table A-15. ( Continued)
                                             Recovery periods in years
Year
    10      10.5        11     11.5   12     12.5      13     13.5    14     15     16     16.5                          17
1   13.13%  12.50%      11.93% 11.41% 10.94% 10.50%    10.10% 9.72%   9.38%  8.75%  8.20%  7.95%                         7.72%
2   13.03   12.50       12.01  11.56  11.13  10.74     10.37  10.03   9.71   9.13   8.61   8.37                          8.14
3   11.08   10.71       10.37  10.05  9.74   9.45      9.18   8.92    8.67   8.21   7.80   7.61                          7.42
4   9.41    9.18        8.96   8.74   8.52   8.32      8.12   7.93    7.74   7.39   7.07   6.92                          6.77
5   8.71    8.32        7.96   7.64   7.46   7.32      7.18   7.04    6.91   6.65   6.41   6.29                          6.17
6   8.71    8.32        7.96   7.64   7.33   7.04      6.78   6.53    6.31   5.99   5.80   5.71                          5.63
7   8.71    8.32        7.96   7.64   7.33   7.04      6.77   6.54    6.31   5.90   5.54   5.38                          5.23
8   8.71    8.32        7.96   7.64   7.33   7.04      6.78   6.53    6.31   5.91   5.54   5.38                          5.23
9   8.71    8.32        7.96   7.64   7.33   7.04      6.77   6.54    6.31   5.90   5.54   5.38                          5.23
10  8.71    8.31        7.97   7.63   7.32   7.04      6.78   6.53    6.31   5.91   5.54   5.38                          5.23
11  1.09    5.20        7.96   7.64   7.33   7.04      6.77   6.54    6.31   5.90   5.54   5.38                          5.23
12                      1.00   4.77   7.32   7.03      6.78   6.53    6.31   5.91   5.54   5.38                          5.22
13                                    0.92   4.40      6.77   6.54    6.32   5.90   5.54   5.38                          5.23
14                                                     0.85   4.08    6.31   5.91   5.55   5.38                          5.22
15                                                                    0.79   5.90   5.54   5.38                          5.23
16                                                                           0.74   5.55   5.37                          5.22
17                                                                                  0.69   3.36                          5.23
18                                                                                                                       0.65

Publication 946 (2023)                                                                                                        85

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-15. ( Continued)
                                             Recovery periods in years
   Year
       18    19         20     22     24     25     26.5   28         30     35     40     45                            50
   1   7.29% 6.91%      6.563% 5.966% 5.469% 5.250% 4.953% 4.688%     4.375% 3.750% 3.281% 2.917%                        2.625%
   2   7.73  7.35       7.008  6.411  5.908  5.685  5.380  5.106      4.781  4.125  3.627  3.236                         2.921
   3   7.08  6.77       6.482  5.974  5.539  5.344  5.075  4.832      4.542  3.948  3.491  3.128                         2.834
   4   6.49  6.23       5.996  5.567  5.193  5.023  4.788  4.574      4.315  3.779  3.360  3.024                         2.749
   5   5.95  5.74       5.546  5.187  4.868  4.722  4.517  4.329      4.099  3.617  3.234  2.923                         2.666
   6   5.45  5.29       5.130  4.834  4.564  4.439  4.262  4.097      3.894  3.462  3.113  2.826                         2.586
   7   5.00  4.87       4.746  4.504  4.279  4.172  4.020  3.877      3.700  3.314  2.996  2.732                         2.509
   8   4.94  4.69       4.459  4.197  4.011  3.922  3.793  3.669      3.515  3.172  2.884  2.640                         2.433
   9   4.95  4.69       4.459  4.061  3.761  3.687  3.578  3.473      3.339  3.036  2.776  2.552                         2.360
   10  4.94  4.69       4.459  4.061  3.729  3.582  3.383  3.287      3.172  2.906  2.671  2.467                         2.290
   11  4.95  4.69       4.459  4.061  3.729  3.582  3.384  3.204      3.013  2.781  2.571  2.385                         2.221
   12  4.94  4.69       4.460  4.061  3.730  3.582  3.383  3.204      2.994  2.662  2.475  2.306                         2.154
   13  4.95  4.69       4.459  4.061  3.729  3.582  3.384  3.204      2.994  2.571  2.382  2.229                         2.090
   14  4.94  4.69       4.460  4.061  3.730  3.582  3.383  3.204      2.994  2.571  2.293  2.154                         2.027
   15  4.95  4.68       4.459  4.061  3.729  3.582  3.384  3.204      2.994  2.571  2.252  2.083                         1.966
   16  4.94  4.69       4.460  4.061  3.730  3.582  3.383  3.204      2.994  2.571  2.252  2.013                         1.907
   17  4.95  4.68       4.459  4.061  3.729  3.582  3.384  3.204      2.994  2.571  2.253  2.005                         1.850
   18  4.94  4.69       4.460  4.061  3.730  3.582  3.383  3.204      2.994  2.571  2.252  2.005                         1.806
   19  0.62  4.68       4.459  4.061  3.729  3.581  3.384  3.204      2.994  2.571  2.253  2.005                         1.806
   20        0.59       4.460  4.060  3.730  3.582  3.383  3.204      2.994  2.571  2.252  2.005                         1.806
   21                   0.557  4.061  3.729  3.581  3.384  3.203      2.993  2.571  2.253  2.005                         1.806
   22                          4.060  3.730  3.582  3.383  3.204      2.994  2.571  2.252  2.005                         1.806
   23                          0.508  3.729  3.581  3.384  3.203      2.993  2.571  2.253  2.005                         1.806
   24                                 3.730  3.582  3.383  3.204      2.994  2.570  2.252  2.005                         1.806
   25                                 0.466  3.581  3.384  3.203      2.993  2.571  2.253  2.004                         1.806
   26                                        0.448  3.383  3.204      2.994  2.570  2.252  2.005                         1.806
   27                                               2.115  3.203      2.993  2.571  2.253  2.004                         1.806
   28                                                      3.204      2.994  2.570  2.252  2.005                         1.805
   29                                                      0.400      2.993  2.571  2.253  2.004                         1.806
   30                                                                 2.994  2.570  2.252  2.005                         1.805
   31                                                                 0.374  2.571  2.253  2.004                         1.806
   32                                                                        2.570  2.252  2.005                         1.805
   33                                                                        2.571  2.253  2.004                         1.806
   34                                                                        2.570  2.252  2.005                         1.805
   35                                                                        2.571  2.253  2.004                         1.806
   36                                                                        0.321  2.252  2.005                         1.805
   37                                                                               2.253  2.004                         1.806
   38                                                                               2.252  2.005                         1.805
   39                                                                               2.253  2.004                         1.806
   40                                                                               2.252  2.005                         1.805
   41                                                                               0.282  2.004                         1.806
   42                                                                                      2.005                         1.805
   43                                                                                      2.004                         1.806
   44                                                                                      2.005                         1.805
   45                                                                                      2.004                         1.806
   46                                                                                      0.251                         1.805
   47                                                                                                                    1.806
   48                                                                                                                    1.805
   49                                                                                                                    1.806
   50                                                                                                                    1.805
   51                                                                                                                    0.226

86                                                                                  Publication 946 (2023)

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-16. 150% Declining Balance Method
            Mid-Quarter Convention
            Property Placed in Service in Second Quarter
                                             Recovery periods in years
Year
    2.5     3           3.5    4      5      6      6.5    7          7.5    8      8.5    9                             9.5
1   37.50%  31.25%      26.79% 23.44% 18.75% 15.63% 14.42% 13.39%     12.50% 11.72% 11.03% 10.42%                        9.87%
2   37.50   34.38       31.38  28.71  24.38  21.09  19.75  18.56      17.50  16.55  15.70  14.93                         14.23
3   25.00   25.00       22.31  20.15  17.06  15.82  15.19  14.58      14.00  13.45  12.93  12.44                         11.98
4           9.37        19.52  20.15  16.76  14.06  13.07  12.22      11.49  10.93  10.65  10.37                         10.09
5                              7.55   16.76  14.06  13.07  12.22      11.49  10.82  10.19  9.64                          9.16
6                                     6.29   14.07  13.07  12.22      11.49  10.82  10.19  9.65                          9.16
7                                            5.27   11.43  12.23      11.48  10.83  10.19  9.64                          9.16
8                                                          4.58       10.05  10.82  10.20  9.65                          9.17
9                                                                            4.06   8.92   9.64                          9.16
10                                                                                         3.62                          8.02

Table A-16. ( Continued)
                                             Recovery periods in years
Year
    10      10.5        11     11.5   12     12.5   13     13.5       14     15     16     16.5                          17
1   9.38%   8.93%       8.52%  8.15%  7.81%  7.50%  7.21%  6.94%      6.70%  6.25%  5.86%  5.68%                         5.51%
2   13.59   13.01       12.47  11.98  11.52  11.10  10.71  10.34      10.00  9.38   8.83   8.57                          8.34
3   11.55   11.15       10.77  10.42  10.08  9.77   9.47   9.19       8.92   8.44   8.00   7.80                          7.60
4   9.82    9.56        9.31   9.06   8.82   8.60   8.38   8.17       7.97   7.59   7.25   7.09                          6.93
5   8.73    8.34        8.04   7.88   7.72   7.56   7.41   7.26       7.12   6.83   6.57   6.44                          6.32
6   8.73    8.34        7.98   7.64   7.33   7.04   6.78   6.55       6.35   6.15   5.95   5.86                          5.76
7   8.73    8.34        7.98   7.64   7.33   7.04   6.79   6.55       6.32   5.91   5.55   5.38                          5.25
8   8.73    8.34        7.98   7.64   7.33   7.05   6.78   6.55       6.32   5.90   5.55   5.39                          5.23
9   8.73    8.34        7.99   7.64   7.33   7.04   6.79   6.54       6.32   5.91   5.55   5.38                          5.23
10  8.73    8.35        7.98   7.63   7.33   7.05   6.78   6.55       6.32   5.90   5.54   5.39                          5.23
11  3.28    7.30        7.99   7.64   7.33   7.04   6.79   6.54       6.32   5.91   5.55   5.38                          5.23
12                      2.99   6.68   7.32   7.05   6.78   6.55       6.32   5.90   5.54   5.39                          5.23
13                                    2.75   6.16   6.79   6.54       6.32   5.91   5.55   5.38                          5.24
14                                                  2.54   5.73       6.33   5.90   5.54   5.39                          5.23
15                                                                    2.37   5.91   5.55   5.38                          5.24
16                                                                           2.21   5.54   5.39                          5.23
17                                                                                  2.08   4.71                          5.24
18                                                                                                                       1.96

Publication 946 (2023)                                                                                                        87

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-16. ( Continued)
                                             Recovery periods in years
Year
      18    19          20     22     24     25     26.5   28         30     35     40     45                            50
   1  5.21% 4.93%       4.688% 4.261% 3.906% 3.750% 3.538% 3.348%     3.125% 2.679% 2.344% 2.083%                        1.875%
   2  7.90  7.51        7.148  6.528  6.006  5.775  5.460  5.178      4.844  4.171  3.662  3.264                         2.944
   3  7.24  6.91        6.612  6.083  5.631  5.429  5.151  4.900      4.602  3.992  3.525  3.155                         2.855
   4  6.64  6.37        6.116  5.668  5.279  5.103  4.859  4.638      4.371  3.821  3.393  3.050                         2.770
   5  6.08  5.86        5.658  5.281  4.949  4.797  4.584  4.389      4.153  3.657  3.265  2.948                         2.687
   6  5.58  5.40        5.233  4.921  4.639  4.509  4.325  4.154      3.945  3.501  3.143  2.850                         2.606
   7  5.11  4.98        4.841  4.586  4.349  4.238  4.080  3.932      3.748  3.351  3.025  2.755                         2.528
   8  4.94  4.69        4.478  4.273  4.078  3.984  3.849  3.721      3.561  3.207  2.912  2.663                         2.452
   9  4.94  4.69        4.463  4.063  3.823  3.745  3.631  3.522      3.383  3.069  2.802  2.574                         2.378
   10 4.95  4.69        4.463  4.063  3.729  3.583  3.426  3.333      3.213  2.938  2.697  2.489                         2.307
   11 4.94  4.69        4.463  4.062  3.729  3.583  3.384  3.205      3.053  2.812  2.596  2.406                         2.238
   12 4.95  4.69        4.463  4.063  3.729  3.583  3.383  3.205      2.994  2.692  2.499  2.325                         2.171
   13 4.94  4.69        4.463  4.062  3.730  3.583  3.384  3.205      2.994  2.576  2.405  2.248                         2.106
   14 4.95  4.69        4.463  4.063  3.729  3.583  3.383  3.205      2.994  2.571  2.315  2.173                         2.042
   15 4.94  4.69        4.462  4.062  3.730  3.583  3.384  3.205      2.994  2.571  2.253  2.101                         1.981
   16 4.95  4.69        4.463  4.063  3.729  3.583  3.383  3.204      2.994  2.571  2.253  2.031                         1.922
   17 4.94  4.69        4.462  4.062  3.730  3.583  3.384  3.205      2.994  2.571  2.253  2.005                         1.864
   18 4.95  4.69        4.463  4.063  3.729  3.583  3.383  3.204      2.993  2.571  2.253  2.005                         1.808
   19 1.85  4.69        4.462  4.062  3.730  3.583  3.384  3.205      2.994  2.571  2.253  2.005                         1.806
   20       1.76        4.463  4.063  3.729  3.583  3.383  3.204      2.993  2.571  2.253  2.005                         1.806
   21                   1.673  4.062  3.730  3.583  3.384  3.205      2.994  2.572  2.253  2.005                         1.806
   22                          4.063  3.729  3.583  3.383  3.204      2.993  2.571  2.253  2.005                         1.806
   23                          1.523  3.730  3.583  3.384  3.205      2.994  2.572  2.253  2.004                         1.806
   24                                 3.729  3.582  3.383  3.204      2.993  2.571  2.253  2.005                         1.806
   25                                 1.399  3.583  3.384  3.205      2.994  2.572  2.253  2.004                         1.806
   26                                        1.343  3.383  3.204      2.993  2.571  2.253  2.005                         1.806
   27                                               2.961  3.205      2.994  2.572  2.253  2.004                         1.806
   28                                                      3.204      2.993  2.571  2.253  2.005                         1.806
   29                                                      1.202      2.994  2.572  2.253  2.004                         1.806
   30                                                                 2.993  2.571  2.252  2.005                         1.806
   31                                                                 1.123  2.572  2.253  2.004                         1.806
   32                                                                        2.571  2.252  2.005                         1.806
   33                                                                        2.572  2.253  2.004                         1.806
   34                                                                        2.571  2.252  2.005                         1.806
   35                                                                        2.572  2.253  2.004                         1.806
   36                                                                        0.964  2.252  2.005                         1.806
   37                                                                               2.253  2.004                         1.806
   38                                                                               2.252  2.005                         1.806
   39                                                                               2.253  2.004                         1.806
   40                                                                               2.252  2.005                         1.806
   41                                                                               0.845  2.004                         1.806
   42                                                                                      2.005                         1.806
   43                                                                                      2.004                         1.806
   44                                                                                      2.005                         1.806
   45                                                                                      2.004                         1.805
   46                                                                                      0.752                         1.806
   47                                                                                                                    1.805
   48                                                                                                                    1.806
   49                                                                                                                    1.805
   50                                                                                                                    1.806
   51                                                                                                                    0.677

88                                                                                  Publication 946 (2023)

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-17. 150% Declining Balance Method
            Mid-Quarter Convention
            Property Placed in Service in Third Quarter
                                             Recovery periods in years
Year
    2.5     3           3.5    4      5      6         6.5   7        7.5   8     8.5   9                                9.5
1   22.50%  18.75%      16.07% 14.06% 11.25% 9.38%     8.65% 8.04%    7.50% 7.03% 6.62% 6.25%                            5.92%
2   46.50   40.63       35.97  32.23  26.63  22.66 21.08     19.71    18.50 17.43 16.48 15.63                            14.85
3   27.56   25.00       22.57  20.46  18.64  16.99 16.22     15.48    14.80 14.16 13.57 13.02                            12.51
4   3.44    15.62       22.57  20.46  16.56  14.06 13.10     12.27    11.84 11.51 11.18 10.85                            10.53
5                       2.82   12.79  16.57  14.06 13.10     12.28    11.48 10.78 10.18 9.64                             9.17
6                                     10.35  14.06 13.11     12.27    11.48 10.78 10.17 9.65                             9.17
7                                            8.79  13.10     12.28    11.48 10.78 10.18 9.64                             9.18
8                                                      1.64  7.67     11.48 10.79 10.17 9.65                             9.17
9                                                                     1.44  6.74  10.18 9.64                             9.18
10                                                                                1.27  6.03                             9.17
11                                                                                                                       1.15

Table A-17. ( Continued)
                                             Recovery periods in years
Year
    10      10.5        11     11.5   12     12.5      13    13.5     14    15    16    16.5                             17
1   5.63%   5.36%       5.11%  4.89%  4.69%  4.50%     4.33% 4.17%    4.02% 3.75% 3.52% 3.41%                            3.31%
2   14.16   13.52       12.94  12.41  11.91  11.46 11.04     10.65    10.28 9.63  9.05  8.78                             8.53
3   12.03   11.59       11.18  10.79  10.43  10.08     9.77  9.46     9.18  8.66  8.20  7.98                             7.78
4   10.23   9.93        9.65   9.38   9.12   8.88      8.64  8.41     8.20  7.80  7.43  7.26                             7.09
5   8.75    8.51        8.33   8.16   7.98   7.81      7.64  7.48     7.32  7.02  6.73  6.60                             6.47
6   8.75    8.34        7.97   7.63   7.33   7.05      6.79  6.65     6.54  6.31  6.10  6.00                             5.90
7   8.75    8.34        7.97   7.63   7.33   7.05      6.79  6.55     6.31  5.90  5.55  5.45                             5.38
8   8.74    8.34        7.97   7.63   7.33   7.05      6.79  6.54     6.31  5.90  5.55  5.38                             5.23
9   8.75    8.34        7.97   7.63   7.33   7.05      6.79  6.55     6.32  5.91  5.55  5.39                             5.23
10  8.74    8.34        7.97   7.63   7.32   7.05      6.79  6.54     6.31  5.90  5.55  5.38                             5.23
11  5.47    8.35        7.96   7.63   7.33   7.05      6.79  6.55     6.32  5.91  5.55  5.39                             5.23
12          1.04        4.98   7.64   7.32   7.04      6.80  6.54     6.31  5.90  5.55  5.38                             5.23
13                             0.95   4.58   7.05      6.79  6.55     6.32  5.91  5.55  5.39                             5.22
14                                           0.88      4.25  6.54     6.31  5.90  5.55  5.38                             5.23
15                                                           0.82     3.95  5.91  5.55  5.39                             5.22
16                                                                          3.69  5.55  5.38                             5.23
17                                                                                3.47  5.39                             5.22
18                                                                                      0.67                             3.27

Publication 946 (2023)                                                                                                        89

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-17. ( Continued)
                                             Recovery periods in years
   Year
       18    19         20     22     24     25     26.5   28         30     35     40     45                            50
   1   3.13% 2.96%      2.813% 2.557% 2.344% 2.250% 2.123% 2.009%     1.875% 1.607% 1.406% 1.250%                        1.125%
   2   8.07  7.66       7.289  6.644  6.104  5.865  5.540  5.250      4.906  4.217  3.697  3.292                         2.966
   3   7.40  7.06       6.742  6.191  5.722  5.513  5.227  4.968      4.661  4.036  3.559  3.182                         2.877
   4   6.78  6.50       6.237  5.769  5.364  5.182  4.931  4.702      4.428  3.863  3.425  3.076                         2.791
   5   6.22  5.99       5.769  5.375  5.029  4.871  4.652  4.450      4.207  3.698  3.297  2.973                         2.707
   6   5.70  5.51       5.336  5.009  4.715  4.579  4.388  4.212      3.996  3.539  3.173  2.874                         2.626
   7   5.23  5.08       4.936  4.667  4.420  4.304  4.140  3.986      3.796  3.387  3.054  2.778                         2.547
   8   4.94  4.69       4.566  4.349  4.144  4.046  3.906  3.773      3.607  3.242  2.940  2.686                         2.471
   9   4.94  4.69       4.460  4.064  3.885  3.803  3.685  3.571      3.426  3.103  2.829  2.596                         2.397
   10  4.94  4.69       4.460  4.064  3.729  3.584  3.476  3.379      3.255  2.970  2.723  2.510                         2.325
   11  4.94  4.69       4.460  4.064  3.730  3.584  3.383  3.205      3.092  2.843  2.621  2.426                         2.255
   12  4.95  4.69       4.460  4.064  3.729  3.584  3.383  3.205      2.994  2.721  2.523  2.345                         2.187
   13  4.94  4.69       4.461  4.064  3.730  3.584  3.383  3.205      2.994  2.605  2.428  2.267                         2.122
   14  4.95  4.69       4.460  4.064  3.729  3.584  3.383  3.205      2.994  2.571  2.337  2.192                         2.058
   15  4.94  4.70       4.461  4.064  3.730  3.584  3.383  3.205      2.994  2.571  2.253  2.118                         1.996
   16  4.95  4.69       4.460  4.064  3.729  3.584  3.383  3.206      2.994  2.571  2.253  2.048                         1.937
   17  4.94  4.70       4.461  4.064  3.730  3.584  3.383  3.205      2.994  2.571  2.253  2.005                         1.878
   18  4.95  4.69       4.460  4.065  3.729  3.584  3.383  3.206      2.994  2.571  2.253  2.005                         1.822
   19  3.09  4.70       4.461  4.064  3.730  3.584  3.383  3.205      2.994  2.571  2.253  2.005                         1.806
   20        2.93       4.460  4.065  3.729  3.584  3.383  3.206      2.993  2.571  2.253  2.005                         1.806
   21                   2.788  4.064  3.730  3.585  3.383  3.205      2.994  2.571  2.253  2.005                         1.806
   22                          4.065  3.729  3.584  3.383  3.206      2.993  2.571  2.253  2.005                         1.806
   23                          2.540  3.730  3.585  3.383  3.205      2.994  2.571  2.253  2.005                         1.806
   24                                 3.729  3.584  3.383  3.206      2.993  2.571  2.253  2.005                         1.806
   25                                 2.331  3.585  3.382  3.205      2.994  2.571  2.253  2.004                         1.806
   26                                        2.240  3.383  3.206      2.993  2.571  2.253  2.005                         1.806
   27                                               3.382  3.205      2.994  2.571  2.253  2.004                         1.806
   28                                               0.423  3.206      2.993  2.571  2.253  2.005                         1.806
   29                                                      2.003      2.994  2.571  2.253  2.004                         1.806
   30                                                                 2.993  2.571  2.253  2.005                         1.806
   31                                                                 1.871  2.571  2.253  2.004                         1.806
   32                                                                        2.571  2.253  2.005                         1.806
   33                                                                        2.571  2.253  2.004                         1.806
   34                                                                        2.571  2.253  2.005                         1.806
   35                                                                        2.571  2.253  2.004                         1.806
   36                                                                        1.607  2.253  2.005                         1.806
   37                                                                               2.253  2.004                         1.805
   38                                                                               2.254  2.005                         1.806
   39                                                                               2.253  2.004                         1.805
   40                                                                               2.254  2.005                         1.806
   41                                                                               1.408  2.004                         1.805
   42                                                                                      2.005                         1.806
   43                                                                                      2.004                         1.805
   44                                                                                      2.005                         1.806
   45                                                                                      2.004                         1.805
   46                                                                                      1.253                         1.806
   47                                                                                                                    1.805
   48                                                                                                                    1.806
   49                                                                                                                    1.805
   50                                                                                                                    1.806
   51                                                                                                                    1.128

90                                                                                  Publication 946 (2023)

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-18. 150% Declining Balance Method
            Mid-Quarter Convention
            Property Placed in Service in Fourth Quarter
                                          Recovery periods in years
Year
    2.5        3        3.5   4     5     6     6.5        7       7.5   8     8.5   9                                   9.5
1   7.50%   6.25%       5.36% 4.69% 3.75% 3.13% 2.88%      2.68%   2.50% 2.34% 2.21% 2.08%                               1.97%
2   55.50   46.88       40.56 35.74 28.88 24.22 22.41      20.85   19.50 18.31 17.26 16.32                               15.48
3   26.91   25.00       23.18 22.34 20.21 18.16 17.24      16.39   15.60 14.88 14.21 13.60                               13.03
4   10.09   21.87       22.47 19.86 16.40 14.06 13.26      12.87   12.48 12.09 11.70 11.33                               10.98
5                       8.43  17.37 16.41 14.06 13.10      12.18   11.41 10.74 10.16 9.65                                9.24
6                                   14.35 14.06 13.10      12.18   11.41 10.75 10.16 9.65                                9.17
7                                         12.31 13.10      12.19   11.41 10.74 10.16 9.64                                9.17
8                                               4.91       10.66   11.41 10.75 10.16 9.65                                9.17
9                                                                  4.28  9.40  10.17 9.64                                9.17
10                                                                             3.81  8.44                                9.18
11                                                                                                                       3.44

Table A-18. ( Continued)
                                          Recovery periods in years
Year
    10      10.5        11    11.5  12    12.5          13 13.5    14    15    16    16.5                                17
1   1.88%   1.79%       1.70% 1.63% 1.56% 1.50% 1.44%      1.39%   1.34% 1.25% 1.17% 1.14%                               1.10%
2   14.72   14.03       13.40 12.83 12.31 11.82 11.37      10.96   10.57 9.88  9.27  8.99                                8.73
3   12.51   12.03       11.58 11.16 10.77 10.40 10.06      9.74    9.44  8.89  8.40  8.17                                7.96
4   10.63   10.31       10.00 9.70  9.42  9.15  8.90       8.66    8.43  8.00  7.61  7.43                                7.25
5   9.04    8.83        8.63  8.44  8.24  8.06  7.87       7.69    7.52  7.20  6.90  6.75                                6.61
6   8.72    8.32        7.95  7.63  7.33  7.09  6.96       6.84    6.72  6.48  6.25  6.14                                6.03
7   8.72    8.31        7.96  7.63  7.33  7.05  6.78       6.53    6.31  5.90  5.66  5.58                                5.50
8   8.72    8.32        7.95  7.62  7.33  7.05  6.78       6.53    6.31  5.90  5.54  5.38                                5.22
9   8.72    8.31        7.96  7.63  7.33  7.05  6.78       6.53    6.31  5.90  5.54  5.38                                5.23
10  8.71    8.32        7.95  7.62  7.32  7.05  6.78       6.54    6.31  5.91  5.54  5.38                                5.22
11  7.63    8.31        7.96  7.63  7.33  7.05  6.78       6.53    6.31  5.90  5.54  5.38                                5.23
12          3.12        6.96  7.62  7.32  7.04  6.78       6.54    6.30  5.91  5.55  5.38                                5.22
13                            2.86  6.41  7.05  6.78       6.53    6.31  5.90  5.54  5.38                                5.23
14                                        2.64  5.94       6.54    6.30  5.91  5.55  5.38                                5.22
15                                                         2.45    5.52  5.90  5.54  5.37                                5.23
16                                                                       5.17  5.55  5.38                                5.22
17                                                                             4.85  5.37                                5.23
18                                                                                   2.02                                4.57

Publication 946 (2023)                                                                                                        91

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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A-18. ( Continued)
                                             Recovery periods in years
   Year
       18    19         20     22     24     25     26.5   28         30     35     40     45                            50
   1   1.04% 0.99%      0.938% 0.852% 0.781% 0.750% 0.708% 0.670%     0.625% 0.536% 0.469% 0.417%                        0.375%
   2   8.25  7.82       7.430  6.760  6.201  5.955  5.620  5.321      4.969  4.263  3.732  3.319                         2.989
   3   7.56  7.20       6.872  6.299  5.814  5.598  5.302  5.036      4.720  4.080  3.592  3.209                         2.899
   4   6.93  6.63       6.357  5.870  5.450  5.262  5.002  4.766      4.484  3.905  3.458  3.102                         2.812
   5   6.35  6.11       5.880  5.469  5.110  4.946  4.719  4.511      4.260  3.738  3.328  2.998                         2.728
   6   5.82  5.63       5.439  5.097  4.790  4.649  4.452  4.269      4.047  3.578  3.203  2.898                         2.646
   7   5.34  5.18       5.031  4.749  4.491  4.370  4.200  4.041      3.845  3.424  3.083  2.802                         2.567
   8   4.94  4.77       4.654  4.425  4.210  4.108  3.962  3.824      3.653  3.278  2.968  2.708                         2.490
   9   4.94  4.69       4.458  4.124  3.947  3.862  3.738  3.619      3.470  3.137  2.856  2.618                         2.415
   10  4.94  4.69       4.458  4.062  3.730  3.630  3.526  3.426      3.296  3.003  2.749  2.531                         2.342
   11  4.95  4.69       4.458  4.062  3.729  3.582  3.383  3.242      3.132  2.874  2.646  2.447                         2.272
   12  4.94  4.69       4.458  4.062  3.730  3.582  3.382  3.204      2.994  2.751  2.547  2.365                         2.204
   13  4.95  4.69       4.458  4.062  3.729  3.582  3.383  3.204      2.994  2.633  2.451  2.286                         2.138
   14  4.94  4.69       4.458  4.061  3.730  3.582  3.382  3.204      2.994  2.570  2.359  2.210                         2.074
   15  4.95  4.69       4.458  4.062  3.729  3.582  3.383  3.204      2.994  2.571  2.271  2.136                         2.011
   16  4.94  4.69       4.458  4.061  3.730  3.583  3.382  3.204      2.994  2.570  2.253  2.065                         1.951
   17  4.95  4.68       4.458  4.062  3.729  3.582  3.383  3.204      2.994  2.571  2.253  2.005                         1.893
   18  4.94  4.69       4.459  4.061  3.730  3.583  3.382  3.204      2.994  2.570  2.253  2.005                         1.836
   19  4.33  4.68       4.458  4.062  3.729  3.582  3.383  3.204      2.993  2.571  2.253  2.005                         1.806
   20        4.10       4.459  4.061  3.730  3.583  3.382  3.204      2.994  2.570  2.253  2.005                         1.806
   21                   3.901  4.062  3.729  3.582  3.383  3.204      2.993  2.571  2.253  2.005                         1.806
   22                          4.061  3.730  3.583  3.382  3.204      2.994  2.570  2.253  2.005                         1.806
   23                          3.554  3.729  3.582  3.383  3.205      2.993  2.571  2.253  2.005                         1.806
   24                                 3.730  3.583  3.382  3.204      2.994  2.570  2.253  2.005                         1.805
   25                                 3.263  3.582  3.383  3.205      2.993  2.571  2.253  2.005                         1.806
   26                                        3.135  3.382  3.204      2.994  2.570  2.252  2.005                         1.805
   27                                               3.383  3.205      2.993  2.571  2.253  2.004                         1.806
   28                                               1.268  3.204      2.994  2.570  2.252  2.005                         1.805
   29                                                      2.804      2.993  2.571  2.253  2.004                         1.806
   30                                                                 2.994  2.570  2.252  2.005                         1.805
   31                                                                 2.619  2.571  2.253  2.004                         1.806
   32                                                                        2.570  2.252  2.005                         1.805
   33                                                                        2.571  2.253  2.004                         1.806
   34                                                                        2.570  2.252  2.005                         1.805
   35                                                                        2.571  2.253  2.004                         1.806
   36                                                                        2.249  2.252  2.005                         1.805
   37                                                                               2.253  2.004                         1.806
   38                                                                               2.252  2.005                         1.805
   39                                                                               2.253  2.004                         1.806
   40                                                                               2.252  2.005                         1.805
   41                                                                               1.971  2.004                         1.806
   42                                                                                      2.005                         1.805
   43                                                                                      2.004                         1.806
   44                                                                                      2.005                         1.805
   45                                                                                      2.004                         1.806
   46                                                                                      1.754                         1.805
   47                                                                                                                    1.806
   48                                                                                                                    1.805
   49                                                                                                                    1.806
   50                                                                                                                    1.805
   51                                                                                                                    1.580

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                        RATES TO FIGURE INCLUSION AMOUNTS
                                            FOR
                              LEASED LISTED PROPERTY

Table A-19.                          Amount A Percentages
                                First Tax Year During Lease in Which
Recovery Period                      Business Use is 50% or Less
of Property
Under ADS          1    2     3      4      5      6      7         8      9      10     11     12 & Later
Less than 7 years  2.1% –7.2% –19.8% –20.1% –12.4% –12.4% –12.4%    –12.4% –12.4% –12.4% –12.4% –12.4%
7 to 10 years      3.9% –3.8% –17.7% –25.1% –27.8% –27.2% –27.1%    –27.6% –23.7% –14.7% –14.7% –14.7%
More than 10 years 6.6% –1.6% –16.9% –25.6% –29.9% –31.1% –32.8%    –35.1% –33.3% –26.7% –19.7% –12.2%

Table A-20.                          Amount B Percentages
                                First Tax Year During Lease in Which
Recovery Period                      Business Use is 50% or Less
of Property
Under ADS          1    2     3      4      5      6      7         8      9      10     11     12 & Later
Less than 7 years  0.0% 10.0% 22.0%  21.2%  12.7%  12.7%  12.7%     12.7%  12.7%  12.7%  12.7%                           12.7%
7 to 10 years      0.0% 9.3%  23.8%  31.3%  33.8%  32.7%  31.6%     30.5%  25.0%  15.0%  15.0%                           15.0%
More than 10 years 0.0% 10.1% 26.3%  35.4%  39.6%  40.2%  40.8%     41.4%  37.5%  29.2%  20.8%                           12.5%

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Qualiﬁed Indian Reservation Property Tables 
for Property Placed in Service Before 2022

Table A-21. 2-Year Qualiﬁed Indian Reservation Property
            Half-Year and Mid-Quarter Conventions

               Half-Year
   Year                  Q-1                           Q-2     Q-3    Q-4
               Convention

   1           50.00%    87.50%                  62.50%        37.50% 12.50%

   2           50.00     12.50                   37.50         62.50  87.50

Table A-22. 4-Year Qualiﬁed Indian Reservation Property
            Half-Year and Mid-Quarter Conventions

               Half-Year
   Year                  Q-1                           Q-2     Q-3    Q-4
               Convention

   1           25.00%    43.75%                  31.25%        18.75% 6.25%

   2           37.50     28.13                   34.37         40.63  46.87

   3           18.75     14.06                   17.19         20.31  23.44

   4           12.50     12.50                   12.50         12.50  12.50

   5           6.25      1.56                          4.69    7.81   10.94

Table A-23. 6-Year Qualiﬁed Indian Reservation Property
            Half-Year and Mid-Quarter Conventions

               Half-Year
   Year                  Q-1                           Q-2     Q-3    Q-4
               Convention

   1           16.67%    29.17%                  20.83%        12.50% 4.17%

   2           27.78     23.61                   26.39         29.17  31.94

   3           18.52     15.74                   17.59         19.44  21.30

   4           12.35     10.49                   11.73         12.96  14.20

   5           9.87      9.88                          9.88    9.88   9.87

   6           9.87      9.88                          9.88    9.88   9.88

   7           4.94      1.23                          3.70    6.17   8.64

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Table  A-24.           Qualiﬁed Nonresidential Real Indian Reservation Property
                       Mid-Month Convention
                       Straight Line—22 Years

                                             Month property placed in service
Year
    1                  2      3      4       5      6      789                        10     11     12
1   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              4.545  4.545  4.545   4.545  4.545  4.545  4.545        4.545  4.545  4.545  4.545
4   4.546              4.546  4.546  4.545   4.545  4.546  4.546  4.545        4.545  4.546  4.546  4.546
5   4.545              4.545  4.545  4.546   4.546  4.545  4.545  4.546        4.546  4.545  4.545  4.545
6   4.546              4.546  4.546  4.545   4.545  4.546  4.546  4.545        4.545  4.546  4.546  4.546
7   4.545              4.545  4.545  4.546   4.546  4.545  4.545  4.546        4.546  4.545  4.545  4.545
8   4.546              4.546  4.546  4.545   4.545  4.546  4.546  4.545        4.545  4.546  4.546  4.546
9   4.545              4.545  4.545  4.546   4.546  4.545  4.545  4.546        4.546  4.545  4.545  4.545
10  4.546              4.546  4.546  4.545   4.545  4.546  4.546  4.545        4.545  4.546  4.546  4.546
11  4.545              4.545  4.545  4.546   4.546  4.545  4.545  4.546        4.546  4.545  4.545  4.545
12  4.546              4.546  4.546  4.545   4.545  4.546  4.546  4.545        4.545  4.546  4.546  4.546
13  4.545              4.545  4.545  4.546   4.546  4.545  4.545  4.546        4.546  4.545  4.545  4.545
14  4.546              4.546  4.546  4.545   4.545  4.546  4.546  4.545        4.545  4.546  4.546  4.546
15  4.545              4.545  4.545  4.546   4.546  4.545  4.545  4.546        4.546  4.545  4.545  4.545
16  4.546              4.546  4.546  4.545   4.545  4.546  4.546  4.545        4.545  4.546  4.546  4.546
17  4.545              4.545  4.545  4.546   4.546  4.545  4.545  4.546        4.546  4.545  4.545  4.545
18  4.546              4.546  4.546  4.545   4.545  4.546  4.546  4.545        4.545  4.546  4.546  4.546
19  4.545              4.545  4.545  4.546   4.546  4.545  4.545  4.546        4.546  4.545  4.545  4.545
20  4.546              4.546  4.546  4.545   4.545  4.546  4.546  4.545        4.545  4.546  4.546  4.546
21  4.545              4.545  4.545  4.546   4.546  4.545  4.545  4.546        4.546  4.545  4.545  4.545
22  4.546              4.546  4.546  4.545   4.545  4.546  4.546  4.545        4.545  4.546  4.546  4.546
23  0.189%             0.568% 0.947% 1.326%  1.705% 2.083% 2.462% 2.841%       3.220% 3.598% 3.977% 4.356%

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Appendix B — Table of Class Lives and Recovery Periods

The Table of Class Lives and Recovery  the activity in which the property is be- recovery period is 13 years. If you only 
Periods has two sections. The first sec- ing  used  and  use  the  recovery  period  looked  at  Table  B-1,  you  would  select 
tion, Specific Depreciable Assets Used           shown  in  the  appropriate  column  fol- asset class 00.3,    Land Improvements, 
in  All  Business  Activities,  Except  as       lowing the description.                       and  incorrectly  use  a  recovery  period 
Noted, generally lists assets used in all                                                      of  15  years  for  GDS  or  20  years  for 
business activities. It is shown as Table        Property  not  in  either  table. If  the     ADS.
B-1.  The  second  section, Depreciable          activity or the property is not included 
Assets Used in the Following Activities,         in either table, check the end of Table       Example  2.     You  produce  rubber 
describes  assets  used  only  in  certain       B-2 to find Certain Property for Which        products.  During  the  year,  you  made 
activities. It is shown as Table B-2.            Recovery Periods Assigned.   This prop- substantial  improvements  to  the  land 
                                                 erty generally has a recovery period of  on which your rubber plant is located. 
                                                 7 years for GDS or 12 years for ADS.  You check Table B-1 and find land im-
How To Use the Tables                            See Which Property Class Applies Un-          provements  under  asset  class  00.3. 
You will need to look at both Table B-1          der GDS? and Which Recovery Period            You then check Table B-2 and find your 
and Table B-2 to find the correct recov-         Applies? in chapter 4 for the class lives  activity, producing rubber products, un-
ery period. Generally, if the property is        or  the  recovery  periods  for  GDS  and  der  asset  class  30.1, Manufacture  of 
listed in Table B-1, you use the recov-          ADS for the following.                        Rubber  Products.  Reading  the  head-
ery  period  shown  in  that  table.  How-       • Residential rental property and             ings  and  descriptions  under  asset 
                                                                                               class 30.1, you find that it does not in-
ever, if the property is specifically listed       nonresidential real property (also 
                                                                                               clude  land  improvements.  Therefore, 
in Table B-2 under the type of activity in         see Appendix A, Chart 2).
which it is used, you use the recovery                                                         you use the recovery period under as-
period  listed  under  the  activity  in  that   • Qualified rent-to-own property.             set class 00.3. The land improvements 
table.  Use  the  tables  in  the  order         • A motorsport entertainment com-             have a 20-year class life and a 15-year 
shown below to determine the recovery              plex.                                       recovery period for GDS. If you elect to 
                                                                                               use  ADS,  the  recovery  period  is  20 
                                                 •
period of your depreciable property.               Any retail motor fuels outlet.              years.
Table B-1. Check Table B-1 for a de-             • Initial clearing and grading land im-
scription of the property. If it is descri-        provements for gas utility property         Example 3.      You own a retail cloth-
bed in Table B-1, also check Table B-2             and electric utility transmission and       ing  store.  During  the  year,  you  pur-
to find the activity in which the property         distribution plants.                        chased a desk and a cash register for 
is  being  used.  If  the  activity  is  descri-                                               use in your business. You check Table 
                                                 • Any water utility property.
bed in Table B-2, read the text (if any)                                                       B-1  and  find  office  furniture  under  as-
under the title to determine if the prop-        • Certain electric transmission prop-         set class 00.11. Cash registers are not 
erty  is  specifically  included  in  that  as-    erty used in the transmission at 69         listed in any of the asset classes in Ta-
set class. If it is, use the recovery pe-          or more kilovolts of electricity for        ble B-1. You then check Table B-2 and 
riod  shown  in  the  appropriate  column          sale and placed in service after            find your activity, retail store, under as-
of Table B-2 following the description of          April 11, 2005.                             set class 57.0, Distributive Trades and 
                                                                                               Services, which includes assets used 
the activity. If the activity is not descri-     • Natural gas gathering and distribu-         in  wholesale  and  retail  trade.  This 
bed in Table B-2 or if the activity is de-         tion lines placed in service after          asset class does not specifically list of-
scribed  but  the  property  either  is  not       April 11, 2005.                             fice  furniture  or  a  cash  register.  You 
specifically included in or is specifically 
                                                                                               look  back  at  Table  B-1  and  use  asset 
excluded  from  that  asset  class,  then         Example 1.  You are a paper manu-
use  the  recovery  period  shown  in  the  facturer.  During  the  year,  you  made           class 00.11 for the desk. The desk has 
appropriate  column  following  the  de- substantial  improvements  to  the  land              a 10-year class life and a 7-year recov-
                                                                                               ery period for GDS. If you elect to use 
scription of the property in Table B-1.          on  which  your  paper  plant  is  located. 
                                                                                               ADS,  the  recovery  period  is  10  years. 
                                                 You check Table B-1 and find land im-
                                                                                               For  the  cash  register,  you  use  asset 
Tax-exempt use property subject to               provements  under  asset  class  00.3. 
                                                                                               class 57.0 because cash registers are 
a lease.  The recovery period for ADS            You then check Table B-2 and find your 
                                                                                               not listed in Table B-1 but it is an asset 
cannot be less than 125% of the lease            activity,  paper  manufacturing,  under 
                                                                                               used in your retail business. The cash 
term  for  any  property  leased  under  a       asset  class  26.1, Manufacture  of  Pulp 
                                                                                               register  has  a  9-year  class  life  and  a 
leasing  arrangement  to  a  tax-exempt          and Paper. You use the recovery period 
                                                                                               5-year recovery period for GDS. If you 
organization, governmental unit, or for-         under this asset class because it spe-
                                                                                               elect  to  use  the  ADS  method,  the  re-
eign person or entity (other than a part-        cifically  includes  land  improvements. 
                                                                                               covery period is 9 years.
nership).                                        The land improvements have a 13-year 
                                                 class life and a 7-year recovery period 
Table B-2. If the property is not listed 
                                                 for  GDS.  If  you  elect  to  use  ADS,  the 
in  Table  B-1,  check  Table  B-2  to  find 

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Table B-1. Table of Class Lives and Recovery Periods
                                                                                                                                                                       Recovery Periods
                                                                                                                                                                       (in years)
Asset                                                                                                                                                       Class Life GDS
class  Description of assets included                                                                                                                       (in years) (MACRS) ADS
SPECIFIC DEPRECIABLE ASSETS USED IN ALL BUSINESS ACTIVITIES, EXCEPT AS NOTED:
00.11  Ofﬁce Furniture, Fixtures, and Equipment:
       Includes furniture and xtures that are not a structural component of a building. Includes such                                                      10         7       10
       assets as desks, les, 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                                                              6          5         5
       transactions and the maintenance of business records, their retrieval and analysis.
       Information systems are dened 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 les, disc packs, visual image projector tubes, card
       sorters, plotters, and collators. Peripheral equipment may be used online or ofine.
       Does not incude equipment that is an integral part of other capital equipment that is included
       in other classes of economic activity, that is, 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                                                                 6          5         6
       duplicating equipment.
00.21  Airplanes (airframes and engines), except those used in commercial or contract carrying                                                              6          5         6
       of passengers or freight, and all helicopters (airframes and engines)
00.22  Automobiles, Taxis                                                                                                                                   3          5         5
00.23  Buses                                                                                                                                                9          5         9
00.241 Light General Purpose Trucks:
       n I u l c de u r t   s ck u   r o f   s s o   e v h t   r e o r   e a a (   d u t c   l a w g i e e l   t h s h t   s a 1   n 0 , 3 0 p   0 ound ) s 4          5         5
00.242 Heavy General Purpose Trucks:
       Includes heavy general purpose trucks, concrete ready mix-trucks, and ore trucks, for use                                                            6          5         6
       over the road (actual unloaded weight 13,000 pounds or more)
00.25  Railroad Cars and Locomotives, except those owned by railroad transportation                                                                         15         7       15
       companies
00.26  Tractor Units for Use Over-the-Road                                                                                                                  4          3         4
00.27  Trailers and Trailer-Mounted Containers                                                                                                              6          5         6
00.28  Vessels, Barges, Tugs, and Similar Water Transportation Equipment, except those used                                                                 18         10      18
       in marine construction
00.3   Land Improvements:
       Includes improvements directly to or added to land, whether such improvements are section                                                            20         15      20
       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 dened in section 1.48-1(e) of the regulations. Excludes public utility initial
       clearing and grading land improvements as specied in Rev. Rul. 72-403, 1972-2 C.B. 102.
00.4   Industrial Steam and Electric Generation and/or Distribution Systems:
       Includes assets, whether such assets are section 1245 property or 1250 property, providing                                                           22         15      22
       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 dened 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 specied. 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 specically related distribution and return systems are not included but
       are included in appropriate manufacturing equipment classes elsewhere specied. An example
       of an excluded steam and chemical recovery boiler system is that used in the pulp and paper
       manufacturing equipment classes elsewhere specied. An example of an excluded steam and
       chemical recovery boiler system is that used in the pulp and paper manufacturing industry.

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Table B-2. Table of Class Lives and Recovery Periods
                                                                                                                               Recovery Periods
                                                                                                                               (in years)
Asset                                                                                                               Class Life GDS
class  Description of assets included                                                                               (in years) (MACRS) ADS
      DEPRECIABLE ASSETS USED IN THE FOLLOWING ACTIVITIES:
01.1   Agriculture:
       Includes machinery and equipment, grain bins, and fences but no other land improvements,                            10  7****   10
       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                                                                                               12  7       12
01.21  Cattle, Breeding or Dairy                                                                                           7   5         7
01.221 Any breeding or work horse that is 12 years old or less at the time it is placed in service**                       10  7       10
01.222 Any breeding or work horse that is more than 12 years old at the time it is placed in service**                     10  3       10
01.223 Any race horse that is more than 2 years old at the time it is placed in service**                                  *   3       12
01.224 Any horse that is more than 12 years old at the time it is placed in service and that is                            *   3       12
       neither a race horse nor a horse described in class 01.222**
01.225 Any horse not described in class 01.221, 01.222, 01.223, or 01.224                                                  *   7       12
01.23  Hogs, Breeding                                                                                                      3   3         3
01.24  Sheep and Goats, Breeding                                                                                           5   5         5
01.3   Farm buildings except structures included in class 01.4                                                             25  20      25
01.4   Single purpose agricultural or horticultural structures (within the meaning of section                              15  10***   15
       168(i)(13) of the Code)
10.0   Mining:
       Includes assets used in the mining and quarrying of metallic and nonmetallic minerals (including sand,              10  7       10
       gravel, stone, and clay) and the milling, beneciation, and other primary preparation of such materials.
13.0   Offshore Drilling:
       Includes assets used in offshore drilling for oil and gas such as oating, self-propelled and                       7.5 5       7.5
       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                              6   5         6
       geophysical and other exploration services; and the provision of such oil and gas eld 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                 14  7       14
       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 classied in class 13.0), compression or pumping
       equipment, and gathering and transmission lines to the rst onshore transshipment facility. The assets
       used in the rst 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 classied 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                 16  10      16
       into gasoline and its other components.
15.0   Construction:
       Includes assets used in construction by general building, special trade, heavy, and marine                          6   5         6
       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 ours, cereals, livestock feeds, and other grain and                      17  10      17
       grain mill products.
20.2   Manufacture of Sugar and Sugar Products:
       Includes assets used in the production of raw sugar, syrup, or nished sugar from sugar cane or sugar beets.        18  10      18
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                       18  10      18
       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,                         12  7       12
       20.2, and 20.3.
20.5   Manufacture of Food and Beverages—Special Handling Devices:
       Includes assets dened as specialized materials handling devices such as returnable pallets,                        4   3         4
       palletized containers, and sh processing equipment including boxes, baskets, carts, and aking trays
       used in activities as dened 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.
   *  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.
****  5 if machinery and equipment used in a farming business (other than any grain bin, cotton ginning asset, fence, or other land improvement) placed in service 
      after 2017, in tax years ending after 2017.

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Table B-2. Table of Class Lives and Recovery Periods
                                                                                                                                Recovery Periods
                                                                                                                                (in years)
Asset                                                                                                                Class Life GDS
class Description of assets included                                                                                 (in years) (MACRS) ADS
21.0  Manufacture of Tobacco and Tobacco Products:
      Includes assets used in the production of cigarettes, cigars, smoking and chewing tobacco,                     15         7       15
      snuff, and other tobacco products.
22.1  Manufacture of Knitted Goods:
      Includes assets used in the production of knitted and netted fabrics and lace. Assets used in                  7.5        5       7.5
      yarn preparation, bleaching, dyeing, printing, and other similar nishing processes, texturing,
      and packaging are elsewhere classied.
22.2  Manufacture of Yarn, Thread, and Woven Fabric:
      Includes assets used in the production of spun yarns including the preparing, blending, spinning, and          11         7       11
      twisting of bers 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 bers, ocks, and shoddies. Assets used to manufacture carpets, man-made bers, and nonwovens,
      and assets used in texturing, bleaching, dyeing, printing, and other similar nishing processes, are elsewhere
      classied.
22.3  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       9          5         9
      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 nishing 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 oor covering such as tile, rubber, and cork, are elsewhere classied.
22.4  Manufacture of Textile Yarns:
      Includes assets used in the processing of yarns to impart bulk and/or stretch properties to the                8          5         8
      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 bers are elsewhere classied when located in
      the same plant in an integrated operation with man-made ber producing assets. Assets used
      to manufacture man-made bers and assets used in bleaching, dyeing, printing, and other
      similar nishing processes are elsewhere classied.
22.5  Manufacture of Nonwoven Fabrics:
      Includes assets used in the production of nonwoven fabrics, felt goods including felt hats, padding, batting,  10         7       10
      wadding, oakum, and llings, from new materials and from textile mill waste. Nonwoven fabrics are dened
      as fabrics (other than reinforced and laminated composites consisting of nonwovens and other products)
      manufactured by bonding natural and/or synthetic bers and/or laments by means of induced mechanical
      interlocking, uid entanglement, chemical adhesion, thermal or solvent reaction, or by combination thereof
      other than natural hydration bonding as occurs with natural cellulose bers. Such means include resin
      bonding, web bonding, and melt bonding. Specically includes assets used to make ocked and needle
      punched products other than carpets and rugs. Assets, as described above, which are used to manufacture
      nonwovens are elsewhere classied when located in the same plant in an integrated operation with
      man-made ber producing assets. Assets used to manufacture man-made bers and assets used in
      bleaching, dyeing, printing, and other similar nishing processes are elsewhere classied.
23.0  Manufacture of Apparel and Other Finished Products:
      Includes assets used in the production of clothing and fabricated textile products by the cutting              9          5         9
      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.
24.1  Cutting of Timber:
      Includes logging machinery and equipment and roadbuilding equipment used by logging and                        6          5         6
      sawmill operators and pulp manufacturers for their own account.
24.2  Sawing of Dimensional Stock From Logs:
      Includes machinery and equipment installed in permanent or well-established sawmills.                          10         7       10
24.3  Sawing of Dimensional Stock From Logs:
      Includes machinery and equipment in sawmills characterized by temporary foundations and a                      6          5         6
      lack, or minimum amount, of lumberhandling, drying, and residue disposal equipment and
      facilities.
24.4  Manufacture of Wood Products, and Furniture:
      Includes assets used in the production of plywood, hardboard, ooring, veneers, furniture, and                 10         7       10
      other wood products, including the treatment of poles and timber.
26.1  Manufacture of Pulp and Paper:
      Includes assets for pulp materials handling and storage, pulp mill processing, bleach processing, paper and    13         7       13
      paperboard manufacturing, and on-line nishing. Includes pollution control assets and all land improvements
      associated with the factory site or production process such as efuent ponds and canals, provided such
      improvements are depreciable but does not include buildings and structural components as dened 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.

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Table B-2. Table of Class Lives and Recovery Periods
                                                                                                                  Recovery Periods
                                                                                                                  (in years)
Asset                                                                                                  Class Life GDS
class Description of assets included                                                                   (in years) (MACRS) ADS
26.2  Manufacture of Converted Paper, Paperboard, and Pulp Products:
      Includes assets used for modication, or remanufacture of paper and pulp into converted          10         7       10
      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
      classied.
27.0  Printing, Publishing, and Allied Industries:
      Includes assets used in printing by one or more processes, such as letter-press, lithography,    11         7       11
      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.
28.0  Manufacture of Chemicals and Allied Products:
      Includes assets used to manufacture basic organic and inorganic chemicals; chemical products     9.5        5       9.5
      to be used in further manufacture, such as synthetic bers and plastics materials; and nished
      chemical products. Includes assets used to further process man-made bers, to manufacture
      plastic lm, 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 lm, photographic paper, sensitized
      photographic paper, and developing chemicals. Includes all land improvements associated with
      plant site or production processes, such as efuent ponds and canals, provided such land
      improvements are depreciable but does not include buildings and structural components as
      dened in section 1.48-1(e) of the regulations. Does not include assets used in the manufacture
      of nished rubber and plastic products or in the production of natural gas products, butane,
      propane, and by-products of natural gas production plants.
30.1  Manufacture of Rubber Products:
      Includes assets used for the production of products from natural, synthetic, or reclaimed        14         7       14
      rubber, gutta percha, balata, or gutta siak, such as tires, tubes, rubber footwear, mechanical
      rubber goods, heels and soles, ooring, and rubber sundries; and in the recapping, retreading,
      and rebuilding of tires.
30.11 Manufacture of Rubber Products—Special Tools and Devices:
      Includes assets dened as special tools, such as jigs, dies, mandrels, molds, lasts, patterns,   4          3         4
      specialty containers, pallets, shells; and tire molds, and accessory parts such as rings and
      insert plates used in activities as dened 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.
30.2  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        11         7       11
      materials nor the manufacture of phonograph records.
30.21 Manufacture of Finished Plastic Products—Special Tools:
      Includes assets dened as special tools, such as jigs, dies, xtures, molds, patterns, gauges,   3.5        3       3.5
      and specialty transfer and shipping devices, used in activities as dened in class 30.2. Special
      tools are specically designed for the production or processing of particular parts and have no
      signicant 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.
31.0  Manufacture of Leather and Leather Products:
      Includes assets used in the tanning, currying, and nishing of hides and skins; the processing   11         7       11
      of fur pelts; and the manufacture of nished leather products, such as footwear, belting,
      apparel, and luggage.
32.1  Manufacture of Glass Products:
      Includes assets used in the production of at, blown, or pressed products of glass, such as      14         7       14
      oat and window glass, glass containers, glassware, and berglass. Does not include assets
      used in the manufacture of lenses.
32.11 Manufacture of Glass Products—Special Tools:
      Includes assets dened as special tools such as molds, patterns, pallets, and specialty transfer 2.5        3       2.5
      and shipping devices such as steel racks to transport automotive glass, used in activities as
      dened in class 32.1. Special tools are specically designed for the production or processing of
      particular parts and have no signicant 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.
32.2  Manufacture of Cement:
      Includes assets used in the production of cement, but does not include assets used in the        20         15      20
      manufacture of concrete and concrete products nor in any mining or extraction process.
32.3  Manufacture of Other Stone and Clay Products:
      Includes assets used in the manufacture of products from materials in the form of clay and       15         7       15
      stone, such as brick, tile, and pipe; pottery and related products, such as vitreous-china,
      plumbing xtures, 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.

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Table B-2. Table of Class Lives and Recovery Periods
                                                                                                                    Recovery Periods
                                                                                                                    (in years)
Asset                                                                                                    Class Life GDS
class Description of assets included                                                                     (in years) (MACRS) ADS
33.2  Manufacture of Primary Nonferrous Metals:
      Includes assets used in the smelting, rening, and electrolysis of nonferrous metals from ore,     14         7       14
      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.
33.21 Manufacture of Primary Nonferrous Metals—Special Tools:
      Includes assets dened as special tools such as dies, jigs, molds, patterns, xtures, gauges,      6.5        5       6.5
      and drawings concerning such special tools used in the activities as dened in class 33.2,
      Manufacture of Primary Nonferrous Metals. Special tools are specically designed for the
      production or processing of particular products or parts and have no signicant 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.
33.3  Manufacture of Foundry Products:
      Includes assets used in the casting of iron and steel, including related operations such as        14         7       14
      molding and coremaking. Also includes assets used in the nishing of castings and
      patternmaking when performed at the foundry, all special tools, and related land improvements.
33.4  Manufacture of Primary Steel Mill Products:
      Includes assets used in the smelting, reduction, and rening of iron and steel from ore, pig, or   15         7       15
      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 and 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.
34.0  Manufacture of Fabricated Metal Products:
      Includes assets used in the production of metal cans, tinware, fabricated structural metal         12         7       12
      products, metal stampings, and other ferrous and nonferrous metal and wire products not
      elsewhere classied. Does not include assets used to manufacture non-electric heating
      apparatus.
34.01 Manufacture of Fabricated Metal Products—Special Tools:
      Includes assets dened as special tools such as dies, jigs, molds, patterns, xtures, gauges,      3          3         3
      and returnable containers and drawings concerning such special tools used in the activities as
      dened in class 34.0. Special tools are specically designed for the production or processing of
      particular machine components, products, or parts, and have no signicant 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.
35.0  Manufacture of Electrical and Non-Electrical Machinery and Other Mechanical Products:
      Includes assets used to manufacture or rebuild nished machinery and equipment and                 10         7       10
      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 eld machinery, internal combustion engines
      (except those elsewhere classied), turbines (except those that power airborne vehicles),
      batteries, lamps and lighting xtures, 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 nished machinery and equipment in activities elsewhere classied 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 nished 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 classied.
36.0  Manufacture of Electronic Components, Products, and Systems:
      Includes assets used in the manufacture of electronic communication, computation,                  6          5         6
      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 dened above such as
      electron tubes, capacitors, coils, resistors, printed circuit substrates, switches, harness cables,
      lasers, ber optic devices, and magnetic media devices. Specically 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 classied. Does not include semiconductor manufacturing equipment included in
      class 36.1.
36.1  Any Semiconductor Manufacturing Equipment                                                          5          5         5

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Table B-2. Table of Class Lives and Recovery Periods
                                                                                                                    Recovery Periods
                                                                                                                    (in years)
Asset                                                                                                    Class Life GDS
class Description of assets included                                                                     (in years) (MACRS) ADS
37.11 Manufacture of Motor Vehicles:
      Includes assets used in the manufacture and assembly of nished automobiles, trucks, trailers,     12         7       12
      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 classied elsewhere. Includes assets used
      in manufacturing activities elsewhere classied other than those excluded above, where such
      activities are incidental to and an integral part of the manufacture and assembly of nished
      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 classied in manufacturing activity classes, for example, does
      not include any assets classied in asset guideline classes 00.11 through 00.4. Activities will be
      considered incidental to the manufacture and assembly of nished motor vehicles only if 75%
      or more of the value of the products produced under one roof are used for the manufacture 
      and assembly of nished motor vehicles. Parts that are produced as a normal replacement 
      stock complement in connection with the manufacture and assembly of nished motor 
      vehicles are considered used for the manufacture assembly of nished 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 nished motor vehicles.
37.12 Manufacture of Motor Vehicles—Special Tools:
      Includes assets dened as special tools, such as jigs, dies, xtures, molds, patterns, gauges,     3          3         3
      and specialty transfer and shipping devices, owned by manufacturers of nished motor vehicles
      and used in qualied activities as dened in class 37.11. Special tools are specically designed
      for the production or processing of particular motor vehicle components and have no
      signicant 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.
37.2  Manufacture of Aerospace Products:
      Includes assets used in the manufacture and assembly of airborne vehicles and their component      10         7       10
      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.
37.31 Ship and Boat Building Machinery and Equipment:
      Includes assets used in the manufacture and repair of ships, boats, caissons, marine drilling      12         7       12
      rigs, and special fabrications not included in asset classes 37.32 and 37.33. Specically
      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.
37.32 Ship and Boat Building Dry Docks and Land Improvements:
      Includes assets used in the manufacture and repair of ships, boats, caissons, marine drilling      16         10      16
      rigs, and special fabrications not included in asset classes 37.31 and 37.33. Specically
      includes oating and xed 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.
37.33 Ship and Boat Building—Special Tools:
      Includes assets dened as special tools such as dies, jigs, molds, patterns, xtures, gauges,      6.5        5       6.5
      and drawings concerning such special tools used in the activities dened in classes 37.31 and
      37.32. Special tools are specically designed for the production or processing of particular
      machine components, products, or parts, and have no signicant 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.
37.41 Manufacture of Locomotives:
      Includes assets used in building or rebuilding railroad locomotives (including mining and          11.5       7       11.5
      industrial locomotives). Does not include assets of railroad transportation companies or assets
      of companies which manufacture components of locomotives but do not manufacture nished
      locomotives.
37.42 Manufacture of Railroad Cars:
      Includes assets used in building or rebuilding railroad freight or passenger cars (including rail  12         7       12
      transit cars). Does not include assets of railroad transportation companies or assets of
      companies which manufacture components of railroad cars but do not manufacture nished
      railroad cars.
39.0  Manufacture of Athletic, Jewelry, and Other Goods:
      Includes assets used in the production of jewelry; musical instruments; toys and sporting          12         7       12
      goods; motion picture and television lms and tapes; and pens, pencils, ofce and art supplies,
      brooms, brushes, caskets, etc.
      Railroad Transportation:
      Classes with the prex 40 include the assets identied below that are used in the commercial
      and contract carrying of passengers and freight by rail. Assets of electried railroads will be
      classied 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 prex beginning
      00.1 and 00.2 above, and also excludes any non-depreciable assets included in Interstate
      Commerce Commission accounts enumerated for this class.

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Table B-2. Table of Class Lives and Recovery Periods
                                                                                                                       Recovery Periods
                                                                                                                       (in years)
Asset                                                                                                       Class Life GDS
class Description of assets included                                                                        (in years) (MACRS) ADS
40.1  Railroad Machinery and Equipment:
      Includes assets classied in the following Interstate Commerce Commission accounts:                   14         7       14
      Roadway accounts:
           (16) Station and ofce 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
40.2  Railroad Structures and Similar Improvements:
      Includes assets classied in the following Interstate Commerce Commission road accounts:              30         20      30
           (6)  Bridges, trestles, and culverts
           (7)  Elevated structures
           (13) Fences, snowsheds, and signs
           (16) Station and ofce 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
40.3  Railroad Wharves and Docks:
      Includes assets classied in the following Interstate Commission Commerce accounts:                   20         15      20
           (23) Wharves and docks
           (24) Coal and ore wharves
40.4  Railroad Track                                                                                        10         7       10
40.51 Railroad Hydraulic Electric Generating Equipment                                                      50         20      50
40.52 Railroad Nuclear Electric Generating Equipment                                                        20         15      20
40.53 Railroad Steam Electric Generating Equipment                                                          28         20      28
40.54 Railroad Steam, Compressed Air, and Other Power Plan Equipment                                        28         20      28
41.0  Motor Transport—Passengers:
      Includes assets used in the urban and interurban commercial and contract carrying of                  8          5         8
      passengers by road, except the transportation assets included in classes with the prex 00.2.
42.0  Motor Transport—Freight:
      Includes assets used in the commercial and contract carrying of freight by road, except the           8          5         8
      transportation assets included in classes with the prex 00.2.
44.0  Water Transportation:
      Includes assets used in the commercial and contract carrying of freight and passengers by             20         15      20
      water except the transportation assets included in classes with the prex 00.2. Includes all
      related land improvements.
45.0  Air Transport:
      Includes assets (except helicopters) used in commercial and contract carrying of passengers           12         7       12
      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 dened by Civil
      Aeronautics Board uniform accounts 5200, maintenance burden (exclusive of expenses
      pertaining to maintenance buildings and improvements) as dened by Civil Aeronautics Board
      accounts 5300, and expenditures which are not “excluded additions” as dened 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.
45.1  Air Transport (restricted):
      Includes each asset described in the description of class 45.0 which was held by the taxpayer         6          5         6
      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 classication based
      on binding contract concept is to be applied in the same manner as under the general rules
      expressed in sections 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).
46.0  Pipeline Transportation:
      Includes assets used in the private, commercial, and contract carrying of petroleum, gas, and         22         15      22
      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 specied in Rev. Rul. 72-403, 1972-2 C.B. 102, but
      includes all other related land improvements.

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Table B-2. Table of Class Lives and Recovery Periods
                                                                                                                   Recovery Periods
                                                                                                                   (in years)
Asset                                                                                                   Class Life GDS
class  Description of assets included                                                                   (in years) (MACRS) ADS
       Telephone Communications:
       Includes the assets classied below and that are used in the provision of commercial and
       contract telephonic services such as:
48.11  Telephone Central Ofﬁce Buildings:
       Includes assets intended to house central ofce equipment, as dened in Federal                  45         20        45
       Communications Commission Part 31 Account No. 212 whether section 1245 or section 1250
       property.
48.12  Telephone Central Ofﬁce Equipment:
       Includes central ofce switching and related equipment as dened in Federal Communications       18         10        18
       Commission Part 31 Account No. 221.
       Does not include computer-based telephone central ofce switching equipment included in
       class 48.121. Does not include private branch exchange (PBX) equipment.
48.121 Computer-Based Telephone Central Ofﬁce Switching Equipment:
       Includes equipment whose functions are those of a computer or peripheral equipment (as           9.5        5         9.5
       dened in section 168(i)(2)(B) of the Code) used in its capacity as telephone central ofce
       equipment. Does not include private exchange (PBX) equipment.
48.13  Telephone Station Equipment:
       Includes such station apparatus and connections as teletypewriters, telephones, booths, private  10         7*      10*
       exchanges, and comparable equipment as dened in Federal Communications Commission
       Part 31 Account No. 231, 232, and 234.
48.14  Telephone Distribution Plant:
       Includes such assets as pole lines, cable, aerial wire, underground conduits, and comparable     24         15        24
       equipment, and related land improvements as dened in Federal Communications Commission
       Part 31 Account Nos. 241, 242.1, 242.2, 242.3, 242.4, 243, and 244.
48.2   Radio and Television Broadcastings:
       Includes assets used in radio and television broadcasting, except transmitting towers.           6          5         6
       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.
48.31  TOCSC—Electric Power Generating and Distribution Systems:
       Includes assets used in the provision of electric power by generation, modulation, rectication, 19         10        19
       channelization, control, and distribution. Does not include these assets when they are installed
       on customers’ premises.
48.32  TOCSC—High Frequency Radio and Microwave Systems:
       Includes assets such as transmitters and receivers, antenna supporting structures, antennas,     13         7         13
       transmission lines from equipment to antenna, transmitter cooling systems, and control and
       amplication equipment. Does not include cable and long-line systems.
48.33  TOCSC—Cable and Long-Line Systems:
       Includes assets such as transmission lines, pole lines, ocean cables, buried cable and conduit,  26.5       20      26.5
       repeaters, repeater stations, and other related assets. Does not include high frequency radio or
       microwave systems.
48.34  TOCSC—Central Ofﬁce Control Equipment:
       Includes assets for general control, switching, and monitoring of communications signals         16.5       10      16.5
       including electromechanical switching and channeling apparatus, multiplexing equipment
       patching and monitoring facilities, in-house cabling, teleprinter equipment, and associated site
       improvements.
48.35  TOCSC—Computerized Switching, Channeling, and Associated Control Equipment:
       Includes central ofce switching computers, interfacing computers, other associated specialized  10.5       7       10.5
       control equipment, and site improvements.
48.36  TOCSC—Satellite Ground Segment Property:
       Includes assets such as xed earth station equipment, antennas, satellite communications         10         7         10
       equipment, and interface equipment used in satellite communications. Does not include general
       purpose equipment or equipment used in satellite space segment property.
48.37  TOCSC—Satellite Space Segment Property:
       Includes satellites and equipment used for telemetry, tracking, control, and monitoring when     8          5         8
       used in satellite communications.
48.38  TOCSC—Equipment Installed on Customer’s Premises:
       Includes assets installed on customer’s premises, such as computers, terminal equipment,         10         7         10
       power generation and distribution systems, private switching center, teleprinters, facsimile
       equipment, and other associated and related equipment.
48.39  TOCSC—Support and Service Equipment:
       Includes assets used to support but not engage in communications. Includes store, warehouse      13.5       7       13.5
       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 2-way communications services.
* Property described in asset guideline class 48.13 which is qualied technological equipment as dened in section 168(i)(2) is assigned a 5-year recovery period.

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Table B-2. Table of Class Lives and Recovery Periods
Recovery Periods
(in years)
Asset Class Life GDS
class Description of assets included (in years) (MACRS) ADS
48.41 CATV—Headend:
Includes assets such as towers, antennas, preampliers, converters, modulation equipment, and program 11 7 11
non-duplication systems. Does not include headend buildings and program origination assets.
48.42 CATV—Subscriber Connection and Distribution Systems:
Includes assets such as trunk and feeder cable, connecting hardware, ampliers, power
equipment, passive devices, directional taps, pedestals, pressure taps, drop cables, matching 10 7 10
transformers, multiple set connector equipment, and convertors.
48.43 CATV—Program Origination:
Includes assets such as cameras, lm chains, videotape recorders, lighting, and remote location 9 5 9
equipment excluding vehicles. Does not include buildings and their structural components.
48.44 CATV—Service and Test:
Includes assets such as oscilloscopes, eld strength meters, spectrum analyzers, and cable 8.5 5 8.5
testing equipment, but does not include vehicles.
48.45 CATV—Microwave Systems:
Includes assets such as towers, antennas, transmitting and receiving equipment, and broad 9.5 5 9.5
band microwave assets 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, 50 20 50
or water for sale including related land improvements.
49.11 Electric Utility Hydraulic Production Plant:
Includes assets used in the hydraulic power production of electricity for sale, including related
land improvements, such as dams, umes, canals, and waterways.
49.12 Electric Utility Nuclear Production Plant:
Includes assets used in the nuclear power production and electricity for sale and related land 20 15 20
improvements. Does not include nuclear fuel assemblies.
49.121 Electric Utility Nuclear Fuel Assemblies:
Includes initial core and replacement core nuclear fuel assemblies (i.e., the composite of fabricated nuclear 5 5 5
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.
49.13 Electric Utility Steam Production Plant:
Includes assets used in the steam power production of electricity for sale, combustion turbines operated in a 28 20 28
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.
49.14 Electric Utility Transmission and Distribution Plant:
Includes assets used in the transmission and distribution of electricity for sale and related land 30 20 30
improvements. Excludes initial clearing and grading land improvements as specied in Rev. Rul.
72-403, 1972-2 C.B. 102.
49.15 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 20 15 20
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.
49.21 Gas Utility Distribution Facilities:
Includes gas water heaters and gas conversion equipment installed by utility on customers’ 35 20 35
premises on a rental basis.
49.221 Gas Utility Manufactured Gas Production Plants:
Includes assets used in the manufacture of gas having chemical and/or physical properties 30 20 30
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 classied.
49.222 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 14 7 14
hydrocarbons to a gaseous fuel which is completely interchangeable with domestic natural gas.
49.223 Substitute Natural Gas—Coal Gasiﬁcation:
Includes assets used in the manufacture and production of pipeline quality gas from coal using the basic Lurgi 18 10 18
process with advanced methanation. Includes all process plant equipment and structures used in this coal
gasication 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 gasication
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 gasication process itself.
49.23 Natural Gas Production Plant 14 7 14
49.24 Gas Utility Trunk Pipelines and Related Storage Facilities:
Excluding initial clearing and grading land improvements as specied in Rev. Rul. 72-40. 22 15 22
49.25 Liqueﬁed Natural Gas Plant:
Includes assets used in the liquefaction, storage, and regasication of natural gas including 22 15 22
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.

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Table B-2. Table of Class Lives and Recovery Periods
                                                                                                                                      Recovery Periods
                                                                                                                                      (in years)
    Asset                                                                                                                Class Life   GDS
    class Description of assets included                                                                                 (in years) (MACRS)                  ADS
    49.3  Water Utilities:
          Includes assets used in the gathering, treatment, and commercial distribution of water.                                  50 20***                  50
    49.4  Central Steam Utility Production and Distribution:
          Includes assets used in the production and distribution of steam for sale. Does not include                              28 20                     28
          assets used in waste reduction and resource recovery plants which are elsewhere classied.
    49.5  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                         10            7           10
          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 classied 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.
    50.0  Municipal Wastewater Treatment Plant                                                                                     24 15                     24
    51.0  Municipal Sewer                                                                                                          50 20***                  50
    57.0  Distributive Trades and Services:
          Includes assets used in wholesale and retail trade, and personal and professional services.                              9             5           9*
          Includes section 1245 assets used in marketing petroleum and petroleum products.
    57.1  Distributive Trades and Services—Billboard, Service Station Buildings, and Petroleum
          Marketing Land Improvements:
          Includes section 1250 assets, including service station buildings and depreciable land                                   20 15                     20
          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
          dened in section 1.48-1(e) of the regulations. 
    79.0  Recreation:
          Includes assets used in the provision of entertainment services on payment of a fee or                                   10            7           10
          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.
    80.0  Theme and Amusement Parks:
          Includes assets used in the provision of rides, attractions, and amusements in activities dened as theme      12.5                    7           12.5
          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 (for example, parking lots, sidewalks, waterways, bridges, 
          fences, landscaping, etc.), and support functions (for example, food and beverage retailing, souvenir vending, 
          and other nonlodging accommodations) if owned by the park and provided exclusively for the benet of park
          patrons. Theme and amusement parks are dened 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
          airplanes, etc., which are included in asset guideline classes with the prex 00.2); assets used in the
          trucks, cars,provision of administrative services (asset classes with the prex 00.1) and warehouses, 
          administration buildings, hotels, and motels.
          Certain Property for Which Recovery Periods Assigned
          A. Personal Property With No Class Life                                                                                                7           12
          Section 1245 Real Property With No Class Life                                                                                          7           40
          B. Qualied Technological Equipment, as dened in section 168(i)(2).                                                     **            5           5
          C. Property Used in Connection with Research and Experimentation referred to in section                                  **            5           class life if
          168(e)(3)(B).                                                                                                                                      no class
                                                                                                                                                             life—12
          D. Alternative energy property described in sections 48(l)(3)(A)(ix) (as in effect on the day before                     **            5           class life if
          the date of enactment (11/5/90) of the Revenue Reconciliation Act of 1990).                                                                        no class
                                                                                                                                                             life—12
          E. Biomass property described in section 48(l)(15) (as in effect on the day before the date of                           **            5           class life if
          enactment (11/5/90) of the Revenue Reconciliation Act of 1990) and is a qualifying small                                                           no class
          production facility within the meaning of section 3(17)(c) of the Federal Power Act (16 U.S.C.                                                     life—12
          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                             **            5           class life if
          energy” were substituted for “solar energy” in section 48(a)(3)(A)(i)).                                                                            no class
                                                                                                                                                             life—12
  * Any high technology medical equipment as dened 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 class B, C, D, E, or F is determined by reference to the asset guideline classes. If an item of property
    described in paragraph 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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Glossary

Abstract fees: Expenses generally System (GDS) and Alternative Depre- business is transacted, to a list of cus-
paid by a buyer to research the title of ciation System (ADS). tomers, or to other elements of value in
real property. business as a going concern.
Commuting: Travel between a per-
Active conduct of a trade or busi- sonal home and work or job site within Grantor: The one who transfers prop-
ness: Generally, for the section 179 the area of an individual's tax home. erty to another.
deduction, a taxpayer is considered to
conduct a trade or business actively if Convention: A method established Improvement: An addition to or par-
they meaningfully participate in the under the Modified Accelerated Cost tial replacement of property that adds
management or operations of the trade Recovery System (MACRS) to deter- to its value, appreciably lengthens the
or business. A mere passive investor in mine the portion of the year to depreci- time you can use it, or adapts it to a dif-
a trade or business does not actively ate property both in the year the prop- ferent use.
conduct the trade or business. erty is placed in service and in the year
of disposition. Intangible property: Property that
Adjusted basis: The original cost of has value but cannot be seen or
property, plus certain additions and im- Declining balance method: An ac- touched, such as goodwill, patents,
provements, minus certain deductions celerated method to depreciate prop- copyrights, and computer software.
such as depreciation allowed or allowa- erty. The GDS of MACRS uses the
ble and casualty losses. 150% and 200% declining balance Listed property: Passenger automo-
methods for certain types of property. A biles; any other property used for trans-
Amortization: A ratable deduction for depreciation rate (percentage) is deter- portation; and property of a type gener-
the cost of intangible property over its mined by dividing the declining bal- ally used for entertainment, recreation,
useful life. ance percentage by the recovery pe- or amusement.
riod for the property.
Amount realized: The total of all Nonresidential real property: Most
money received plus the fair market Disposition: The permanent with- real property other than residential
value of all property or services re- drawal from use in a trade or business rental property.
ceived from a sale or exchange. The or from the production of income.
amount realized also includes any lia- Placed in service: Ready and availa-
bilities assumed by the buyer and any Documentary evidence: Written re- ble for a specific use whether in a trade
liabilities to which the property transfer- cords that establish certain facts. or business, the production of income,
red is subject, such as real estate taxes a tax-exempt activity, or a personal ac-
or a mortgage. Exchange: To barter, swap, part with, tivity.
give, or transfer property for other prop-
Basis: A measure of an individual's in- erty or services. Property class: A category for prop-
vestment in property for tax purposes. erty under MACRS. It generally deter-
Fair market value (FMV): The price mines the depreciation method, recov-
Business/investment use: Usually, a that property brings when it is offered ery period, and convention.
percentage showing how much an item for sale by one who is willing but not
of property, such as an automobile, is obligated to sell, and is bought by one Recapture: To include as income on
used for business and investment pur- who is willing or desires to buy but is your return an amount allowed or al-
poses. not compelled to do so. lowable as a deduction in a prior year.

Capitalized: Expended or treated as Fiduciary: The one who acts on be- Recovery period: The number of
an item of a capital nature. A capital- half of another as a guardian, trustee, years over which the basis of an item of
ized amount is not deductible as a cur- executor, administrator, receiver, or property is recovered.
rent expense and must be included in conservator.
the basis of property. Remainder interest: That part of an
Fungible commodity: A commodity estate that is left after all the other pro-
Circumstantial evidence: Details or of a nature that one part may be used visions of a will have been satisfied.
facts which indirectly point to other in place of another part.
facts. Residential rental property: Real
Goodwill: An intangible property such property, generally buildings or struc-
Class life: A number of years that es- as the advantage or benefit received in tures, if 80% or more of its annual
tablishes the property class and recov- property beyond its mere value. It is not gross rental income is from dwelling
ery period for most types of property confined to a name but can also be at- units.
under the General Depreciation tached to a particular area where

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Salvage value: An estimated value of Structural components: Parts that account any depreciation taken in ear-
property at the end of its useful life. Not together form an entire structure, such lier years but with adjustments for other
used under MACRS. as a building. The term includes those amounts, including amortization, the
parts of a building such as walls, parti- section 179 deduction, any special de-
Section 1245 property: Property that tions, floors, and ceilings, as well as preciation allowance, any deduction
is or has been subject to an allowance any permanent coverings such as pan- claimed for clean-fuel vehicles or
for depreciation or amortization. Sec- eling or tiling, windows and doors, and clean-fuel vehicle refueling property
tion 1245 property includes personal all components of a central air condi- placed in service before January 1,
property, single-purpose agricultural tioning or heating system including mo- 2006, and any electric vehicle credit.
and horticultural structures, storage fa- tors, compressors, pipes, and ducts. It
cilities used in connection with the dis- also includes plumbing fixtures such as Unit-of-production method: A way
tribution of petroleum or primary prod- sinks, bathtubs, electrical wiring and to figure depreciation for certain prop-
ucts of petroleum, and railroad grading lighting fixtures, and other parts that erty. It is determined by estimating the
or tunnel bores. form the structure. number of units that can be produced
before the property is worn out. For ex-
Section 1250 property: Real prop- Tangible property: Property you can ample, if it is estimated that a machine
erty (other than section 1245 property) see or touch, such as buildings, machi- will produce 1,000 units before its use-
which is or has been subject to an al- nery, vehicles, furniture, and equip- ful life ends, and it actually produces
lowance for depreciation. ment. 100 units in a year, the percentage to
figure depreciation for that year is 10%
Standard mileage rate: The estab- Tax-exempt: Not subject to tax. of the machine's cost less its salvage
lished amount for optional use in deter- value.
mining a tax deduction for automobiles Term interest: A life interest in prop-
instead of deducting depreciation and erty, an interest in property for a term of Useful life: An estimate of how long
actual operating expenses. years, or an income interest in a trust. It an item of property can be expected to
generally refers to a present or future be usable in trade or business or to
Straight line method: A way to figure interest in income from property or the produce income.
depreciation for property that ratably right to use property that terminates or
deducts the same amount for each fails upon the lapse of time, the occur-
year in the recovery period. The rate (in rence of an event, or the failure of an
percentage terms) is determined by di- event to occur.
viding 1 by the number of years in the
recovery period. Unadjusted basis: The basis of an
item of property for purposes of figur-
ing gain on a sale without taking into

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                       To help us develop a more useful index, please let us know if you have ideas for index entries.
Index                  See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.
 
                                               Depreciation allowable  12                          Leasehold improvement property, 
A                                              Depreciation allowed   12                            defined    30
Addition to property 32                        Depreciation deduction:                             Life tenant 4
Adjusted basis  12                               Listed property 53                                (See also Term interests)
Alternative Depreciation System (ADS):         Determinable useful life 5                          Limit on deduction:
  Recovery periods   32                        Disposition:                                         Automobile   57
  Required use   27                              Before recovery period ends    38                  Section 179  17
Amended return   13                              General asset account property   46               Listed property:
Apartment:                                       Section 179 deduction  22                          5% owner    54
                                                                                                    Condition of employment    52
  Cooperative  4                                                                                    Defined    51
  Rental   29                                  E
                                                                                                    Employee deduction   52
Assistance (See Tax help)                      Election:                                            Employer convenience     52
Automobile (See Passenger automobile)            ADS   27 34,                                       Improvements to   51
                                                 Declining balance (150% DB) method             34  Leased   56
B                                                Exclusion from MACRS    11                         Passenger automobile     51
Basis:                                           General asset account  49                          Qualified business use   54
  Adjustments   12 21 36, ,                      Not to claim special depreciation                  Recordkeeping    61
                                                     allowance  26                                  Related person   54
  Basis for depreciation 31                      Section 179 deduction  21                          Reporting on Form 4562    63
  Casualty loss  36                              Straight line method 34
  Change in use  12                            Electric vehicle 59                                 M
  Cost 11                                      Employee:
  Depreciable basis  25                          Depreciation deduction  52                        Maximum deduction:
  Other than cost 12                             How to claim depreciation 13                       Electric vehicles 59
  Recapture of clean-fuel vehicle deduction or Employee deduction, listed property              52  Passenger automobiles    58
     credit 36                                                                                      Trucks   59
  Term interest 6                              Exchange of MACRS property       42
                                                                                                    Vans  59
  Unadjusted  36                                                                                   Mobile home (See Residential rental property)
Business use of property, partial  5           F
                                                                                                   Modified ACRS (MACRS):
Business-use limit, recapture of Section 179  Farm:                                                 Addition or improvement   32
  deduction   22                                 Property 33                                        Alternative Depreciation System (ADS) 27
Business-use requirement, listed               Figuring MACRS:                                      Conventions   32
  property  53                                   Using percentage tables  34                        Declining balance method   39
                                                 Without using percentage tables   39               Depreciation methods    33
C                                              Films 10                                             Farm property   33
Car (See Passenger automobile)                                                                      Figuring, short tax year 44
Carryover of section 179 deduction    20       G                                                    General Depreciation System (GDS)  27
Casualty loss, effect of 36                    General asset account:                               Percentage tables  34
Changing accounting method      13               Abusive transaction  48                            Property classes  28
Communication equipment (See Listed              Disposing of property 46                           Recovery periods  31
  property)                                      Grouping property in  46                           Short tax year 43
Commuting   54                                   Nonrecognition transaction  48                     Straight line method 39
Computer software    10 16,                    General Depreciation System (GDS), 
Containers  5                                    recovery periods   31                             N
Conventions   32                               Gift (See Basis, other than cost)
Cooperative apartment    4                     Glossary  107                                       Nonresidential real property 29
Copyright  10                                                                                      Nontaxable transfer of MACRS property  43
 (See also Section 197 intangibles)
Correcting depreciation deductions    13       I                                                   O
Cost basis  11                                 Idle property 7                                     Office in the home 5 32, 
                                               Improvements   12 32, 
D                                              Income forecast method    10                        Ownership, incidents of   4
Declining balance:                             Incorrect depreciation deductions              13
  Method   39                                  index 7 11 13 15 17 25 46 50 61, , , , , , , ,      P
  Rates  39                                    Index 6                                             Partial business use 16
Deduction limit:                               Inheritance (See Basis, other than cost)            Passenger automobile:
  Automobile  57                               Intangible property:                                 Defined    51
  Section 179  17                                Depreciation method   9 10,                        Electric vehicles 59
Depreciation:                                    Income forecast method   10                        Limit on   57
  Deduction:                                     Straight line method 9                             Maximum depreciation deduction   58
     Employee   52                             Inventory 5                                          Trucks   59
     Listed property 52                        Investment use of property, partial            5     Vans  59
  Determinable useful life  5                  Involuntary conversion of MACRS                     Patent 10
                                                 property   42                                     (See also Section 197 intangibles)
  Excepted property  6                                                                             Personal property  8
  Incorrect amount deducted   13               L                                                   Phonographic equipment (See Listed 
  Methods   33                                                                                      property)
  Property lasting more than one year 6        Land:                                               Photographic equipment (See Listed 
  Property owned  4                              Not depreciable 6                                  property)
  Property used in business   5                  Preparation costs 6                               Placed in service:
  Recapture   50 55,                           Leased property   17                                 Before 1987   8

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  Date 30                                     GDS   31                                     Figuring placed-in-service date 43
  Rule 7                                    Related persons  6 9 17 54,  , ,              Software, computer   10 16, 
Property:                                   Rent-to-own property, defined    29           Sound recording 10
  Classes  28                               Rental home (See Residential rental property) Special depreciation allowance:
  Depreciable 3                             Rented property, improvements       13         Election not to claim 26
  Idle 7                                    Repairs 12                                     Qualified property  23
  Improvements  12                          Residential rental property      29            Recapture   26
  Leased  4 17,                             Retail motor fuels outlet 30                  Stock, constructive ownership of 9
  Listed 51                                 Revoking:                                     Straight line method 9 39, 
  Personal 8                                  ADS election 27                              Created intangibles 10
  Real 8                                      General asset account election    50
  Retired from service 7                      Section 179 election 22                     T
  Tangible personal 16                                                                    Tangible personal property  16
  Term interest 6                           S                                             Tax help 63
Publications (See Tax help)                 Sale of property 38                           Term interest 6
                                            Section 179 deduction:                        Trade-in of property 18
Q                                             Business use required  16                   Trucks 59
Qualified leasehold improvement property,     Carryover 20
  defined  30                                 Dispositions 22                             U
Qualified property, special depreciation      Electing 21                                 Unadjusted basis 36
  allowance   23                              Limits:                                     Useful life 5
                                              Business (taxable) income         19
R                                             Business-use, recapture        22
Real property 8                               Dollar    18                                V
Recapture:                                    Partial business use    16                  Vans 59
  Clean-fuel vehicle deduction or credit 36   Married filing separate returns   18        Video tape  10
  General asset account, abusive              Partnership rules 20                        Video-recording equipment (See Listed 
    transaction 48                            Property:                                    property)
  Listed property 55                          Eligible   16
  MACRS depreciation   50                     Excepted     17                             W
  Section 179 deduction  22                   Purchase required   17                      When to use ADS  27
  Special depreciation allowance 26           Recapture  22                               Worksheet:
Recordkeeping:                                Recordkeeping  22                            Leased listed property 56
  Listed property 61                          S corporation rules 21                       MACRS      36
  Section 179 22                            Settlement fees  11
Recovery periods:                           Short tax year:
  ADS  32                                     Figuring depreciation 44

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                                                              See How To Get Tax Help for a variety of ways to get publications, including by 
Tax Publications for Business Taxpayers                       computer, phone, and mail.
General Guides                                      517 Social Security and Other Information                  908      Bankruptcy Tax Guide
                                                         for Members of the Clergy and                         925      Passive Activity and At-Risk Rules
    1                                                                                                          946
        Your Federal Income Tax                         Residential Rental Property
17      Your Rights as a Taxpayer                   527  Religious Workers                                     947      PracticeHow To DepreciateBefore the IRSPropertyand Power 
334     Tax Guide for Small Business                534 Depreciating Property Placed in                                   of Attorney
                                                         Service Before 1987                                   966      Electronic Federal Tax Payment System: 
Employer’s Guides                                   535 Business Expenses
                                                                                                                             A Guide to Getting Started
15      (Circular E), Employer’s Tax Guide          536 Net Operating Losses (NOLs) for                        1544     Reporting Cash Payments of Over
15-A    Employer’s Supplemental Tax Guide                Individuals, Estates, and Trusts                                 $10,000 
15-B    Employer’s Tax Guide to Fringe              537 Installment Sales                                      1546     Taxpayer Advocate Service —  
                                                    538 Accounting Periods and Methods                                    We Are Here To Help You 
51      (Circular A), Agricultural Employer’s       541 Partnerships                                     Spanish Language Publications
        Tax Guide                                   542 Corporations
80      (Circular SS), Federal Tax Guide for        544 Sales and Other Dispositions of Assets                 1SP      Derechos del Contribuyente
        Employers in the U.S. Virgin Islands,       551 Basis of Assets                                        179      (Circular PR), Guía Contributiva Federal
        Guam, American Samoa, and the               556 Examination of Returns, Appeal Rights,                            para Patronos Puertorriqueños
        Commonwealth of the Northern                     and Claims for Refund                           594SP          El Proceso de Cobro del IRS
926     Mariana Islands                             560 Retirement Plans for Small Business                    850      English-Spanish Glossary of Words
        Household Employer’s Tax Guide              561                                                  (EN/SP)
                                                        Determining the Value of Donated                                  and Phrases 
Specialized Publications                                 Property                                      1544SP           Informe de Pagos en Efectivo en
                                                    583 Starting a Business and Keeping
225     Farmer’s Tax Guide                               Records                                                          Exceso de $10,000 
463     Travel, Gift, and Car Expenses              587 Business Use of Your Home 
505     Tax Withholding and Estimated Tax           594 The IRS Collection Process
                                                    597 Information on the United States–
510     Excise Taxes                                     Canada Income Tax Treaty
515     Withholding of Tax on Nonresident           598 Tax on Unrelated Business Income of
        Aliens and Foreign Entities                      Exempt Organizations
                                                    901 U.S. Tax Treaties

Commonly Used Tax Forms                       See How To Get Tax Help for a variety of ways to get forms, including by computer, phone,
                                              and mail. 
             Form Number and Title                       Catalog                                Form Number and Title                                                      Catalog 
                                                         Number                                                                                                            Number
W-2     Wage and Tax Statement                           10134          2106       Employee Business Expenses                                                              11700
W-4                                                      10220          2210       Underpayment of Estimated Tax by Individuals,                                           11744
940     Employer’s Annual Federal Unemployment           11234                      Estates, and Trusts
        (FUTA) Tax Return                                               2441       Child and Dependent Care Expenses                                                       11862
941     Employer’s QUARTERLY Federal Tax Return          17001          2848       Power of Attorney and Declaration of                                                    11980
1040 or U.S. Individual Income Tax Return                11320                      Representative
1040-SR U.S. Tax Return for Seniors                      71930          3800       General Business Credit                                                                 12392
Sch A        Itemized Deductions                         17145          3903       Moving Expenses                                                                         12490
Sch B        Interest and Ordinary Dividends             17146          4562       Depreciation and Amortization                                                           12906
Sch C                                                    11334          4797       Sales of Business Property                                                              13086
                                                                        4868       Application for Automatic Extension of Time To File                                     13141
Sch D        Capital Gains and Losses                    11338                      U.S. Individual Income Tax Return
Sch E        Supplemental Income and Loss                11344          5329                                                                                               13329
Sch F                                                    11346                      IRAs) and Other Tax-Favored Accounts
Sch H        Household Employment Taxes                  12187          6252       Installment Sale Income                                                                 13601
Sch J        Income Averaging for Farmers and Fishermen 25513           8283       Noncash Charitable Contributions                                                        62299
Sch R        Credit for the Elderly or the Disabled      11359          8300       Report of Cash Payments Over $10,000 Received                                           62133
Sch SE       Self-Employment Tax                                                   Passivein a TradeActivityorLossBusinessLimitations
1040-ES Estimated Tax for Individuals                    11358          8582       Nondeductible IRAs                                                                      63704
1040-X  Amended U.S. Individual Income Tax Return        11340          8606                                                                                               63966
1065    U.S. Return of Partnership Income                11360          8822       Change of Address                                                                       12081
                                                         11390
Sch D        Capital Gains and Losses                    11393          8822-B8829 ChangeExpensesofforAddressBusinessor ResponsibleUse of YourPartyHome— Business 57465
Sch K-1      Partner’s Share of Income,                  11394                                                                                                             13232
             Deductions, Credits, etc.                                  8949       Sales and Other Dispositions of Capital Assets                                           37768
1120    U.S. Corporation Income Tax Return               11450          8959       Ad o i t i d n l a Me c i d e r a Tax                                                   59475
1120-S  U.S. Income Tax Return for an S Corporation      11510
Sch D        Capital Gains and Losses and Built-in Gains 11516
Sch K-1      Shareholder’s Share of Income,              11520
             Deductions, Credits, etc.

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