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            Department of the Treasury                   Contents
            Internal Revenue Service
                                                         Future Developments . . . . . . . . . . . . . . . . . . . . . . .           2
                                                         What's New for 2022      . . . . . . . . . . . . . . . . . . . . . . . .    2
Publication 946
Cat. No. 13081F                                          What’s New for 2023        . . . . . . . . . . . . . . . . . . . . . . .    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?                           . . . . . . 6
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          . . . . . . . . . . . . . . . . . . . . . . . .      14
For use in preparing                                     What Property Qualifies?                . . . . . . . . . . . . . . . . . . 15
                                                         What Property Does Not Qualify?                     . . . . . . . . . . .   17
2022 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 . . . . . . . . . . . . . . . . .                    22
                                                         What Is Qualified Property? . . . . . . . . . . . . . . . .                 23
                                                         How Much Can You Deduct?                    . . . . . . . . . . . . . . .   25
                                                         How Can You Elect Not To Claim an 
                                                         Allowance?           . . . . . . . . . . . . . . . . . . . . . . . . .      25
                                                         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?                           . . . .   27
                                                         What Is the Placed in Service Date? . . . . . . . . . .                     30
                                                         What Is the Basis for Depreciation?                   . . . . . . . . . .   30
                                                         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?                            . . . .   45
                                                         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 23, 2023

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What Is the Business-Use Requirement? . . . . . . 53 fruits and nuts planted or grafted after December 31,
Do the Passenger Automobile Limits Apply? . . . . 57 2022, and before January 1, 2024. See Certain Qualified
What Records Must Be Kept? . . . . . . . . . . . . . . 61 Property Acquired After September 27, 2017 and What Is
How Is Listed Property Information Qualified Property, later.
Reported? . . . . . . . . . . . . . . . . . . . . . . . . . . 63
How To Get Tax Help . . . . . . . . . . . . . . . . . . . . . . 63
Reminders
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Photographs of missing children. The Internal Reve-
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 nue Service is a proud partner with the National Center for
Missing & Exploited Children® (NCMEC). Photographs of
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 missing children selected by the Center may appear in
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 this publication on pages that would otherwise be blank.
You can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST
(1-800-843-5678) if you recognize a child.
Future Developments
For the latest information about developments related to
Pub. 946, such as legislation enacted after this publication Introduction
was published, go to IRS.gov/Pub946.
This publication explains how you can recover the cost of
business or income-producing property through deduc-
tions for depreciation (for example, the special deprecia-
What's New for 2022 tion allowance and deductions under the Modified Accel-
erated Cost Recovery System (MACRS)). It also explains
Section 179 deduction dollar limits. For tax years be-
how you can elect to take a section 179 deduction, in-
ginning in 2022, the maximum section 179 expense de-
stead of depreciation deductions, for certain property and
duction is $1,080,000. This limit is reduced by the amount
the additional rules for listed property.
by which the cost of section 179 property placed in serv-
ice during the tax year exceeds $2,700,000. The depreciation methods discussed in this publi-
Also, the maximum section 179 expense deduction for ! cation generally do not apply to property placed in
sport utility vehicles placed in service in tax years begin- CAUTION service before 1987. For more information, see
ning in 2022 is $27,000. Pub. 534, Depreciating Property Placed in Service Before
1987.
Depreciation limits on business vehicles. The total
section 179 deduction and depreciation you can deduct
for a passenger automobile, including a truck or van, you Definitions. Many of the terms used in this publication
use in your business and first placed in service in 2022 is are defined in the Glossary at the end of this publication.
$19,200, if the special depreciation allowance applies, or Glossary terms used in each discussion under the major
$11,200, if the special depreciation allowance does not headings are listed before the beginning of each discus-
apply. See Maximum Depreciation Deduction in chap- sion throughout the publication.

ter 5. Do you need a different publication? The following ta-
ble shows where you can get more detailed information
when depreciating certain types of property.
What’s New for 2023
For information See Publication:
Section 179 deduction dollar limits. For tax years be- on depreciating:
ginning in 2023, the maximum section 179 expense de-
duction is $1,160,000. This limit is reduced by the amount A car 463, Travel, Gift, and Car Expenses
by which the cost of section 179 property placed in serv- Residential rental
527, Residential Rental Property
ice during the tax year exceeds $2,890,000. property
Also, the maximum section 179 expense deduction for Office space in
587, Business Use of Your Home
sport utility vehicles placed in service in tax years begin- your home
ning in 2023 is $28,900.
Farm property 225, Farmer's Tax Guide
Phase down of special depreciation allowance. The
special depreciation allowance is 80% for certain qualified Comments and suggestions. We welcome your com-
property acquired after September 27, 2017, and placed ments about this publication and your suggestions for fu-
in service after December 31, 2022, and before January 1, ture editions.
2024 (other than certain property with a long production You can send us comments through IRS.gov/
period and certain aircraft). The special depreciation al- FormComments. Or, you can write to the Internal
lowance is also 80% for certain specified plants bearing

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Revenue Service, Tax Forms and Publications, 1111 Con- Useful Items
stitution 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
tax questions, tax returns, or payments to the above ad- 1987
dress. 535 535 Business Expenses
Getting answers to your tax questions. If you have 538 538 Accounting Periods and Methods
a tax question not answered by this publication or the How 551 551 Basis of Assets
To Get Tax Help section at the end of this publication, go
to the IRS Interactive Tax Assistant page at IRS.gov/ Form (and Instructions)
Help/ITA where you can find topics by using the search
feature or viewing the categories listed. Sch C (Form 1040) Sch C (Form 1040) Profit or Loss From Business
Getting tax forms, instructions, and publications. 2106 2106 Employee Business Expenses
Go to IRS.gov/Forms to download current and prior-year 3115 3115 Application for Change in Accounting Method
forms, instructions, and publications.
4562 4562 Depreciation and Amortization
Ordering tax forms, instructions, and publications.
Go to IRS.gov/OrderForms to order current forms, instruc- See chapter 6 for information about getting publications
tions, and publications; call 800-829-3676 to order and forms.
prior-year forms and instructions. The IRS will process
your order for forms and publications as soon as possible.
Don’t resubmit requests you’ve already sent us. You can What Property Can Be
get forms and publications faster online.
Depreciated?

Terms you may need to know
(see Glossary):
1. Adjusted basis
Basis
Overview of Depreciation Commuting
Disposition
Introduction Fair market value (FMV)
Intangible property
Depreciation is an annual income tax deduction that al-
lows you to recover the cost or other basis of certain prop- Listed property
erty over the time you use the property. It is an allowance Placed in service
for the wear and tear, deterioration, or obsolescence of
the property. Tangible property
This chapter discusses the general rules for depreciat- Term interest
ing property and answers the following questions.
Useful life
• What property can be depreciated?
• What property cannot be depreciated?
• When does depreciation begin and end? You can depreciate most types of tangible property (ex-
cept land), such as buildings, machinery, vehicles, furni-
• What method can you use to depreciate your prop- ture, and equipment. You can also depreciate certain in-
erty? tangible property, such as patents, copyrights, and
• What is the basis of your depreciable property? computer software.
• How do you treat repairs and improvements? To be depreciable, the property must meet all the fol-
lowing requirements.
• Do you have to file Form 4562?
• It must be property you own.
• How do you correct depreciation deductions?
• It must be used in your business or income-producing
activity.
• It must have a determinable useful life.

Chapter 1 Overview of Depreciation Page 3

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• It must be expected to last more than 1 year. tion of income, you can depreciate your stock in the cor-
The following discussions provide information about these poration, even though the corporation owns the apart-
requirements. ment.
Figure your depreciation deduction as follows.
Property You Own 1. Figure the depreciation for all the depreciable real
property owned by the corporation in which you have
To claim depreciation, you must usually be the owner of a proprietary lease or right of tenancy. If you bought
the property. You are considered as owning property even your cooperative stock after its first offering, figure the
if it is subject to a debt. depreciable basis of this property as follows.
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
and you can depreciate it. c. Subtract from the amount figured in (b) any mort-
gage debt that is not for the depreciable real prop-
Leased property. You can depreciate leased property erty, such as the part for the land.
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
trade or business or for the production of income, gener- 3. Divide the number of your shares of stock by the total
ally you cannot depreciate its cost because you do not re- number of outstanding shares, including any shares
tain the incidents of ownership. You can, however, depre- held by the corporation.
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 (3). This is your depreciation on the stock.
in this chapter, and Additions and Improvements under
Which Recovery Period Applies? in chapter 4. Your depreciation deduction for the year cannot be
If you lease property to someone, you can generally more than the part of your adjusted basis in the stock of
depreciate its cost even if the lessee (the person leasing the corporation that is allocable to your business or in-
from you) has agreed to preserve, replace, renew, and come-producing property. You must also reduce your de-
maintain the property. However, if the lease provides that preciation deduction if only a portion of the property is
the lessee is to maintain the property and return to you the used in a business or for the production of income.
same property or its equivalent in value at the expiration of
the lease in as good condition and value as when leased, Example. You figure your share of the cooperative
you cannot depreciate the cost of the property. housing corporation's depreciation to be $30,000. Your
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 legal title to the property. the year cannot be more than $25,000 ( / of $50,000).1 2
• The legal obligation to pay for the property. Change to business use. If you change your cooper-
ative apartment to business use, figure your allowable de-
• The responsibility to pay maintenance and operating
preciation as explained earlier. The basis of all the depre-
expenses.
ciable real property owned by the cooperative housing
• The duty to pay any taxes on the property. corporation is the smaller of the following amounts.
• The risk of loss if the property is destroyed, con- • The FMV of the property on the date you change your
demned, or diminished in value through obsolescence apartment to business use. This is considered to be
or exhaustion. the same as the corporation's adjusted basis minus
straight line depreciation, unless this value is unrealis-
Life tenant. Generally, if you hold business or investment tic.
property as a life tenant, you can depreciate it as if you
were the absolute owner of the property. However, see • The corporation's adjusted basis in the property on
Certain term interests in property under Excepted Prop- that date. Do not subtract depreciation when figuring
erty, later. the corporation's adjusted basis.
If you bought the stock after its first offering, the corpo-
Cooperative apartments. If you are a tenant-stock- ration's adjusted basis in the property is the amount fig-
holder in a cooperative housing corporation and use your ured in (1) above. The FMV of the property is considered
cooperative apartment in your business or for the produc- to be the same as the corporation's adjusted basis figured

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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
a short time, and then sells them at retail prices or in sales
Income-Producing Activity in which a dealer's profit is intended, the cars are treated
as inventory and are not depreciable property. In this sit-
To claim depreciation on property, you must use it in your uation, the cars are held primarily for sale to customers in
business or income-producing activity. If you use property the ordinary course of business.
to produce income (investment use), the income must be
taxable. You cannot depreciate property that you use Containers. Generally, containers for the products
solely for personal activities. you sell are part of inventory and you cannot depreciate
them. However, you can depreciate containers used to
Partial business or investment use. If you use prop- ship your products if they have a life longer than 1 year
erty for business or investment purposes and for personal and meet the following requirements.
purposes, you can deduct depreciation based only on the
• They qualify as property used in your business.
business or investment use. For example, you cannot de-
duct depreciation on a car used only for commuting, per- • Title to the containers does not pass to the buyer.
sonal shopping trips, family vacations, driving children to To determine if these requirements are met, consider
and from school, or similar activities. the following questions.
You must keep records showing the business, in- • Does your sales contract, sales invoice, or other type
vestment, and personal use of your property. For of order acknowledgment indicate whether you have
RECORDS more information on the records you must keep
retained title?
for listed property, such as a car, see What Records Must
Be Kept? in chapter 5. • Does your invoice treat the containers as separate
items?
Although you can combine business and invest- • Do any of your records state your basis in the contain-
! ment use of property when figuring depreciation ers?
CAUTION deductions, do not treat investment use as quali-
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 Useful Life
What Is the Business-Use Requirement? in chapter 5.
To be depreciable, your property must have a determina-
Office in the home. If you use part of your home as ble useful life. This means that it must be something that
an office, you may be able to deduct depreciation on that wears out, decays, gets used up, becomes obsolete, or
part based on its business use. For information about de- loses its value from natural causes.
preciating your home office, see Pub. 587.
Property Lasting More Than 1 Year
Inventory. You cannot depreciate inventory because it is
not held for use in your business. Inventory is any property To be depreciable, property must have a useful life that
you hold primarily for sale to customers in the ordinary extends substantially beyond the year you place it in serv-
course of your business. ice.
If you are a rent-to-own dealer, you may be able to treat
certain property held in your business as depreciable Example. You maintain a library for use in your profes-
property rather than as inventory. See Rent-to-own dealer sion. You can depreciate it. However, if you buy technical
under Which Property Class Applies Under GDS? in books, journals, or information services for use in your
chapter 4. business that have a useful life of 1 year or less, you can-
In some cases, it is not clear whether property is held not depreciate them. Instead, you deduct their cost as a
for sale (inventory) or for use in your business. If it is un- business expense.
clear, examine carefully all the facts in the operation of the
particular business. The following example shows how a
careful examination of the facts in two similar situations re-
sults in different conclusions.

Example. Maple Corporation is in the business of
leasing cars. At the end of their useful lives, when the cars
are no longer profitable to lease, Maple sells them. Maple
does not have a showroom, used car lot, or individuals to
sell the cars. Instead, it sells them through wholesalers or

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basis of your improvements. See Uniform Capitaliza-
tion Rules in Pub. 551.
What Property Cannot Be
• Section 197 intangibles. You must amortize these
Depreciated? costs. Section 197 intangibles are discussed in detail
in chapter 8 of Pub. 535. Intangible property, such as
certain computer software, that is not section 197 in-
Terms you may need to know tangible property, can be depreciated if it meets cer-
(see Glossary): tain requirements. See Intangible Property, later.
Amortization • Certain term interests.

Basis Certain term interests in property. You cannot depre-
Goodwill ciate a term interest in property created or acquired after
July 27, 1989, for any period during which the remainder
Intangible property
interest is held, directly or indirectly, by a person related to
Remainder interest you. A term interest in property means a life interest in
Term interest property, an interest in property for a term of years, or an
income interest in a trust.

Related persons. For a description of related per-
Certain property cannot be depreciated. This includes sons, see Related Persons, later. For this purpose, how-
land and certain excepted property. ever, treat as related persons only the relationships listed
in items (1) through (10) of that discussion and substitute
“50%” for “10%” each place it appears.
Land
Basis adjustments. If you would be allowed a depre-
You cannot depreciate the cost of land because land does ciation deduction for a term interest in property except that
not wear out, become obsolete, or get used up. The cost the holder of the remainder interest is related to you, you
of land generally includes the cost of clearing, grading, must generally reduce your basis in the term interest by
planting, and landscaping. any depreciation or amortization not allowed.
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
with the life of the associated property. • The term interest is held by an organization exempt
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.
Excepted Property

Even if the requirements explained in the preceding dis- When Does Depreciation
cussions are met, you cannot depreciate the following
property. Begin and End?
• Property placed in service and disposed of in the
same year. Determining when property is placed in Terms you may need to know
service is explained later. (see Glossary):
• Equipment used to build capital improvements. You Basis
must add otherwise allowable depreciation on the
equipment during the period of construction to the Exchange

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Placed in service Idle Property

Continue to claim a deduction for depreciation on property
You begin to depreciate your property when you place it in used in your business or for the production of income
service for use in your trade or business or for the produc- even if it is temporarily idle (not in use). For example, if
tion of income. You stop depreciating property either you stop using a machine because there is a temporary
when you have fully recovered your cost or other basis or lack of a market for a product made with that machine,
when you retire it from service, whichever happens first. continue to deduct depreciation on the machine.

Placed in Service Cost or Other Basis Fully Recovered

You place property in service when it is ready and availa- You stop depreciating property when you have fully recov-
ble for a specific use, whether in a business activity, an in- ered your cost or other basis. You fully recover your basis
come-producing activity, a tax-exempt activity, or a per- when your section 179 deduction, allowed or allowable
sonal activity. Even if you are not using the property, it is depreciation deductions, and salvage value, if applicable,
in service when it is ready and available for its specific equal the cost or investment in the property. See What Is
use. the Basis of Your Depreciable Property, later.

Example 1. You bought a machine for your business. Retired From Service
The machine was delivered last year. However, it was not
installed and operational until this year. It is considered You stop depreciating property when you retire it from
placed in service this year. If the machine had been ready service, even if you have not fully recovered its cost or
and available for use when it was delivered, it would be other basis. You retire property from service when you
considered placed in service last year even if it was not permanently withdraw it from use in a trade or business or
actually used until this year. from use in the production of income because of any of
the following events.
Example 2. On April 6, Sue Thorn bought a house to
use as residential rental property. Sue made several re- • You sell or exchange the property.
pairs and had it ready for rent on July 5. At that time, Sue • You convert the property to personal use.
began to advertise it for rent in the local newspaper. The
house is considered placed in service in July when it was • You abandon the property.
ready and available for rent. Sue can begin to depreciate • You transfer the property to a supplies or scrap ac-
it in July. count.
Example 3. James Elm is a building contractor who • The property is destroyed.
specializes in constructing office buildings. James bought If you included the property in a general asset ac-
a truck last year that had to be modified to lift materials to ! count, see How Do You Use General Asset Ac-
second-story levels. The installation of the lifting equip- CAUTION counts? in chapter 4 for the rules that apply when
ment was completed and James accepted delivery of the you dispose of that property.
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
service in a personal activity, you cannot claim deprecia- Depreciate Your Property?
tion. However, if you change the property's use to use in a
business or income-producing activity, then you can begin
to depreciate it at the time of the change. You place the Terms you may need to know
property in service in the business or income-producing (see Glossary):
activity on the date of the change.
Adjusted basis
Example. You bought a home and used it as your per- Basis
sonal home several years before you converted it to rental
property. Although its specific use was personal and no Convention
depreciation was allowable, you placed the home in serv- Exchange
ice when you began using it as your home. You can begin
Fiduciary
to claim depreciation in the year you converted it to rental
property because its use changed to an income-produc- Grantor
ing use at that time. Intangible property
Nonresidential real property
Placed in service

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Related persons Property Owned or Used in 1986
Residential rental property
You may not be able to use MACRS for property you ac-
Salvage value quired and placed in service after 1986 if any of the situa-
Section 1245 property tions described below apply. If you cannot use MACRS,
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-
Straight line method ! erty as owned before you placed it in service. If
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 per-
sonal property (section 1245 property) in any of the follow-
You must use the Modified Accelerated Cost Recovery ing situations.
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
property. it 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-
ted to this person) who owned or used the property in
• Intangible property.
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
hands of the person from whom you acquired it
The following discussions describe the property listed because of (2) or (3) above.
above and explain what depreciation method should be
used. Real property. You generally cannot use MACRS for
real property (section 1250 property) in any of the follow-
Property You Placed in Service ing situations.
Before 1987 • You or someone related to you owned the property in
1986.
You cannot use MACRS for property you placed in serv- • You lease the property to a person who owned the
ice before 1987 (except property you placed in service af- property in 1986 (or someone related to that person).
ter July 31, 1986, if MACRS was elected). Property placed
in service before 1987 must be depreciated under the • You acquired the property in a like-kind exchange, in-
methods discussed in Pub. 534. voluntary conversion, or repossession of property you
or someone related to you owned in 1986. MACRS
For a discussion of when property is placed in service, applies only to that part of your basis in the acquired
see When Does Depreciation Begin and End, earlier. property that represents cash paid or unlike property
given up. It does not apply to the carried-over part of
Use of real property changed. You must generally use the basis.
MACRS to depreciate real property that you acquired for
personal use before 1987 and changed to business or in- Exceptions. The rules above do not apply to the follow-
come-producing use after 1986. ing.
Improvements made after 1986. You must treat an im- 1. Residential rental property or nonresidential real prop-
provement made after 1986 to property you placed in erty.
service before 1987 as separate depreciable property. 2. Any property if, in the first tax year it is placed in serv-
Therefore, you can depreciate that improvement as sepa- ice, the deduction under the Accelerated Cost Recov-
rate property under MACRS if it is the type of property that ery System (ACRS) is more than the deduction under
otherwise qualifies for MACRS depreciation. For more in- MACRS using the half-year convention. For informa-
formation about improvements, see How Do You Treat tion on how to figure depreciation under ACRS, see
Repairs and Improvements, later, and Additions and Im- Pub. 534.
provements under Which Recovery Period Applies? in
chapter 4.

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3. Property that was MACRS property in the hands of Constructive ownership of stock or partnership in-
the person from whom you acquired it because of (2) terest. To determine whether a person directly or indi-
above. rectly owns any of the outstanding stock of a corporation
or an interest in a partnership, apply the following rules.
Related persons. For this purpose, the following are re-
lated persons. 1. Stock or a partnership interest directly or indirectly
owned by or for a corporation, partnership, estate, or
1. An individual and a member of their family, including trust is considered owned proportionately by or for its
only a spouse, child, parent, sibling, half sibling, an- shareholders, partners, or beneficiaries. However, for
cestor, and lineal descendant. a partnership interest owned by or for a C corporation,
2. A corporation and an individual who directly or indi- this applies only to shareholders who directly or indi-
rectly owns more than 10% of the value of the out- rectly own 5% or more of the value of the stock of the
standing stock of that corporation. corporation.
3. Two corporations that are members of the same con- 2. An individual is considered to own the stock or part-
trolled group. nership interest directly or indirectly owned by or for
the individual's family.
4. A trust fiduciary and a corporation if more than 10% of
the value of the outstanding stock is directly or indi- 3. An individual who owns, except by applying rule (2),
rectly owned by or for the trust or grantor of the trust. any stock in a corporation is considered to own the
stock directly or indirectly owned by or for the individ-
5. The grantor and fiduciary, and the fiduciary and bene- ual's partner.
ficiary, of any trust.
4. For purposes of rule (1), (2), or (3), stock or a partner-
6. The fiduciaries of two different trusts, and the fiducia- ship interest considered to be owned by a person un-
ries and beneficiaries of two different trusts, if the der rule (1) is treated as actually owned by that per-
same person is the grantor of both trusts. son. However, stock or a partnership interest
7. A tax-exempt educational or charitable organization considered to be owned by an individual under rule
and any person (or, if that person is an individual, a (2) or (3) is not treated as owned by that individual for
member of that person's family) who directly or indi- reapplying either rule (2) or (3) to make another per-
rectly controls the organization. son considered to be the owner of the same stock or
partnership interest.
8. Two S corporations, and an S corporation and a regu-
lar corporation, if the same persons own more than
10% of the value of the outstanding stock of each cor- Intangible Property
poration.
Generally, if you can depreciate intangible property, you
9. A corporation and a partnership if the same persons usually use the straight line method of depreciation. How-
own both of the following. 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
the partnership. ! a section 197 intangible or that does not other-
CAUTION wise meet all the requirements discussed earlier
10. The executor and beneficiary of any estate. 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
Straight Line Method
in the partnership.
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-
vage value, and estimated useful life of your property.
13. The related person and a person who is engaged in
Subtract the salvage value, if any, from the adjusted ba-
trades or businesses under common control. See
sis. The balance is the total depreciation you can take
sections 52(a) and 52(b) of the Internal Revenue
over the useful life of the property.
Code.
When to determine relationship. You must deter- Divide the balance by the number of years in the useful
mine whether you are related to another person at the life. This gives you your yearly depreciation deduction.
time you acquire the property. Unless there is a big change in adjusted basis or useful
A partnership acquiring property from a terminating life, this amount will stay the same throughout the time
partnership must determine whether it is related to the ter- you depreciate the property. If, in the first year, you use
minating partnership immediately before the event the property for less than a full year, you must prorate your
causing the termination. depreciation deduction for the number of months in use.

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Example. In April, you bought a patent for $5,100 that prohibited by the Code, regulations, or other pub-
is not a section 197 intangible. You depreciate the patent lished 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, mul-
tiplied by a fraction. The numerator of the fraction is the
• It has not been substantially modified. current year's net income from the property, and the de-
If the software meets the tests above, it may also qual- nominator is the total income anticipated from the property
ify for the section 179 deduction and the special deprecia- through the end of the 10th tax year following the tax year
tion allowance, discussed later in chapters 2 and 3. If you the property is placed in service. For more information,
can depreciate the cost of computer software, use the see section 167(g) of the Internal Revenue Code.
straight 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 partici-
intangibles created on or after December 31, 2003, over a pations 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 can- under the income forecast method. The participations and
not 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 prop-
definite duration, such as a trade association member- erty is placed in service. For this purpose, participations
ship, are eligible costs. and residuals are defined as costs, which by contract vary
The following are not eligible. with the amount of income earned in connection with the
• Any intangible asset acquired from another person. property.
Instead of including these amounts in the adjusted ba-
• Created financial interests. sis of the property, you can deduct the costs in the tax
• Any intangible asset that has a useful life that can be year that they are paid.
estimated with reasonable accuracy.
Videocassettes. If you are in the business of renting
• Any intangible asset that has an amortization period or videocassettes, you can depreciate only those videocas-
limited useful life that is specifically prescribed or settes bought for rental. If the videocassette has a useful

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life of 1 year or less, you can currently deduct the cost as
a business expense.
What Is the Basis of Your

Corporate or Partnership Property Depreciable Property?
Acquired in a Nontaxable Transfer
MACRS does not apply to property used before 1987 and Terms you may need to know
transferred after 1986 to a corporation or partnership (ex- (see Glossary):
cept property the transferor placed in service after July 31,
Abstract fees
1986, if MACRS was elected) to the extent its basis is car-
ried over from the property's adjusted basis in the trans- Adjusted basis
feror's hands. You must continue to use the same depre- Basis
ciation method as the transferor and figure depreciation
as if the transfer had not occurred. However, if MACRS Exchange
would otherwise apply, you can use it to depreciate the Fair market value (FMV)
part of the property's basis that exceeds the carried-over

basis.
The nontaxable transfers covered by this rule include To figure your depreciation deduction, you must deter-
the following. mine the basis of your property. To determine basis, you
need to know the cost or other basis of your property.
• A distribution in complete liquidation of a subsidiary.
• A transfer to a corporation controlled by the transferor.
Cost as Basis
• An exchange of property solely for corporate stock or
securities in a reorganization. The basis of property you buy is its cost plus amounts you
paid for items such as sales tax (see Exception below),
• A contribution of property to a partnership in exchange
freight charges, and installation and testing fees. The cost
for a partnership interest.
includes the amount you pay in cash, debt obligations,
• A partnership distribution of property to a partner. other property, or services.
Exception. You can elect to deduct state and local
Election To Exclude Property general sales taxes instead of state and local income
From MACRS taxes as an itemized deduction on Schedule A (Form
1040). If you make that choice, you cannot include those
If you can properly depreciate any property under a sales taxes as part of your cost basis.
method not based on a term of years, such as the
unit-of-production method, you can elect to exclude that Assumed debt. If you buy property and assume (or buy
property from MACRS. You make the election by report- subject to) an existing mortgage or other debt on the prop-
ing your depreciation for the property on line 15 in Part II erty, your basis includes the amount you pay for the prop-
of Form 4562 and attaching a statement as described in erty plus the amount of the assumed debt.
the Instructions for Form 4562. You must make this elec-
tion by the return due date (including extensions) for the Example. You make a $20,000 down payment on
tax year you place your property in service. However, if property and assume the seller's mortgage of $120,000.
you timely filed your return for the year without making the Your total cost is $140,000, the cash you paid plus the
election, you can still make the election by filing an amen- mortgage you assumed.
ded return within 6 months of the due date of the return
Settlement costs. The basis of real property also in-
(excluding extensions). Attach the election to the amen-
cludes certain fees and charges you pay in addition to the
ded return and write “Filed pursuant to section
purchase price. These are generally shown on your settle-
301.9100-2” on the election statement. File the amended
ment statement and include the following.
return at the same address you filed the original return.
• Legal and recording fees.
Use of standard mileage rate. If you use the standard
mileage rate to figure your tax deduction for your business • Abstract fees.
automobile, you are treated as having made an election to • Survey charges.
exclude the automobile from MACRS. See Pub. 463 for a
• Owner's title insurance.
discussion of the standard mileage rate.
• Amounts the seller owes that you agree to pay, such
as back taxes or interest, recording or mortgage fees,
charges for improvements or repairs, and sales com-
missions.
For fees and charges you cannot include in the basis of
property, see Real Property in Pub. 551.

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Property you construct or build. If you construct, build, There are also special rules for determining the basis of
or otherwise produce property for use in your business, MACRS property involved in a like-kind exchange or invol-
you may have to use the uniform capitalization rules to de- untary conversion when the property is contained in a
termine the basis of your property. For information about general asset account. See How Do You Use General As-
the uniform capitalization rules, see Pub. 551 and the reg- set Accounts? in chapter 4.
ulations under section 263A of the Internal Revenue
Code. Adjusted Basis

Other Basis To find your property's basis for depreciation, you may
have to make certain adjustments (increases and decrea-
Other basis usually refers to basis that is determined by ses) to the basis of the property for events occurring be-
the way you received the property. For example, your ba- tween the time you acquired the property and the time you
sis is other than cost if you acquired the property in ex- placed it in service. These events could include the follow-
change for other property, as payment for services you ing.
performed, as a gift, or as an inheritance. If you acquired
property in this or some other way, see Pub. 551 to deter- • Installing utility lines.
mine your basis. • Paying legal fees for perfecting the title.
Property changed from personal use. If you held prop- • Settling zoning issues.
erty for personal use and later use it in your business or • Receiving rebates.
income-producing activity, your depreciable basis is the
lesser of the following. • Incurring a casualty or theft loss.
For a discussion of adjustments to the basis of your prop-
1. The FMV of the property on the date of the change in
erty, see Adjusted Basis in Pub. 551.
use.
2. Your original cost or other basis adjusted as follows. If you depreciate your property under MACRS, you may
also have to reduce your basis by certain deductions and
a. Increased by the cost of any permanent improve- credits with respect to the property. For more information,
ments or additions and other costs that must be see What Is the Basis for Depreciation? in chapter 4.
added to basis.
Basis adjustment for depreciation allowed or allowa-
b. Decreased by any deductions you claimed for
ble. You must reduce the basis of property by the depre-
casualty and theft losses and other items that re-
ciation allowed or allowable, whichever is greater. Depre-
duced your basis.
ciation allowed is depreciation you actually deducted
Example. Several years ago, Nia paid $160,000 to (from which you received a tax benefit). Depreciation al-
have a home built on a lot that cost $25,000. Before lowable is depreciation you are entitled to deduct.
changing the property to rental use last year, Nia paid If you do not claim depreciation you are entitled to de-
$20,000 for permanent improvements to the house and duct, you must still reduce the basis of the property by the
claimed a $2,000 casualty loss deduction for damage to full amount of depreciation allowable.
the house. Land is not depreciable, so Nia includes only If you deduct more depreciation than you should, you
the cost of the house when figuring the basis for deprecia- must reduce your basis by any amount deducted from
tion. which you received a tax benefit (the depreciation al-
The adjusted basis in the house when Nia changed its lowed).
use was $178,000 ($160,000 + $20,000 − $2,000). On the
same date, the property had an FMV of $180,000, of
which $15,000 was for the land and $165,000 was for the How Do You Treat Repairs and
house. The basis for depreciation on the house is the
FMV on the date of change ($165,000) because it is less Improvements?
than Nia’s adjusted basis ($178,000).
If you improve depreciable property, you must treat the
Property acquired in a nontaxable transaction. Gen- improvement as separate depreciable property. Improve-
erally, if you receive property in a nontaxable exchange, ment means an addition to or partial replacement of prop-
the basis of the property you receive is the same as the erty that is a betterment to the property, restores the prop-
adjusted basis of the property you gave up. Special rules erty, or adapts it to a new or different use. See section
apply in determining the basis and figuring the MACRS 1.263(a)-3 of the regulations.
depreciation deduction and special depreciation allow-
ance for property acquired in a like-kind exchange or in- You generally deduct the cost of repairing business
voluntary conversion. See Like-kind exchanges and invol- property in the same way as any other business expense.
untary conversions under How Much Can You Deduct? in However, if the cost is for a betterment to the property, to
chapter 3, and Figuring the Deduction for Property Ac- restore the property, or to adapt the property to a new or
quired in a Nontaxable Exchange in chapter 4. different use, you must treat it as an improvement and de-
preciate it.

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  Example.   You repair a small section on one corner of 
the roof of a rental house. You deduct the cost of the re-
pair as a rental expense. However, if you completely re-        How Do You Correct 
place the roof, the new roof is an improvement because it 
                                                                Depreciation Deductions?
is a restoration of the building. You depreciate the cost of 
the new roof.
                                                                If you deducted an incorrect amount of depreciation in any 
Improvements to rented property.     You can depreciate         year,  you  may  be  able  to  make  a  correction  by  filing  an 
permanent improvements you make to business property            amended return for that year. See Filing an Amended Re-
you rent from someone else.                                     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-
                                                                tion. See Changing Your Accounting Method, later.
Do You Have To File
Form 4562?                                                      Filing an Amended Return

                                                                You can file an amended return to correct the amount of 
Terms you may need to know                                      depreciation claimed for any property in any of the follow-
                                                                ing situations.
(see Glossary):
   Amortization                                                 •   You claimed the incorrect amount because of a math-
                                                                    ematical error made in any year.
   Listed property
                                                                •   You claimed the incorrect amount because of a post-
   Placed in service                                                ing error made in any year.
   Standard mileage rate                                        •   You have not adopted a method of accounting for 
                                                                    property placed in service by you in tax years ending 
                                                                    after December 29, 2003.
Use Form 4562 to figure your deduction for depreciation         • You claimed the incorrect amount on property placed 
and amortization. Attach Form 4562 to your tax return for         in service by you in tax years ending before December 
the current tax year if you are claiming any of the following     30, 2003.
items.
 • A section 179 deduction for the current year or a sec-       Adoption  of  accounting  method  defined. Generally, 
   tion 179 carryover from a prior year. See chapter 2 for      you adopt a method of accounting for depreciation by us-
   information on the section 179 deduction.                    ing  a  permissible  method  of  determining  depreciation 
                                                                when you file your first tax return, or by using the same im-
 • Depreciation for property placed in service during the       permissible method of determining depreciation in two or 
   current year.                                                more consecutively filed tax returns.
 • Depreciation on any vehicle or other listed property,        For  an  exception  to  the  2-year  rule,  see  sections 
   regardless of when it was placed in service. See             6.01(1)(b), 6.19(1)(b), and 6.21(3)(b) of Revenue Proce-
   chapter 5 for information on listed property.                dure  2022-14  on  page  502  of  Internal  Revenue  Bulletin 
                                                                2022-7,   available at IRS.gov/irb/2022-7_IRB#REV-
 • A deduction for any vehicle if the deduction is reported     PROC-2022-14.
   on a form other than Schedule C (Form 1040).
 • Amortization of costs if the current year is the first year  When to file.  If an amended return is allowed, you must 
   of the amortization period.                                  file it by the later of the following.
 • Depreciation or amortization on any asset on a corpo-        • 3 years from the date you filed your original return for 
   rate income tax return (other than Form 1120-S, U.S.           the year in which you did not deduct the correct 
   Income Tax Return for an S Corporation) regardless             amount. A return filed before an unextended due date 
   of when it was placed in service.                              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          Generally,  you  must  get  IRS  approval  to  change  your 
various parts of Form 4562.                                     method of accounting. You must generally file Form 3115, 
                                                                Application for Change in Accounting Method, to request 
Employee.  Do  not  use  Form  4562  if  you  are  an  em-      a change in your method of accounting for depreciation.
ployee and you deduct job-related vehicle expenses using 
either  actual  expenses  (including  depreciation)  or  the 
standard mileage rate. Instead, use Form 2106.

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The following are examples of a change in method of scope limitations and automatic accounting method
accounting for depreciation. changes.
• A change from an impermissible method of determin- Additional guidance. For additional guidance and
ing depreciation for depreciable property if the imper- special procedures for changing your accounting method,
missible method was used in two or more consecu- automatic change procedures, amending your return, and
tively filed tax returns. filing Form 3115, see Revenue Procedure 2015-13 on
• A change in the treatment of an asset from nondepre- page 419 of Internal Revenue Bulletin 2015-5, available at
ciable to depreciable or vice versa. IRS.gov/irb/2015-05_IRB#RP-2015-13; Revenue Proce-
dure 2019-43 on page 1107 of Internal Revenue Bulletin
• A change in the depreciation method, period of recov- 2019-48, available at IRS.gov/irb/2019-48_IRB#REV-
ery, or convention of a depreciable asset. PROC-2019-43; and Revenue Procedure 2022-14 on
• A change from not claiming to claiming the special de- page 502 of Internal Revenue Bulletin 2022-7, available at
preciation allowance if you did not make the election IRS.gov/irb/2022-7_IRB#REV-PROC-2022-14.
to not claim any special allowance.
Section 481(a) adjustment. If you file Form 3115 and
• A change from claiming a 50% special depreciation al- change from an impermissible method to a permissible
lowance to claiming a 100% special depreciation al- method of accounting for depreciation, you can make a
lowance for qualified property acquired and placed in section 481(a) adjustment for any unclaimed or excess
service by you after September 27, 2017 (if you did amount of allowable depreciation. The adjustment is the
not make the election under section 168(k)(10) to difference between the total depreciation actually deduc-
claim a 50% special depreciation allowance). ted for the property and the total amount allowable prior to
Changes in depreciation that are not a change in the year of change. If no depreciation was deducted, the
method of accounting (and may only be made on an adjustment is the total depreciation allowable prior to the
amended return) include the following. year of change. A negative section 481(a) adjustment re-
sults in a decrease in taxable income. It is taken into ac-
• An adjustment in the useful life of a depreciable asset count in the year of change and is reported on your busi-
for which depreciation is determined under section ness tax returns as “other expenses.” A positive section
167. 481(a) adjustment results in an increase in taxable in-
• A change in use of an asset in the hands of the same come. It is generally taken into account over 4 tax years
taxpayer. and is reported on your business tax returns as “other in-
come.” However, you can elect to use a 1-year adjustment
• Making a late depreciation election or revoking a period and report the adjustment in the year of change if
timely valid depreciation election (including the elec- the total adjustment is less than $50,000. Make the elec-
tion not to deduct the special depreciation allowance). tion by completing the appropriate line on Form 3115.
If you elected not to claim any special depreciation al- If you file a Form 3115 and change from one permissi-
lowance, a change from not claiming to claiming the ble method to another permissible method, the section
special depreciation allowance is a revocation of the 481(a) adjustment is zero.
election and is not an accounting method change.
Generally, you must get IRS approval to make a late
depreciation election or revoke a depreciation elec-
tion. You must submit a request for a letter ruling to
make a late election or revoke an election.
• Any change in the placed in service date of a depreci- 2.
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. Electing the Section 179

IRS approval. If your change in method of accounting for Deduction
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 Introduction
2022-7, you may be able to get approval from the IRS to You can elect to recover all or part of the cost of certain
make that change under the automatic change request qualifying property, up to a limit, by deducting it in the year
procedures generally covered in Revenue Procedure you place the property in service. This is the section 179
2015-13 on page 419 of Internal Revenue Bulletin 2015-5. deduction. You can elect the section 179 deduction in-
If you do not qualify to use the automatic procedures to stead of recovering the cost by taking depreciation deduc-
get approval, you must use the advance consent request tions.
procedures generally covered in Revenue Procedure
2015-13. Also, see the Instructions for Form 3115 for
more information on getting approval, including lists of

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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

       Estates  and  trusts  cannot  elect  the  section  179         Tangible property
 !     deduction.                                                   
CAUTION
 This chapter explains what property does and does not             To  qualify  for  the  section  179  deduction,  your  property 
qualify for the section 179 deduction, what limits apply to        must meet all the following requirements.
the deduction (including special rules for partnerships and 
corporations),  and  how  to  elect  it.  It  also  explains  when  • It must be eligible property.
and how to recapture the deduction.                                 • It must be acquired for business use.
                                                                    • It must have been acquired by purchase.
Useful Items
You may want to see:                                                • It must not be property described later under What 
                                                                      Property Does Not Qualify.
 Publication                                                         The  following  discussions  provide  information  about 
   537 537 Installment Sales                                       these requirements and exceptions.
   544 544 Sales and Other Dispositions of Assets
                                                                   Eligible Property
 Form (and Instructions)
                                                                   To  qualify  for  the  section  179  deduction,  your  property 
   4562    4562 Depreciation and Amortization                      must  be  one  of  the  following  types  of  depreciable  prop-
   4797    4797 Sales of Business Property                         erty.
                                                                    1. Tangible personal property.
See chapter  6  for  information  about  getting  publications 
and forms.                                                          2. Other tangible property (except buildings and their 
                                                                      structural components) used as:
                                                                        a. An integral part of manufacturing, production, or 
What Property Qualifies?                                                extraction, or of furnishing transportation, commu-
                                                                        nications, electricity, gas, water, or sewage dis-
                                                                        posal services;
Terms you may need to know 
(see Glossary):                                                         b. A research facility used in connection with any of 
                                                                        the activities in (a) above; or
 Adjusted basis
                                                                        c. A facility used in connection with any of the activi-
 Basis                                                                  ties in (a) for the bulk storage of fungible commod-
 Class life                                                             ities.
 Structural components

                                                 Chapter 2              Electing the Section 179 Deduction    Page 15

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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
6. Qualified section 179 real property (described below). any improvement to an interior portion of a building that is
nonresidential real property if the improvement is placed
Tangible personal property. Tangible personal prop- in service after the date the building was first placed in
erty is any tangible property that is not real property. It in- service.
cludes the following property. Also, qualified improvement property does not include
• Machinery and equipment. the cost of any improvement attributable to the following.
• Property contained in or attached to a building (other • The enlargement of the building.
than structural components), such as refrigerators, • Any elevator or escalator.
grocery store counters, office equipment, printing
presses, testing equipment, and signs. • The internal structural framework of the building.

• Gasoline storage tanks and pumps at retail service
Property Acquired for Business Use
stations.
• Livestock, including horses, cattle, hogs, sheep, To qualify for the section 179 deduction, your property
goats, and mink and other furbearing animals. must have been acquired for use in your trade or busi-
• Portable air conditioners or heaters placed in service ness. Property you acquire only for the production of in-
by you in tax years beginning after 2015. come, such as investment property, rental property (if
renting property is not your trade or business), and prop-
• Certain property used predominantly to furnish lodg- erty that produces royalties, does not qualify.
ing or in connection with the furnishing of lodging (ex-
cept as provided in section 50(b)(2)). Partial business use. When you use property for both
The treatment of property as tangible personal property business and nonbusiness purposes, you can elect the
for the section 179 deduction is not controlled by its treat- section 179 deduction only if you use the property more
ment under local law. For example, property may not be than 50% for business in the year you place it in service. If
tangible personal property for the deduction even if trea- you use the property more than 50% for business, multiply
ted so under local law, and some property (such as fix- the cost of the property by the percentage of business
tures) may be tangible personal property for the deduction use. Use the resulting business cost to figure your section
even if treated as real property under local law. 179 deduction.

Off-the-shelf computer software. Off-the-shelf com- Example. May Oak bought and placed in service an
puter software is qualifying property for purposes of the item of section 179 property costing $11,000. May used
section 179 deduction. This is computer software that is the property 80% for business and 20% for personal pur-
readily available for purchase by the general public, is poses. The business part of the cost of the property is
subject to a nonexclusive license, and has not been sub- $8,800 (80% (0.80) × $11,000).
stantially modified. It includes any program designed to
cause a computer to perform a desired function. However, Property Acquired by Purchase
a database or similar item is not considered computer
software unless it is in the public domain and is incidental To qualify for the section 179 deduction, your property
to the operation of otherwise qualifying software. must have been acquired by purchase. For example,
property acquired by gift or inheritance does not qualify.
Qualified section 179 real property. You can elect to
treat certain qualified real property you placed in service Property is not considered acquired by purchase in the
during the tax year as section 179 property. If this election following situations.
is made, the term “section 179 property” will include any
1. It is acquired by one component member of a control-
qualified real property that is:
led group from another component member of the
• Qualified improvement property as described in sec- same group.
tion 168(e)(6) of the Internal Revenue Code, and
2. Its basis is determined either:
• Any of the following improvements to nonresidential
real property placed in service after the date the non- a. In whole or in part by its adjusted basis in the
residential real property was first placed in service. hands of the person from whom it was acquired,
or

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b. Under the stepped-up basis rules for property ac- Leased property. Generally, you cannot claim a section
quired from a decedent. 179 deduction based on the cost of property you lease to
someone else. This rule does not apply to corporations.
3. It is acquired from a related person.
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 1. Property you manufacture or produce and lease to
property qualifies for the section 179 deduction, treat as others.
an individual's family only their spouse, ancestors, and lin-
eal descendants and substitute "50%" for "10%" each 2. Property you purchase and lease to others if both the
place it appears. following tests are met.
a. The term of the lease (including options to renew)
Example. You are a tailor. You bought two industrial
is less than 50% of the property's class life.
sewing machines from your father. You placed both ma-
chines in service in the same year you bought them. They b. For the first 12 months after the property is trans-
do not qualify as section 179 property because you and ferred to the lessee, the total business deductions
your father are related persons. You cannot claim a sec- you are allowed on the property (other than rents
tion 179 deduction for the cost of these machines. and reimbursed amounts) are more than 15% of
the rental income from the property.

What Property Does Not
How Much Can You Deduct?
Qualify?

Terms you may need to know
Terms you may need to know (see Glossary):
(see Glossary):
Adjusted basis
Basis
Basis
Class life
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
elect to deduct under section 179 is subject to a dollar
Land and Improvements limit and a business income limit. These limits apply to
each taxpayer, not to each business. However, see Mar-
Land and land improvements do not qualify as section
ried Individuals under Dollar Limits, later. For a passenger
179 property. Land improvements include swimming
automobile, the total section 179 deduction and deprecia-
pools, paved parking areas, wharves, docks, bridges, and
tion deduction are limited. See Do the Passenger Automo-
fences.
bile Limits Apply? in chapter 5.
Excepted Property If you deduct only part of the cost of qualifying property
as a section 179 deduction, you can generally depreciate
Even if the requirements explained earlier under What the cost you do not deduct.
Property Qualifies? are met, you cannot elect the section
179 deduction for the following property. Trade-in of other property. If you buy qualifying prop-
erty with cash and a trade-in, its cost for purposes of the
• Certain property you lease to others (if you are a non- section 179 deduction includes only the cash you paid.
corporate lessor).
Example. Silver Leaf, a retail bakery, traded in two
• Property used predominantly outside the United
ovens having a total adjusted basis of $680, for a new
States, except property described in section 168(g)(4)
oven costing $1,320. They received an $800 trade-in al-
of the Internal Revenue Code.
lowance for the old ovens and paid $520 in cash for the
• Property used by certain tax-exempt organizations, new oven. On the date that Silver Leaf traded in the two
except property used in connection with the produc- old ovens for the new oven, the old ovens and the new
tion of income subject to the tax on unrelated trade or oven are classified as real property under the law of the
business income. state in which the old and new ovens are located and, as
• Property used by governmental units or foreign per- a result, the old and new ovens are real property for pur-
sons or entities, except property used under a lease poses of section 1031. The new oven is section 179 prop-
with a term of less than 6 months. erty.

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Only the portion of the new oven's basis paid by cash Sport Utility and Certain Other Vehicles
qualifies for the section 179 deduction. Therefore, Silver
Leaf's qualifying cost for the section 179 deduction is You cannot elect to expense more than $27,000 of the
$520. cost of any heavy sport utility vehicle (SUV) and certain
other vehicles placed in service in tax years beginning in
Dollar Limits 2022. This rule applies to any 4-wheeled vehicle primarily
designed or used to carry passengers over public streets,
The total amount you can elect to deduct under section roads, or highways that is rated at more than 6,000
179 for most property placed in service in tax years begin- pounds gross vehicle weight and not more than 14,000
ning in 2022 generally cannot be more than $1,080,000. If pounds gross vehicle weight. However, the $27,000 limit
you acquire and place in service more than one item of does not apply to any vehicle:
qualifying property during the year, you can allocate the
• Designed to seat more than nine passengers behind
section 179 deduction among the items in any way, as
the driver's seat;
long as the total deduction is not more than $1,080,000.
You do not have to claim the full $1,080,000. • Equipped with a cargo area (either open or enclosed
by a cap) of at least 6 feet in interior length that is not
The amount you can elect to deduct is not affec-
readily accessible from the passenger compartment;
TIP ted if you place qualifying property in service in a or
short tax year or if you place qualifying property in
service for only a part of a 12-month tax year. • That has an integral enclosure fully enclosing the
driver compartment and load carrying device, does
After you apply the dollar limit to determine a ten- not have seating rearward of the driver's seat, and has
! tative deduction, you must apply the business in- no body section protruding more than 30 inches
CAUTION come limit (described later) to determine your ac- ahead of the leading edge of the windshield.
tual section 179 deduction.
Married Individuals
Example. In 2022, you bought and placed in service
$1,080,000 in machinery and a $25,000 circular saw for If you are married, how you figure your section 179 deduc-
your business. You elect to deduct $1,055,000 for the ma- tion depends on whether you file jointly or separately. If
chinery and the entire $25,000 for the saw, a total of you file a joint return, you and your spouse are treated as
$1,080,000. This is the maximum amount you can deduct. one taxpayer in determining any reduction to the dollar
Your $25,000 deduction for the saw completely recovered limit, regardless of which of you purchased the property or
its cost. Your basis for depreciation is zero. The basis for placed it in service. If you and your spouse file separate
depreciation of your machinery is $25,000. You figure this returns, you are treated as one taxpayer for the dollar
by subtracting your $1,055,000 section 179 deduction for limit, including the reduction for costs over $2,700,000.
the machinery from the $1,080,000 cost of the machinery. You must allocate the dollar limit (after any reduction) be-
tween you equally, unless you both elect a different allo-
Situations affecting dollar limit. Under certain circum- cation. If the percentages elected by each of you do not
stances, the general dollar limits on the section 179 de- total 100%, 50% will be allocated to each of you.
duction may be reduced or increased or there may be ad-
ditional dollar limits. The general dollar limit is affected by Example. You are married. You and your spouse file
any of the following situations. separate returns. You bought and placed in service
$2,700,000 of qualified farm machinery in 2022. Your
• The cost of your section 179 property placed in serv-
spouse has a separate business, and bought and placed
ice exceeds $2,700,000.
in service $300,000 of qualified business equipment. Your
• You placed in service a sport utility or certain other ve- combined dollar limit is $780,000. This is because you
hicles. and your spouse must figure the limit as if you were one
• You are married filing a joint or separate return. taxpayer. You reduce the $1,080,000 dollar limit by the
$300,000 excess of your costs over $2,700,000.
You elect to allocate the $780,000 dollar limit as fol-
Costs Exceeding $2,700,000
lows.
If the cost of your qualifying section 179 property placed in • $741,000 ($780,000 x 95% (0.95)) to your machinery.
service in a year is more than $2,700,000, you must gen-
erally reduce the dollar limit (but not below zero) by the • $39,000 ($780,000 x 5% (0.05)) to your spouse’s
equipment.
amount of cost over $2,700,000. If the cost of your section
179 property placed in service during 2022 is $3,780,000 If you did not make an election to allocate your costs in
or more, you cannot take a section 179 deduction. this way, you and your spouse would have to allocate
$390,000 ($780,000 × 50% (0.50)) to each of you.
Example. In 2022, Jane Ash placed in service machi-
nery costing $2,750,000. This cost is $50,000 more than Joint return after filing separate returns. If you and
$2,700,000, so Jane must reduce the dollar limit to your spouse elect to amend your separate returns by filing
$1,030,000 ($1,080,000 − $50,000). a joint return after the due date for filing your return, the

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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 $2,700,000).
• 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
date of your returns, you and your spouse file a joint re- deduction figured in Step 2 from the taxable
turn. The dollar limit for the section 179 deduction is income figured in Step 1.
$320,000. This is the lesser of the following amounts. 4 Figure a hypothetical amount for the other
• $780,000—The dollar limit less the cost of section 179 deduction using the amount figured in Step 3
property over $2,700,000. 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 taxable income figured in Step 5.
The total cost you can deduct each year after you apply
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, 2022, 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 $1,080,000. It elects to expense the en-
ginning before 2016 and disallowed because of the busi- tire $1,080,000 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 taxable income figured without the section 179 deduction
trades and businesses you actively conducted during the or the deduction for charitable contributions is $1,100,000.
year. Net income or loss from a trade or business includes XYZ figures its section 179 deduction and its deduction
the following items. for charitable contributions as follows.
• Section 1231 gains (or losses). Step 1—Taxable income figured without either deduc-
• Interest from working capital of your trade or business. tion is $1,100,000.
• Wages, salaries, tips, or other pay earned as an em- Step 2—Using $1,100,000 as taxable income, XYZ's
ployee. hypothetical section 179 deduction is $1,080,000.
For information about section 1231 gains and losses, see Step 3—$20,000 ($1,100,000 − $1,080,000).
chapter 3 of Pub. 544.
Step 4—Using $20,000 (from Step 3) as taxable in-
In addition, figure taxable income without regard to any
come, XYZ's hypothetical charitable contribution (limi-
of the following.
ted to 10% of taxable income) is $2,000.
• The section 179 deduction.
Step 5—$1,098,000 ($1,100,000 − $2,000).
• The self-employment tax deduction.
Step 6—Using $1,098,000 (from Step 5) as taxable
• Any net operating loss carryback or carryforward. income, XYZ figures the actual section 179 deduction.
• Any unreimbursed employee business expenses. Because the taxable income is at least $1,080,000,
XYZ can take a $1,080,000 section 179 deduction.
Two different taxable income limits. In addition to the Step 7—$20,000 ($1,100,000 − $1,080,000).

business income limit for your section 179 deduction, you
may have a taxable income limit for some other deduction.

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Step 8—Using $20,000 (from Step 7) as taxable in- $2,700,000) is applied, any remaining cost of the partner-
come, XYZ's actual charitable contribution (limited to ship and nonpartnership section 179 property is subject to
10% of taxable income) is $2,000. the business income limit.

Carryover of disallowed deduction. You can carry Partnership's taxable income. For purposes of the
over for an unlimited number of years the cost of any business income limit, figure the partnership's taxable in-
qualified section 179 real property that you placed in serv- come by adding together the net income and losses from
ice in tax years beginning after 2015, and that you elected all trades or businesses actively conducted by the part-
to expense, but were unable to deduct because of the nership during the year. See the Instructions for Form
business income limitation. This disallowed deduction 1065 for information on how to figure partnership net in-
amount is shown on line 13 of Form 4562. You use the come (or loss). However, figure taxable income without
amount you carry over to determine your section 179 de- regard to credits, tax-exempt income, the section 179 de-
duction in the next year. Enter that amount on line 10 of duction, and guaranteed payments under section 707(c)
your Form 4562 for the next year. of the Internal Revenue Code.
If you place more than one property in service in a year,
you can select the properties for which all or a part of the Partner's share of partnership's taxable income. For
costs will be carried forward. Your selections must be purposes of the business income limit, the taxable income
shown in your books and records. For this purpose, treat of a partner engaged in the active conduct of one or more
section 179 costs allocated from a partnership or an S of a partnership's trades or businesses includes their allo-
corporation as one item of section 179 property. If you do cable share of taxable income derived from the partner-
not make a selection, the total carryover will be allocated ship's active conduct of any trade or business.
equally among the properties you elected to expense for
Example. In 2022, Beech Partnership placed in serv-
the year.
ice section 179 property with a total cost of $2,750,000.
If costs from more than 1 year are carried forward to a
The partnership must reduce its dollar limit by $50,000
subsequent year in which only part of the total carryover
($2,750,000 − $2,700,000). Its maximum section 179 de-
can be deducted, you must deduct the costs being carried
duction is $1,030,000 ($1,080,000 − $50,000), and it
forward from the earliest year first.
elects to expense that amount. The partnership's taxable
Special rules for qualified section 179 real prop- income from the active conduct of all its trades or busi-
erty. You can carry over to 2023 a 2022 deduction attrib- nesses for the year was $1,030,000, so it can deduct the
utable to qualified section 179 real property that you full $1,030,000. It allocates $40,000 of its section 179 de-
placed in service during the tax year and that you elected duction and $50,000 of its taxable income to Dean, one of
to expense but were unable to take because of the busi- its partners.
ness income limitation. See Carryover of disallowed de- In addition to being a partner in Beech Partnership,
duction, earlier. Thus, the amount of any 2022 disallowed Dean is also a partner in Cedar Partnership, which alloca-
section 179 expense deduction attributable to qualified ted to Dean a $30,000 section 179 deduction and $35,000
section 179 real property will be reported on line 13 of of its taxable income from the active conduct of its busi-
Form 4562. ness. Dean also conducts a business as a sole proprietor
If there is a sale or other disposition of your prop- and, in 2022, placed in service in that business qualifying
TIP erty (including a transfer at death) before you can section 179 property costing $55,000. Dean had a net
use the full amount of any outstanding carryover loss of $5,000 from that business for the year.
of your disallowed section 179 deduction, neither you nor Dean does not have to include section 179 partnership
the new owner can deduct any of the unused amount. In- costs to figure any reduction in the dollar limit, so the total
stead, you must add it back to the property's basis. section 179 costs for the year are not more than
$2,700,000 and the dollar limit is not reduced. Dean’s
maximum section 179 deduction is $1,080,000. Dean
Partnerships and Partners elects to expense all of the $70,000 in section 179 deduc-
tions allocated from the partnerships ($40,000 from Beech
The section 179 deduction limits apply both to the partner- Partnership plus $30,000 from Cedar Partnership), plus
ship and to each partner. The partnership determines its $55,000 of the sole proprietorship's section 179 costs,
section 179 deduction subject to the limits. It then allo- and notes that information in the books and records. How-
cates the deduction among its partners. ever, Dean’s deduction is limited to the business taxable
income of $80,000 ($50,000 from Beech Partnership, plus
Each partner adds the amount allocated from partner- $35,000 from Cedar Partnership, minus $5,000 loss from
ships (shown on Schedule K-1 (Form 1065), Partner's Dean’s sole proprietorship). Dean carries over $45,000
Share of Income, Deductions, Credits, etc.) to their non- ($125,000 − $80,000) of the elected section 179 costs to
partnership section 179 costs and then applies the dollar 2023. Dean allocates the carryover amount to the cost of
limit to this total. To determine any reduction in the dollar section 179 property placed in service in Dean’s sole pro-
limit for costs over $2,700,000, the partner does not in- prietorship, and notes that allocation in the books and re-
clude any of the cost of section 179 property placed in cords.
service by the partnership. After the dollar limit (reduced
for any nonpartnership section 179 costs over

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Different tax years. For purposes of the business in- into account when figuring a shareholder's taxable in-
come limit, if the partner's tax year and that of the partner- come.
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
the partner's tax year. A corporation's taxable income from its active conduct of
any trade or business is its taxable income figured with
Example. John and James Oak are equal partners in the following changes.
Oak Partnership. Oak Partnership uses a tax year ending
January 31. John and James both use a tax year ending 1. It is figured before deducting the section 179 deduc-
December 31. For its tax year ending January 31, 2022, tion, any net operating loss deduction, and special de-
Oak Partnership's taxable income from the active conduct ductions (as reported on the corporation's income tax
of its business is $80,000, of which $70,000 was earned return).
during 2021. 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 2022 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
the total amount of section 179 expenses allocated from How Do You Elect the
the partnership even if the partner cannot currently deduct
the total amount. If the partner disposes of their partner- Deduction?
ship interest, the partner's basis for determining gain or
loss is increased by any outstanding carryover of disal-
lowed section 179 expenses allocated from the partner- Terms you may need to know
ship. (see Glossary):
Listed property
Adjustment of partnership's basis in section 179
property. The basis of a partnership's section 179 prop- Placed in service
erty must be reduced by the section 179 deduction elec-
ted by the partnership. This reduction of basis must be
made even if a partner cannot deduct all or part of the Election. You elect to take the section 179 deduction by
section 179 deduction allocated to that partner by the completing Part I of Form 4562.
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 For property placed in service in 2022, file Form 4562
partners also apply to an S corporation and its sharehold- with either of the following.
ers. The deduction limits apply to an S corporation and to
each shareholder. The S corporation allocates its deduc- • Your original 2022 tax return, whether or not you file it
tion to the shareholders who then take their section 179 timely.
deduction subject to the limits. • An amended return for 2022 filed within the time pre-
scribed by law. An election made on an amended re-
Figuring taxable income for an S corporation. To fig- turn must specify the item of section 179 property to
ure taxable income (or loss) from the active conduct by an which the election applies and the part of the cost of
S corporation of any trade or business, you total the net each such item to be taken into account. The amen-
income and losses from all trades or businesses actively ded return must also include any resulting adjust-
conducted by the S corporation during the year. ments to taxable income.
To figure the net income (or loss) from a trade or busi-
ness actively conducted by an S corporation, you take into You must keep records that show the specific
account the items from that trade or business that are identification of each piece of qualifying section
passed through to the shareholders and used in determin- RECORDS 179 property. These records must show how you
ing each shareholder's tax liability. However, you do not acquired the property, the person you acquired it from,
take into account any credits, tax-exempt income, the and when you placed it in service.
section 179 deduction, and deductions for compensation
paid to shareholder-employees. For purposes of deter- Election for qualified section 179 real property. You
mining the total amount of S corporation items, treat de- can elect to expense certain qualified real property that
ductions and losses as negative income. In figuring the you placed in service as section 179 property for tax years
taxable income of an S corporation, disregard any limits beginning in 2022. For more information, see Election
on the amount of an S corporation item that must be taken above. Also, see Revenue Procedure 2019-8 on page 347

Chapter 2 Electing the Section 179 Deduction Page 21

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of Internal Revenue Bulletin 2019-3, available at with the year you placed the property in service and
IRS.gov/irb/2019-03_IRB#RP-2019-08. include the year of recapture.
Revoking an election. An election (or any specification 2. Subtract the depreciation figured in (1) from the sec-
made in the election) to take a section 179 deduction for tion 179 deduction you claimed. The result is the
2022 can be revoked without IRS approval by filing an amount you must recapture.
amended return. The amended return must be filed within
Example. In January 2020, 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.
When Must You Recapture the Paul used the property only for business in 2020 and
2021. In 2022, Paul used the property 40% for business
Deduction? and 60% for personal use. Paul figures the recapture
amount as follows.
Terms you may need to know
Section 179 deduction claimed (2019). . . . . . . . $5,000.00
(see Glossary):
Minus: Allowable depreciation using Table A-1
Disposition (instead of section 179 deduction):
Exchange 2020. . . . . . . . . . . . . . . . . . . . . . . . . $1,666.50
2021. . . . . . . . . . . . . . . . . . . . . . . . . 2,222.50
Recapture 2022 ($740.50 × 40% (0.40)
Recovery period (business)). . . . . . . . . . . . . . . . . . . . 296.20 4,185.20
Section 1245 property 2022 — Recapture amount. . . . . . . . . . . . . . . $814.80

Paul must include $814.80 in income for 2022.
You may have to recapture the section 179 deduction if, in If any qualified zone property placed in service
any year during the property's recovery period, the per- ! during a particular year ceases to be used in an
centage of business use drops to 50% or less. In the year CAUTION empowerment zone by an enterprise zone busi-
the business use drops to 50% or less, you include the re- ness in a later year, the benefit of the increased section
capture amount as ordinary income in Part IV of Form 179 deduction must be reported as other income on your
4797. You also increase the basis of the property by the return.
recapture amount. Recovery periods for property are dis-
cussed under Which Recovery Period Applies? in chap-
ter 4.
If you sell, exchange, or otherwise dispose of the
! property, do not figure the recapture amount un-
CAUTION der the rules explained in this discussion. Instead, 3.
use the rules for recapturing depreciation explained in
chapter 3 of Pub. 544 under Section 1245 Property. For
qualified real property, see Notice 2013-59 for determin- Claiming the Special
ing the portion of the gain that is attributable to section
1245 property upon the sale or other disposition of quali- Depreciation Allowance
fied real property. You can find Notice 2013-59 at
IRS.gov/irb/2013-40_IRB/ar14.html.

If the property is listed property (described in Introduction
! chapter 5), do not figure the recapture amount un- You can take a special depreciation allowance to recover
CAUTION der the rules explained in this discussion when
part of the cost of qualified property (defined next) placed
the percentage of business use drops to 50% or less. In-
in service during the tax year. The allowance applies only
stead, use the rules for recapturing excess depreciation in
for the first year you place the property in service. The al-
chapter 5 under What Is the Business-Use Requirement.
lowance is an additional deduction you can take after any
section 179 deduction and before you figure regular de-
Figuring the recapture amount. To figure the amount preciation under MACRS for the year you place the prop-
to recapture, take the following steps. erty in service.
1. Figure the depreciation that would have been allowa- This chapter explains what is qualified property. It also
ble on the section 179 deduction you claimed. Begin includes rules regarding how to figure an allowance, how

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to elect not to claim an allowance, and when you must re- Excepted Property
capture an allowance.
See chapter 6 for information about getting publications Qualified reuse and recycling property does not include
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
required 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 prop-
ing. erty.
• Qualified reuse and recycling property.
• Certain qualified property acquired after September Certain Qualified Property Acquired
27, 2017. After September 27, 2017

• Certain plants bearing fruits and nuts. You can elect to take a 100% special depreciation allow-
The following discussions provide information about ance for property acquired after September 27, 2017, and
the types of qualified property listed above for which you placed in service before January 1, 2023 (or before Janu-
can take the special depreciation allowance. ary 1, 2024, for certain property with a long production pe-
riod and for certain aircraft). Your property is qualified
property if it meets the following.
Qualified Reuse and Recycling
Property • Tangible property depreciated under MACRS with a
recovery period of 20 years or less.
You can take a 50% special depreciation allowance for • Computer software defined in and depreciated under
qualified reuse and recycling property. Qualified reuse section 167(f)(1) of the Internal Revenue Code.
and recycling property is any machinery or equipment (not
including buildings or real estate), along with any appurte- • Water utility property.
nance, that is used exclusively to collect, distribute, or re- • Qualified film, television, and live theatrical produc-
cycle qualified reuse and recyclable materials (as defined tions, as defined in sections 181(d) and (e) of the In-
in section 168(m)(3)(B) of the Internal Revenue Code). ternal Revenue Code.
Qualified reuse and recycling property also includes soft-
ware necessary to operate such equipment. The property • A specified plant for which you made the election to
apply section 168(k)(5) for the tax year in which the
must meet the following requirements.
plant is planted or grafted (explained later under Cer-
• The property must be depreciated under MACRS. tain Plants Bearing Fruits and Nuts).
• The property must have a useful life of at least 5 • It is not excepted property (explained later under Ex-
years. cepted Property).
• The original use of the property must begin with you Qualified property must also be placed in service be-
after August 31, 2008. fore January 1, 2027 (or before January 1, 2028, for cer-
• You must have acquired the property by purchase (as tain property with a long production period and for certain
discussed under Property Acquired by Purchase in aircraft), and can be either new property or certain used
chapter 2) after August 31, 2008, with no binding writ- property.

ten contract for the acquisition in effect before Sep- Note. For certain qualified property acquired after
tember 1, 2008. September 27, 2017, and placed in service after Decem-
• The property must be placed in service for use in your ber 31, 2022, and before January 1, 2024 (other than
trade or business after August 31, 2008. certain property with a long production period and certain

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aircraft), you can elect to take an 80% special deprecia- Excepted Property
tion allowance.
Qualified property acquired after September 27, 2017,
Long Production Period Property does not include any of the following.
• 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.
Noncommercial Aircraft • Property described in section 168(k)(9)(B) and placed
in service in any tax year beginning after December
31, 2017.
To be qualified property, noncommercial aircraft must
meet the following requirements.
• The aircraft must not be tangible personal property
Certain Plants Bearing Fruits
used in the trade or business of transporting persons
or property (except for agricultural or firefighting pur- and Nuts
poses).
• The aircraft must be purchased (as discussed under You can elect to claim a 100% special depreciation allow-
Property Acquired by Purchase in chapter 2) by a pur- ance for the adjusted basis of certain specified plants (de-
chaser who at the time of the contract for purchase fined later) bearing fruits and nuts planted or grafted after
makes a nonrefundable deposit of the lesser of 10% September 27, 2017, and before January 1, 2023.
of the cost or $100,000.
A specified plant is:
• The aircraft must have an estimated production period
exceeding 4 months and a cost exceeding $200,000. • Any tree or vine that bears fruits or nuts, and
• You must have acquired the aircraft, or acquired the • Any other plant that will have more than one yield of
fruits or nuts and generally has a pre-productive pe-
aircraft pursuant to a written contract entered into, be-
riod of more than 2 years from planting or grafting to
fore January 1, 2027.
the time it begins bearing fruits or nuts.
See section 168(k)(2)(C) of the Internal Revenue Code. Any property planted or grafted outside the United
States does not qualify as a specified plant.
Special Rules
If you elect to claim the special depreciation allowance
Syndicated leasing transactions. If qualified property for any specified plant, the special depreciation allowance
is originally placed in service by a lessor, the property is applies only for the tax year in which the plant is planted or
sold within 3 months of the date it was placed in service, grafted. The plant will not be treated as qualified property
and the user of the property does not change, then the eligible for the special depreciation allowance in the sub-
property is treated as originally placed in service by the sequent tax year in which it is placed in service.
taxpayer no earlier than the date of the last sale.
Multiple units of property subject to the same lease will To make the election, attach a statement to your timely
be treated as originally placed in service no earlier than filed return (including extensions) for the tax year in which
the date of the last sale if the property is sold within 3 you plant or graft the specified plant(s), indicating you are
months after the final unit is placed in service and the pe- electing to apply section 168(k)(5) and identifying the
riod between the time the first and last units are placed in specified plant(s) for which you are making the election.
service does not exceed 12 months. The election once made cannot be revoked without IRS
consent.

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  Note. For  certain  specified  plants  bearing  fruits  and   Depreciating the remaining cost.   After you figure your 
nuts planted or grafted after December 31, 2022, and be-        special depreciation allowance for your qualified property, 
fore January 1, 2024, you can elect to claim an 80% spe-        you  can  use  the  remaining  cost  to  figure  your  regular 
cial depreciation allowance.                                    MACRS depreciation deduction (discussed in     chapter 4). 
                                                                Therefore, you must reduce the depreciable basis of the 
  See section 168(k)(5) of the Internal Revenue Code.
                                                                property by the special depreciation allowance before fig-
                                                                uring your regular MACRS depreciation deduction.

How Much Can You Deduct?                                        Example. On  July  1,  2022,  you  placed  in  service  in 
                                                                your  business  qualified  property  that  cost  $450,000  and 
                                                                that you acquired after September 27, 2017. You did not 
Terms you may need to know                                      elect to claim a section 179 deduction. You deduct 100% 
(see Glossary):                                                 of the cost ($450,000) as a special depreciation allowance 
                                                                for 2022. You have no remaining cost to figure a regular 
   Adjusted basis                                               MACRS depreciation deduction for your property for 2022 
   Basis                                                        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  deprecia-
line 25.
                                                                tion  deduction.  See Figuring  the  Deduction  for  Property 
        If you place qualified property in service in a short   Acquired  in  a  Nontaxable  Exchange  in  chapter  4  under 
 TIP    tax year, you can take the full amount of a special     How Is the Depreciation Deduction Figured.
        depreciation allowance.

Depreciable  basis.  This  is  the  property's  cost  or  other How Can You Elect Not To 
basis multiplied by the percentage of business/investment 
use, reduced by the total amount of any credits and de-         Claim an Allowance?
ductions allocable to the property.
  The following are examples of some credits and deduc-         You can elect, for any class of property, not to deduct any 
tions that reduce depreciable basis.                            special  depreciation  allowances  for  all  property  in  such 
 • Any section 179 deduction.                                   class placed in service during the tax year.
 • Any deduction for removal of barriers to the disabled        To make an election, attach a statement to your return 
   and the elderly.                                             indicating what election you are making and the class of 
                                                                property for which you are making the election.
 • Any disabled access credit, enhanced oil recovery 
   credit, and credit for employer-provided childcare fa-       The election must be made separately by each person 
   cilities and services.                                       owning  qualified  property  (for  example,  by  the  partner-
                                                                ships, by the S corporation, or for each member of a con-
 • Basis adjustment to investment credit property under         solidated group by the common parent of the group).
   section 50(c) of the Internal Revenue Code.
 • Section 181 expense deduction.                               When to make election. Generally, you must make the 
                                                                election on a timely filed tax return (including extensions) 
  For additional credits and deductions that affect basis,      for the year in which you place the property in service.
see section 1016 of the Internal Revenue Code.                  However, if you timely filed your return for the year with-
  For  information  about  how  to  determine  the  cost  or    out making the election, you can still make the election by 
other basis of property, see What Is the Basis of Your De-      filing an amended return within 6 months of the due date 
preciable Property? in chapter 1. For a discussion of busi-     of the original return (not including extensions). Attach the 
ness/investment  use,  see Partial  business  or  investment    election statement to the amended return. On the amen-
use under Property Used in Your Business or Income-Pro-         ded return, write “Filed pursuant to section 301.9100-2.”
ducing Activity in chapter 1.

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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
CAUTION after 2015 will not be subject to an alternative
minimum tax adjustment for depreciation.
4.

When Must You Recapture an
Figuring Depreciation
Allowance?
Under MACRS
When you dispose of property for which you claimed a
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 The Modified Accelerated Cost Recovery System
You Recapture MACRS Depreciation? in chapter 4 for (MACRS) is used to recover the basis of most business
more information. and investment property placed in service after 1986.
MACRS consists of two depreciation systems, the Gen-
Recapture of allowance deducted for qualified GO
eral Depreciation System (GDS) and the Alternative De-
Zone property. If, in any year after the year you claim the
preciation System (ADS). Generally, these systems pro-
special depreciation allowance for qualified GO Zone
vide different methods and recovery periods to use in
property (including specified GO Zone extension prop-
figuring depreciation deductions.
erty), the property ceases to be used in the GO Zone, you
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
tion allowance. For additional guidance, see Notice CAUTION You Use To Depreciate Your Property? in chap-
2008-25 on page 484 of Internal Revenue Bulletin 2008-9, ter 1.
available at IRS.gov/irb/2008-09_IRB/index.html. This chapter explains how to determine which MACRS
Qualified cellulosic biomass ethanol plant property, depreciation system applies to your property. It also dis-
qualified cellulosic biofuel plant property, and quali- cusses other information you need to know before you
fied second generation biofuel plant property. If, in can figure depreciation under MACRS. This information
any year after the year you claim the special depreciation includes the property's recovery class, placed in service
allowance for any qualified cellulosic biomass ethanol date, and basis, as well as the applicable recovery period,
plant property, qualified cellulosic biofuel plant property, convention, and depreciation method. It explains how to
or qualified second generation biofuel plant property, the use this information to figure your depreciation deduction
property ceases to be qualified cellulosic biomass ethanol and how to use a general asset account to depreciate a
plant property, qualified cellulosic biofuel plant property, group of properties. Finally, it explains when and how to
or qualified second generation biofuel plant property, you recapture MACRS depreciation.
may have to recapture as ordinary income the excess
benefit you received from claiming the special deprecia- Useful Items
tion allowance. You may want to see:

Recapture of allowance for qualified Recovery Assis- Publication
tance property. If, in any year after the year you claim
225
the special depreciation allowance for qualified Recovery 225 Farmer's Tax Guide
Assistance property, the property ceases to be used in the 463 463 Travel, Gift, and Car Expenses
Kansas disaster area, you may have to recapture as ordi-
nary income the excess benefit you received from claim- 544 544 Sales and Other Dispositions of Assets
ing the special depreciation allowance. For additional 551 551 Basis of Assets
guidance, see Notice 2008-67 on page 307 of Internal
Revenue Bulletin 2008-32, available at IRS.gov/irb/ 587 587 Business Use of Your Home
2008-32_IRB/index.html.
Form (and Instructions)
Recapture of allowance for qualified disaster assis-
2106
tance property. If, in any year after the year you claim 2106 Employee Business Expenses
the special depreciation allowance for qualified disaster 4562 4562 Depreciation and Amortization

Page 26 Chapter 4 Figuring Depreciation Under MACRS

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See chapter 6 for information about getting publications • All property used predominantly in a farming business
and forms. 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 an Executive order is in effect because the
(GDS or ADS) Applies? country maintains trade restrictions or engages in
other discriminatory acts.
Terms you may need to know • Any tangible property used predominantly outside the
(see Glossary): United States during the tax year.
Listed property • Any listed property used 50% or less in a qualified
business use during the tax year (discussed later in
Nonresidential real property chapter 5).
Placed in service If you are required to use ADS to depreciate your
Property class ! property, you cannot claim any special deprecia-
CAUTION tion allowance (discussed in chapter 3) for the
Recovery period
property.
Residential rental property
Tangible property Electing ADS. Although your property may qualify for
GDS, you can elect to use ADS. The election must gener-
Tax exempt
ally cover all property in the same property class that you
placed in service during the year. However, the election
for residential rental property and nonresidential real prop-
Your use of either the General Depreciation System erty can be made on a property-by-property basis. Once
(GDS) or the Alternative Depreciation System (ADS) to you make this election, you can never revoke it.
depreciate property under MACRS determines what de- You make the election by completing Form 4562, Part
preciation method and recovery period you use. You must III, line 20.
generally use GDS unless you are specifically required by
law to use ADS or you elect to use ADS.
If you placed your property in service in 2022, complete Which Property Class Applies
Part III of Form 4562 to report depreciation using MACRS.
Complete Section B of Part III to report depreciation using Under GDS?
GDS, and complete Section C of Part III to report depreci-
ation using ADS. If you placed your property in service be-
fore 2021 and are required to file Form 4562, report de- Terms you may need to know
preciation using either GDS or ADS on line 17 in Part III. (see Glossary):
Required use of ADS. You must use ADS for the follow- Class life
ing property. Nonresidential real property
• Nonresidential real property, residential real property, Placed in service
and qualified improvement property held by an elect-
ing real property trade or business (as defined in sec- Property class
tion 163(j)(7)(B) of the Internal Revenue Code). For Recovery period
more information, see Revenue Procedure 2019-8 on
Residential rental property
page 347 of Internal Revenue Bulletin 2019-3, availa-
ble at IRS.gov/irb/2019-03_IRB#RP-2019-08, as Section 1245 property
modified by Revenue Procedure 2021-28 on page 5 of Section 1250 property
Internal Revenue Bulletin 2021-27, available at
IRS.gov/irb/2021-27_IRB#RP-2021-28.

• Any property with a recovery period of 10 years or The following is a list of the nine property classifications
more under GDS held by an electing farming business under GDS and examples of the types of property inclu-
(as defined in section 163(j)(7)(C) of the Internal Rev- ded in each class. These property classes are also listed
enue Code). For more information, see Revenue Pro- under column (a) in Section B of Part III of Form 4562. For
cedure 2019-8 on page 347 of Internal Revenue Bulle- detailed information on property classes, see Appendix B ,
tin 2019-3, available at IRS.gov/irb/ Table of Class Lives and Recovery Periods, in this publi-
2019-03_IRB#RP-2019-08. cation.
• Any tax-exempt use property. 1. 3-year property.
• Any tax-exempt bond-financed property.

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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 a. Farm buildings (other than single-purpose agricul-
after 2017. The original use of the property must tural or horticultural structures).
begin with you after 2017.
b. Municipal sewers not classified as 25-year prop-
3. 7-year property. erty.
a. Office furniture and fixtures (such as desks, files, c. Initial clearing and grading land improvements for
and safes). electric utility transmission and distribution plants.
b. Used agricultural machinery and equipment 7. 25-year property. This class is water utility property,
placed in service after 2017, grain bins, cotton gin- which is either of the following.
ning assets, or fences used in a farming business
a. Property that is an integral part of the gathering,
(but no other land improvements).
treatment, or commercial distribution of water, and
c. Railroad track. that, without regard to this provision, would be
20-year property.
d. Any property that does not have a class life and
has not been designated by law as being in any b. Municipal sewers other than property placed in
other class. service under a binding contract in effect at all
times since June 9, 1996.
e. Certain motorsports entertainment complex prop-
erty (defined later). 8. Residential rental property. This is any building or
structure, such as a rental home (including a mobile
f. Any natural gas gathering line placed in service af-
home), if 80% or more of its gross rental income for
ter April 11, 2005. See Natural gas gathering line
the tax year is from dwelling units. A dwelling unit is a
and electric transmission property, later.
house or apartment used to provide living accommo-
4. 10-year property. dations in a building or structure. It does not include a
unit in a hotel, motel, or other establishment where
a. Vessels, barges, tugs, and similar water transpor- more than half the units are used on a transient basis.
tation equipment. If you occupy any part of the building or structure for
b. Any single-purpose agricultural or horticultural personal use, its gross rental income includes the fair
structure. rental value of the part you occupy.
c. Any tree or vine bearing fruits or nuts. 9. Nonresidential real property. This is section 1250
property, such as an office building, store, or ware-
d. Qualified small electric meter and qualified smart house, that is neither residential rental property nor
electric grid system (defined later) placed in serv- property with a class life of less than 27.5 years.
ice on or after October 3, 2008.

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Qualified rent-to-own property. Qualified rent-to-own all the required payments or the early purchase pay-
property is property held by a rent-to-own dealer for pur- ments required under the contract to acquire legal ti-
poses of being subject to a rent-to-own contract. It is tan- tle.
gible personal property generally used in the home for
• Provides that the customer has no right to sell, sub-
personal use. It includes computers and peripheral equip-
lease, mortgage, pawn, pledge, or otherwise dispose
ment, televisions, videocassette recorders, stereos, cam-
of the property until all contract payments have been
corders, appliances, furniture, washing machines and dry-
made.
ers, refrigerators, and other similar consumer durable
property. Consumer durable property does not include Motorsports entertainment complex. This is a racing
real property, aircraft, boats, motor vehicles, or trailers. track facility permanently situated on land that hosts one
If some of the property you rent to others under a or more racing events for automobiles, trucks, or motorcy-
rent-to-own agreement is of a type that may be used by cles during the 36-month period after the first day of the
the renters for either personal or business purposes, you month in which the facility is placed in service. The events
can still treat this property as qualified property as long as must be open to the public for the price of admission.
it does not represent a significant portion of your leasing
property. However, if this dual-use property does repre- Qualified smart electric grid system. A qualified smart
sent a significant portion of your leasing property, you electric grid system means any smart grid property used
must prove that this property is qualified rent-to-own prop- as part of a system for electric distribution grid communi-
erty. cations, monitoring, and management placed in service
after October 3, 2008, by a taxpayer who is a supplier of
Rent-to-own dealer. You are a rent-to-own dealer if
electrical energy or a provider of electrical energy serv-
you meet all the following requirements.
ices. Smart grid property includes electronics and related
• You regularly enter into rent-to-own contracts (defined equipment that is capable of:
below) in the ordinary course of your business for the
• Sensing, collecting, and monitoring data of or from all
use of consumer property.
portions of a utility's electric distribution grid;
• A substantial portion of these contracts end with the
• Providing real-time, two-way communications to moni-
customer returning the property before making all the
tor or to manage the grid; and
payments required to transfer ownership.
• Providing real-time analysis of an event prediction
• The property is tangible personal property of a type
based on collected data that can be used to provide
generally used within the home for personal use.
electric distribution system reliability, quality, and per-
Rent-to-own contract. This is any lease for the use of formance.
consumer property between a rent-to-own dealer and a
customer who is an individual, which meets all of the fol- Retail motor fuels outlet. Real property is a retail motor
lowing requirements. fuels outlet if it is used to a substantial extent in the retail
marketing of petroleum or petroleum products (whether or
• Is titled “Rent-to-Own Agreement,” “Lease Agreement not it is also used to sell food or other convenience items)
with Ownership Option,” or other similar language. and meets any one of the following three tests.
• Provides a beginning date and a maximum period of • It is not larger than 1,400 square feet.
time, not to exceed 156 weeks or 36 months from the
beginning date, for which the contract can be in effect • 50% or more of the gross revenues generated from
(including renewals or options to extend). the property are derived from petroleum sales.
• Provides for regular periodic (weekly or monthly) pay- • 50% or more of the floor space in the property is devo-
ments that can be either level or decreasing. If the ted to petroleum marketing sales.
payments are decreasing, no payment can be less A retail motor fuels outlet does not include any facility rela-
than 40% of the largest payment. ted to petroleum and natural gas trunk pipelines.
• Provides for total payments that generally exceed the
Qualified improvement property. Generally, this is any
normal retail price of the property plus interest.
improvement to an interior part of a building that is nonres-
• Provides for total payments that do not exceed idential real property, and the improvement is section
$10,000 for each item of property. 1250 property, is made by you, and is placed in service by
you after 2017 and after the date the building was first
• Provides that the customer has no legal obligation to
placed in service by any person.
make all payments outlined in the contract and that, at
However, a qualified improvement does not include
the end of each weekly or monthly payment period,
any improvement for which the expenditure is attributable
the customer can either continue to use the property
to any of the following.
by making the next payment or return the property in
good working order with no further obligations and no • The enlargement of the building.
entitlement to a return of any prior payments.
• Any elevator or escalator.
• Provides that legal title to the property remains with
• The internal structural framework of the building.
the rent-to-own dealer until the customer makes either

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Qualified smart electric meter. A qualified smart elec-
tric meter is any time-based meter and related communi-
cation equipment, which is placed in service by a supplier What Is the Placed in Service
of electric energy or a provider of electric energy services
Date?
and which is capable of being used by you as part of a
system that meets all of the following requirements.
• Measures and records electricity usage data on a Terms you may need to know
time-differentiated basis in at least 24 separate time (see Glossary):
segments per day.
Placed in service
• Provides for the exchange of information between the
supplier or provider and the customer's smart electric
meter in support of time-based rates or other forms of You begin to claim depreciation when your property is
demand response. placed in service for either use in a trade or business or
• Provides data to the supplier or provider so that the the production of income. The placed in service date for
supplier or provider can provide energy usage infor- your property is the date the property is ready and availa-
mation to customers electronically. ble for a specific use. It is therefore not necessarily the
date it is first used. If you converted property held for per-
• Provides all commercial and residential customers of
sonal use to use in a trade or business or for the produc-
such supplier or provider with net metering. Net me-
tion of income, treat the property as being placed in serv-
tering means allowing a customer a credit, if any, as
ice on the conversion date. See Placed in Service under
complies with applicable federal and state laws and
When Does Depreciation Begin and End? in chapter 1 for
regulations for providing electricity to the supplier or
examples illustrating when property is placed in service.
provider.

Natural gas gathering line and electric transmission
property. Any natural gas gathering line placed in serv- What Is the Basis for
ice after April 11, 2005, is treated as 7-year property, and
electric transmission property (that is section 1245 prop- Depreciation?
erty) used in the transmission at 69 or more kilovolts of
electricity and any natural gas distribution line placed in
service after April 11, 2005, are treated as 15-year prop- Terms you may need to know
erty, if the following requirements are met. (see Glossary):
• The original use of the property must have begun with Basis
you after April 11, 2005. Original use means the first
use to which the property is put, whether or not by
you. Therefore, property used by any person before The basis for depreciation of MACRS property is the prop-
April 12, 2005, is not original use. Original use in- erty's cost or other basis multiplied by the percentage of
cludes additional capital expenditures you incurred to business/investment use. For a discussion of business/
recondition or rebuild your property. However, original investment use, see Partial business or investment use
use does not include the cost of reconditioned or re- under Property Used in Your Business or Income-Produc-
built property you acquired. Property containing used ing Activity in chapter 1. Reduce that amount by any cred-
parts will not be treated as reconditioned or rebuilt if its and deductions allocable to the property. The following
the cost of the used parts is not more than 20% of the are examples of some credits and deductions that reduce
total cost of the property. basis.
• The property must not be placed in service under a • Any deduction for section 179 property.
binding contract in effect before April 12, 2005.
• Any deduction under section 179B of the Internal Rev-
• The property must not be self-constructed property enue Code for capital costs to comply with Environ-
(property you manufacture, construct, or produce for mental Protection Agency sulfur regulations.
your own use), if you began the manufacture, con-
struction, or production of the property before April 12, • Any deduction under section 179D of the Internal Rev-
2005. Property that is manufactured, constructed, or enue Code for certain energy efficient commercial
produced for your use by another person under a writ- building property.
ten binding contract entered into by you or a related • Any deduction for removal of barriers to the disabled
party before the manufacture, construction, or produc- and the elderly.
tion of the property is considered to be manufactured,
constructed, or produced by you. • Any disabled access credit, enhanced oil recovery
credit, and credit for employer-provided childcare fa-
cilities and services.
• Any special depreciation allowance.

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

Applies? The GDS recovery periods for property not listed above
can be found in Appendix B , Table of Class Lives and Re-
covery Periods. Residential rental property and nonresi-
Terms you may need to know dential real property are defined earlier under Which Prop-
(see Glossary): erty Class Applies Under GDS.
Active conduct of a trade or business
Enter the appropriate recovery period on Form 4562
Basis under column (d) in Section B of Part III, unless already
Improvement shown (for 25-year property, residential rental property,
and nonresidential real property).
Listed property
Nonresidential real property Office in the home. If your home is a personal-use sin-
gle family residence and you begin to use part of your
Placed in service home as an office, depreciate that part of your home as
Property class nonresidential real property over 39 years (31.5 years if
you began using it for business before May 13, 1993).
Recovery period However, if your home is an apartment in an apartment
Residential rental property building that you own and the building is residential rental
property, as defined earlier under Which Property Class
Section 1245 property Applies Under GDS, depreciate the part used as an office
as residential rental property over 27.5 years. See Pub.
587 for a discussion of the tests you must meet to claim
The recovery period of property is the number of years expenses, including depreciation, for the business use of
over which you recover its cost or other basis. It is deter- your home.
mined based on the depreciation system (GDS or ADS)
used. Home changed to rental use. If you begin to rent a
home that was your personal home before 1987, you de-
preciate it as residential rental property over 27.5 years.
Recovery Periods Under GDS

Under GDS, property is depreciated over one of the fol- Recovery Periods Under ADS
lowing recovery periods.
The recovery periods for most property are generally lon-
ger under ADS than they are under GDS. The following ta-
Property Class Recovery Period
ble shows some of the ADS recovery periods.
3-year property. . . . . . . . . . . . . . . 3 years1

5-year property. . . . . . . . . . . . . . . 5 years Recovery
7-year property. . . . . . . . . . . . . . . 7 years Property Period
10-year property. . . . . . . . . . . . . . 10 years
15-year property. . . . . . . . . . . . . . 15 years2 Rent-to-own property . . . . . . . . . . . . . . . . 4 years
20-year property. . . . . . . . . . . . . . 20 years Automobiles and light duty trucks . . . . . . . 5 years
25-year property. . . . . . . . . . . . . . 25 years3 Computers and peripheral equipment . . . 5 years
Residential rental property . . . . . . 27.5 High technology telephone station
years equipment installed on customer
Nonresidential real property . . . . . 39 years4 premises . . . . . . . . . . . . . . . . . . . . . . . . 5 years

Chapter 4 Figuring Depreciation Under MACRS Page 31

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High technology medical equipment . . . . . 5 years MACRS to figure your depreciation deduction for the addi-
Personal property with no class life . . . . . . 12 years tion. Under GDS, the property class for the addition is res-
Natural gas gathering lines . . . . . . . . . . . . 14 years idential rental property and its recovery period is 27.5
Single-purpose agricultural and years because the home to which the addition is made
horticultural structures . . . . . . . . . . . . . . 15 years would be residential rental property if you had placed it in
Any tree or vine bearing fruits or nuts . . . . 20 years service this year.
Initial clearing and grading land
improvements for gas utility property . . 20 years
Initial clearing and grading land Which Convention Applies?
improvements for electric utility
transmission and distribution plants . . . 25 years
Electric transmission property used in the Terms you may need to know
transmission at 69 or more kilovolts of (see Glossary):
electricity. . . . . . . . . . . . . . . . . . . . . . . . 30 years Basis
Natural gas distribution lines. . . . . . . . . . . 35 years
Nonresidential real property . . . . . . . . . . . 40 years Convention
Residential rental property . . . . . . . . . . . . 30 years1 Disposition

Section 1245 real property not listed in Nonresidential real property

Appendix B. . . . . . . . . . . . . . . . . . . . . . 40 years
Railroad grading and tunnel bore . . . . . . . 50 years Placed in service
1 40 years for property placed in service before January 1, Recovery period
2018. Note. The ADS recovery period for residential rental
property placed in service before January 1, 2018, is 30 years Residential rental property
if the property is held by an electing real property trade or
business (as defined in section 163(j)(7)(B)) and section
168(g)(1)(A), (B), (C), (D), or (E) did not apply to the property Under MACRS, averaging conventions establish when the
before January 1, 2018. recovery period begins and ends. The convention you use
determines the number of months for which you can claim
The ADS recovery periods for property not listed above depreciation in the year you place property in service and
can be found in the tables in Appendix B. Rent-to-own in the year you dispose of the property.
property, residential rental property, and nonresidential
The mid-month convention. Use this convention for
real property are defined earlier under Which Property
nonresidential real property, residential rental property,
Class Applies Under GDS.
and any railroad grading or tunnel bore.
Tax-exempt use property subject to a lease. The ADS Under this convention, you treat all property placed in
recovery period for any property leased under a lease service or disposed of during a month as placed in service
agreement to a tax-exempt organization, governmental or disposed of at the midpoint of the month. This means
unit, or foreign person or entity (other than a partnership) that a one-half month of depreciation is allowed for the
cannot be less than 125% of the lease term. month the property is placed in service or disposed of.
Your use of the mid-month convention is indicated by
the “MM” already shown under column (e) in Part III of
Additions and Improvements Form 4562.

An addition or improvement you make to depreciable The mid-quarter convention. Use this convention if the
property is treated as separate depreciable property. See mid-month convention does not apply and the total depre-
How Do You Treat Repairs and Improvements? in chap- ciable bases of MACRS property you placed in service
ter 1 for a definition of improvements. Its property class during the last 3 months of the tax year (excluding nonres-
and recovery period are the same as those that would ap- idential real property, residential rental property, any rail-
ply to the original property if you had placed it in service at road grading or tunnel bore, property placed in service
the same time you placed the addition or improvement in and disposed of in the same year, and property that is be-
service. The recovery period begins on the later of the fol- ing depreciated under a method other than MACRS) are
lowing dates. more than 40% of the total depreciable bases of all
• The date you place the addition or improvement in MACRS property you placed in service during the entire
service. year.
Under this convention, you treat all property placed in
• The date you place in service the property to which
service or disposed of during any quarter of the tax year
you made the addition or improvement.
as placed in service or disposed of at the midpoint of that
Example. You own a rental home that you have been quarter. This means that, for a 12-month tax year, 1 /1 2
renting out since 1981. If you put an addition on the home months of depreciation is allowed for the quarter the prop-
and place the addition in service this year, you would use erty is placed in service or disposed of.

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If you use this convention, enter “MQ” under column (e) For property placed in service before 1999, you
in Part III of Form 4562. ! could have elected the 150% declining balance
CAUTION method using the ADS recovery periods for cer-
For purposes of determining whether the
tain property classes. If you made this election, continue
! mid-quarter convention applies, the depreciable to use the same method and recovery period for that prop-
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.

The half-year convention. Use this convention if neither Depreciation Methods for Farm
the mid-quarter convention nor the mid-month convention Property
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
If you use this convention, enter “HY” under column (e) the straight line method. You can depreciate real property
in Part III of Form 4562. using the straight line method under either GDS or ADS.
See Figuring the Deduction for a Short Tax Year, later,
Note. For 3-, 5-, 7-, or 10-year property used in a farm-
for information on the short tax year rules.
ing business and placed in service after 2017, in tax years
ending after 2017, the 150% declining balance method is
no longer required. However, the 150% declining balance
Which Depreciation Method method will continue to apply to any 15- or 20-year prop-
erty used in a farming business to which the straight line
Applies? method does not apply or to property for which you elect
the use of the 150% declining balance method.

Terms you may need to know Fruit or nut trees and vines. Depreciate trees and vines
(see Glossary): bearing fruits or nuts under GDS using the straight line
Declining balance method method over a recovery period of 10 years.

Listed property ADS required for some farmers. If you elect not to ap-
ply the uniform capitalization rules to any plant produced
Nonresidential real property
in your farming business, you must use ADS. You must
Placed in service use ADS for all property you place in service in any year
Property class the election is in effect. See the regulations under section
263A of the Internal Revenue Code for information on the
Recovery period uniform capitalization rules that apply to farm property.
Residential rental property
Straight line method Electing a Different Method

Tax exempt As shown in Table 4-1, you can elect a different method
for depreciation for certain types of property. You must
make the election by the due date of the return (including
MACRS provides three depreciation methods under GDS extensions) for the year you placed the property in serv-
and one depreciation method under ADS. ice. However, if you timely filed your return for the year
without making the election, you can still make the elec-
• The 200% declining balance method over a GDS re- tion by filing an amended return within 6 months of the
covery period. due date of the return (excluding extensions). Attach the
• The 150% declining balance method over a GDS re- election to the amended return and write “Filed pursuant
covery period. to section 301.9100-2” on the election statement. File the
amended return at the same address you filed the original
• The straight line method over a GDS recovery period.
return. Once you make the election, you cannot change it.
• The straight line method over an ADS recovery period.

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If you elect to use a different method for one item Property class
! in a property class, you must apply the same Recovery period
CAUTION method to all property in that class placed in serv-
ice during the year of the election. However, you can Straight line method
make the election on a property-by-property basis for non- Unadjusted basis
residential real and residential rental property.

150% election. Instead of using the 200% declining bal- To figure your depreciation deduction under MACRS, you
ance method over the GDS recovery period for property in first determine the depreciation system, property class,
the 3-, 5-, 7-, or 10-year property class, you can elect to placed in service date, basis amount, recovery period,
use the 150% declining balance method. Make the elec- convention, and depreciation method that apply to your
tion by entering “150 DB” under column (f) in Part III of property. Then, you are ready to figure your depreciation
Form 4562. deduction. You can figure it using a percentage table pro-
vided by the IRS, or you can figure it yourself without us-
Straight line election. Instead of using either the 200%
ing the table.
or 150% declining balance method over the GDS recovery
period, you can elect to use the straight line method over
the GDS recovery period. Make the election by entering Using the MACRS Percentage Tables
“S/L” under column (f) in Part III of Form 4562.
To help you figure your deduction under MACRS, the IRS
Election of ADS. As explained earlier under Which De- has established percentage tables that incorporate the
preciation System (GDS or ADS) Applies, you can elect to applicable convention and depreciation method. These
use ADS even though your property may come under percentage tables are in Appendix A near the end of this
GDS. ADS uses the straight line method of depreciation publication.
over fixed ADS recovery periods. Most ADS recovery pe-
riods are listed in Appendix B, or see the table under Re- Which table to use. Appendix A contains the MACRS
covery Periods Under ADS, earlier. Percentage Table Guide, which is designed to help you
Make the election by completing line 20 in Part III of locate the correct percentage table to use for depreciating
Form 4562. your property. The percentage tables immediately follow
the guide.
15- or 20-year farm property. Instead of using the
150% declining balance method over a GDS recovery pe- Rules Covering the Use of the Tables
riod for 15- or 20-year property you use in a farming busi-
ness (other than real property), you can elect to depreci- The following rules cover the use of the percentage ta-
ate it using either of the following methods. bles.
• The straight line method over a GDS recovery period. 1. You must apply the rates in the percentage tables to
your property's unadjusted basis.
• The straight line method over an ADS recovery period.
2. You cannot use the percentage tables for a short tax
year. See Figuring the Deduction for a Short Tax
Year, later, for information on the short tax year rules.
How Is the Depreciation
3. Once you start using the percentage tables for any
Deduction Figured? item of property, you must generally continue to use
them for the entire recovery period of the property.
4. You must stop using the tables if you adjust the basis
Terms you may need to know of the property for any reason other than:
(see Glossary):
a. Depreciation allowed or allowable, or
Adjusted basis
b. An addition or improvement to that property that is
Amortization depreciated as a separate item of property.
Basis
Basis adjustments other than those made due to the items
Business/investment use listed in (4) include an increase in basis for the recapture
Convention of a clean-fuel deduction or credit and a reduction in basis
for a casualty loss.
Declining balance method
Basis adjustment due to recapture of clean-fuel vehi-
Disposition
cle deduction or credit. If you increase the basis of your
Exchange property because of the recapture of part or all of a deduc-
Nonresidential real property tion for clean-fuel vehicles or the credit for clean-fuel vehi-
cle refueling property placed in service before January 1,
Placed in service 2006, you cannot continue to use the percentage tables.

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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.

For the year of the adjustment and the remaining recovery      the  adjustment  and  the  remaining  recovery  period,  you 
period, you must figure the depreciation deduction your-       must figure the depreciation yourself using the property's 
self using the property's adjusted basis at the end of the     adjusted basis at the end of the year. See Figuring the De-
year.  See  Figuring  the  Deduction  Without  Using  the  Ta- duction Without Using the Tables, later.
bles, later.
                                                               Example. On  October  26,  2021,  Sandra  and  Frank 
Basis adjustment due to casualty loss. If you reduce           Elm, calendar year taxpayers, bought and placed in serv-
the basis of your property because of a casualty, you can-     ice in their business a new item of 7-year property. It cost 
not continue to use the percentage tables. For the year of     $39,000  and  they  elected  a  section  179  deduction  of 

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$24,000. They also made an election under section 168(k)         2. Property class . . . . . . . . . . . . . . . . . .                
(7)  not  to  deduct  the  special  depreciation  allowance  for 3. Date placed in service . . . . . . . . . . .                      
7-year property placed in service in 2021. Their unadjus-
ted  basis  after  the  section  179  deduction  was  $15,000    4. Recovery period . . . . . . . . . . . . . . . .                   
($39,000 – $24,000). They figured their MACRS deprecia-          5. Method and convention . . . . . . . . . .                         
tion  deduction  using  the  percentage  tables.  For  2021,     6. Depreciation rate (from 
their MACRS depreciation deduction was $536.                     tables) . . . . . . . . . . . . . . . . . . . . . . . . .            
In July 2022, the property was vandalized and they had 
a  deductible  casualty  loss  of  $3,000.  Sandra  and  Frank                  Part II 
must adjust the property's basis for the casualty loss, so       7. Cost or other basis* . . . . . . . . . . . . .         $
they can no longer use the percentage tables. Their adjus-       8. Business/investment use . . . . . . . .                        %
ted basis at the end of 2022, before figuring their 2022 de-
preciation,  is  $11,464.  They  figure  that  amount  by  sub-  9. Multiply line 7 by line 8 . . . . . . . . . . . . . . . . . .   $
tracting  the  2021  MACRS  depreciation  of  $536  and  the     10. Total claimed for section 179 deduction 
casualty  loss  of  $3,000  from  the  unadjusted  basis  of     and other items . . . . . . . . . . . . . . . . . . . . . . . .    $
$15,000. They must now figure their depreciation for 2022        11. Subtract line 10 from line 9. This is your 
without using the percentage tables.                             tentative basis for depreciation . . . . . . . . . .               $
                                                                 12. Multiply line 11 by the applicable 
Figuring the Unadjusted Basis of Your                            percentage if the special depreciation 
Property                                                         allowance applies. This is your special 
                                                                 depreciation allowance. Enter -0- if this is 
You must apply the table rates to your property's unadjus-       not the year you placed the property in 
ted  basis  each  year  of  the  recovery  period.  Unadjusted 
                                                                 service, the property is not qualified 
basis is the same basis amount you would use to figure 
                                                                 property, or you elected not to claim a 
gain on a sale, but you figure it without reducing your origi-                                                                      $
                                                                 special allowance  . . . . . . . . . . . . . . . . . . . . . .
nal  basis  by  any  MACRS  depreciation  taken  in  earlier 
years.  However,  you  do  reduce  your  original  basis  by     13. Subtract line 12 from line 11. This is your 
other amounts, including the following.                          basis for depreciation . . . . . . . . . . . . . . . . . . .        
                                                                 14. Depreciation rate (from line 6) . . . . . . . . . . .            
• Any amortization taken on the property.
                                                                 15. Multiply line 13 by line 14. This is your 
• Any section 179 deduction claimed.                             MACRS depreciation deduction . . . . . . . . .                     $
• Any special depreciation allowance taken on the prop-
  erty.                                                          * If real estate, do not include cost (basis) of land.

For  business  property  you  purchase  during  the  year,       The  following  example  shows  how  to  figure  your 
the unadjusted basis is its cost minus these and other ap-       MACRS depreciation deduction using the percentage ta-
plicable adjustments. If you trade property, your unadjus-       bles and the MACRS Worksheet.
ted basis in the property received is the cash paid plus the 
adjusted basis of the property traded minus these adjust-        Example. You bought office furniture (7-year property) 
ments.                                                           for $10,000 and placed it in service on August 11, 2022. 
                                                                 You  use  the  furniture  only  for  business.  This  is  the  only 
MACRS Worksheet                                                  property you placed in service this year. You did not elect 
                                                                 a section 179 deduction and the property is not qualified 
You can use this worksheet to help you figure your depre-        property  for  purposes  of  claiming  a  special  depreciation 
ciation deduction using the percentage tables. Use a sep-        allowance, so your property's unadjusted basis is its cost, 
arate worksheet for each item of property. Then, use the         $10,000.  You  use  GDS  and  the  half-year  convention  to 
information from this worksheet to prepare Form 4562.            figure your depreciation. You refer to the MACRS Percent-
                                                                 age Table Guide in Appendix A and find that you should 
        Do  not  use  this  worksheet  for  automobiles.  Use 
                                                                 use Table A-1. Multiply your property's unadjusted basis 
!       the Depreciation Worksheet for Passenger Auto-           each year by the percentage for 7-year property given in 
CAUTION mobiles in chapter 5.
                                                                 Table  A-1.  You  figure  your  depreciation  deduction  using 
                                                                 the MACRS Worksheet as follows.
        MACRS Worksheet 
        Keep for Your Records
                   Part I 
1. MACRS system (GDS or 
  ADS) . . . . . . . . . . . . . . . . . . . . . . . . . . .  

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                        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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                                        8/11/22
  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      land cost $20,000. It is nonresidential real property. The 
other  than  depreciation,  your  depreciation  deduction  for building's unadjusted basis is its original cost, $100,000.
each subsequent year of the recovery period will be as fol-           You  refer  to  the                               MACRS  Percentage  Table  Guide  in 
lows.                                                          Appendix  A  and  find  that  you  should  use  Table  A-7a. 
                                                               March is the third month of your tax year, so multiply the 
Year                    Basis   Percentage Deduction           building's  unadjusted  basis,  $100,000,  by  the  percen-
                                                               tages for the third month in Table A-7a. Your depreciation 
2023. . . . . . . . . . $10,000 24.49%                 $2,449  deduction for each of the first 3 years is as follows.
2024. . . . . . . . . .  10,000 17.49                  1,749
2025. . . . . . . . . .  10,000 12.49                  1,249   Year                                                       Basis Percentage Deduction
2026. . . . . . . . . .  10,000 8.93                   893
2027. . . . . . . . . .  10,000 8.92                   892     1st      . . . . . . . . . . . .                         $ 100,000   2.033%               $2,033
2028. . . . . . . . . .  10,000 8.93                   893     2nd      . . . . . . . . . . .                             100,000                  2.564  2,564
2029. . . . . . . . . .  10,000 4.46                   446     3rd      . . . . . . . . . . .                             100,000                  2.564  2,564

                                                                      Example  2.                                       During  the  year,  you  bought  a  machine 
Examples                                                       (7-year property) for $4,000, office furniture (7-year prop-
The following examples are provided to show you how to         erty)  for  $1,000,  and  a  computer  (5-year  property)  for 
use the percentage tables. In both examples, assume the        $5,000. You placed the machine in service in January, the 
following.                                                     furniture in September, and the computer in October. You 
                                                               do  not  elect  a  section  179  deduction  and  none  of  these 
• You use the property only for business.                      items is qualified property for purposes of claiming a spe-
• You use the calendar year as your tax year.                  cial depreciation allowance.
                                                                      You placed property in service during the last 3 months 
• You use GDS for all the properties.                          of the year, so you must first determine if you have to use 
                                                               the mid-quarter convention. The total bases of all property 
 Example  1.        You  bought  a  building  and  land  for 
                                                               you  placed  in  service  during  the  year  is  $10,000.  The 
$120,000 and placed it in service on March 8. The sales 
                                                               $5,000 basis of the computer, which you placed in service 
contract showed that the building cost $100,000 and the 
                                                               during  the  last  3  months  (the  fourth  quarter)  of  your  tax 
                                                               year, is more than 40% of the total bases of all property 

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($10,000) you placed in service during the year. There- unadjusted basis for the property was $10,000. You used
fore, you must use the mid-quarter convention for all three the mid-quarter convention because this was the only item
items. of business property you placed in service in 2019 and it
You refer to the MACRS Percentage Table Guide in was placed in service during the last 3 months of your tax
Appendix A to determine which table you should use un- year. Your property is in the 5-year property class, so you
der the mid-quarter convention. The machine is 7-year used Table A-5 to figure your depreciation deduction.
property placed in service in the first quarter, so you use Your deductions for 2019, 2020, and 2021 were $500 (5%
Table A-2 . The furniture is 7-year property placed in serv- of $10,000), $3,800 (38% of $10,000), and $2,280
ice in the third quarter, so you use Table A-4. Finally, be- (22.80% of $10,000), respectively. You disposed of the
cause the computer is 5-year property placed in service in property on April 6, 2022. To determine your depreciation
the fourth quarter, you use Table A-5. Knowing what table deduction for 2022, first figure the deduction for the full
to use for each property, you figure the depreciation for year. This is $1,368 (13.68% of $10,000). April is in the
the first 2 years as follows. second quarter of the year, so you multiply $1,368 by
37.5% (0.375) to get your depreciation deduction of $513
for 2022.
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-
1st Furniture 1,000 10.71 107 tiplying a full year of depreciation by a fraction. The
2nd Furniture 1,000 25.51 255 numerator of the fraction is the number of months (includ-
ing partial months) in the year that the property is consid-
1st Computer 5,000 5.00 250 ered in service. The denominator is 12.
2nd Computer 5,000 38.00 1,900
Example. On July 2, 2020, you purchased and placed
in service residential rental property. The property cost
Sale or Other Disposition Before the $100,000, not including the cost of land. You used Table
Recovery Period Ends A-6 to figure your MACRS depreciation for this property.
You sold the property on March 2, 2022. You file your tax
If you sell or otherwise dispose of your property before the return based on the calendar year.
end of its recovery period, your depreciation deduction for A full year of depreciation for 2022 is $3,636. This is
the year of the disposition will be only part of the deprecia- $100,000 multiplied by 0.03636 (the percentage for the
tion amount for the full year. You have disposed of your seventh month of the third recovery year) from Table A-6.
property if you have permanently withdrawn it from use in You then apply the mid-month convention for the 2 /1 2
your business or income-producing activity because of its months of use in 2022. Treat the month of disposition as
sale, exchange, retirement, abandonment, involuntary one-half month of use. Multiply $3,636 by the fraction, 2.5
conversion, or destruction. After you figure the full-year over 12, to get your 2022 depreciation deduction of
depreciation amount, figure the deductible part using the $757.50.
convention that applies to the property.
Half-year convention used. For property for which you Figuring the Deduction Without Using
used a half-year convention, the depreciation deduction the Tables
for the year of the disposition is half the depreciation de-
termined for the full year. Instead of using the rates in the percentage tables to fig-
ure your depreciation deduction, you can figure it yourself.
Mid-quarter convention used. For property for which Before making the computation each year, you must re-
you used the mid-quarter convention, figure your depreci- duce your adjusted basis in the property by the deprecia-
ation deduction for the year of the disposition by multiply- tion claimed the previous year(s).
ing a full year of depreciation by the percentage listed be-
low for the quarter in which you disposed of the property. Figuring MACRS deductions without using the ta-
! bles will generally result in a slightly different
CAUTION amount than using the tables.
Quarter Percentage
First. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5%
Second. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.5 Declining Balance Method
Third. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.5
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.5 When using a declining balance method, you apply the
same depreciation rate each year to the adjusted basis of
your property. You must use the applicable convention for
Example. On December 2, 2019, you placed in serv-
the first tax year and you must switch to the straight line
ice an item of 5-year property costing $10,000. You did
method beginning in the first year for which it will give an
not claim a section 179 deduction and the property does
equal or greater deduction. The straight line method is ex-
not qualify for a special depreciation allowance. Your
plained later.

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You figure depreciation for the year you place property 2. Apply the applicable convention.
in service as follows.
You figure depreciation for all other years (including the
1. Multiply your adjusted basis in the property by the de- year you switch from the declining balance method to the
clining balance rate. straight line method) as follows.
2. Apply the applicable convention. 1. Reduce your adjusted basis in the property by the de-
preciation allowed or allowable in earlier years (under
You figure depreciation for all other years (before the
any method).
year you switch to the straight line method) as follows.
2. Determine the depreciation rate for the year.
1. Reduce your adjusted basis in the property by the de-
preciation allowed or allowable in earlier years. 3. Multiply the adjusted basis figured in (1) by the depre-
ciation rate figured in (2).
2. Multiply this new adjusted basis by the same declin-
ing balance rate used in earlier years. If you dispose of property before the end of its recovery
period, see Using the Applicable Convention, later, for in-
If you dispose of property before the end of its recovery
formation on how to figure depreciation for the year you
period, see Using the Applicable Convention, later, for in-
dispose of it.
formation on how to figure depreciation for the year you
dispose of it. Straight line rate. You determine the straight line depre-
ciation rate for any tax year by dividing the number 1 by
Figuring depreciation under the declining balance the years remaining in the recovery period at the begin-
method and switching to the straight line method is illus- ning of that year. When figuring the number of years re-
trated in Example 1, later, under Examples. maining, you must take into account the convention used
Declining balance rate. You figure your declining bal- in the year you placed the property in service. If the num-
ance rate by dividing the specified declining balance per- ber of years remaining is less than 1, the depreciation rate
centage (150% or 200% changed to a decimal) by the for that tax year is 1.0 (100%).
number of years in the property's recovery period. For ex-
ample, for 3-year property depreciated using the 200% Using the Applicable Convention
declining balance method, divide 2.00 (200%) by 3 to get
0.6667, or a 66.67% declining balance rate. For 15-year The applicable convention (discussed earlier under Which
property depreciated using the 150% declining balance Convention Applies) affects how you figure your deprecia-
method, divide 1.50 (150%) by 15 to get 0.10, or a 10% tion deduction for the year you place your property in serv-
declining balance rate. ice and for the year you dispose of it. It determines how
The following table shows the declining balance rate for much of the recovery period remains at the beginning of
each property class and the first year for which the each year, so it also affects the depreciation rate for prop-
straight line method gives an equal or greater deduction. erty you depreciate under the straight line method. See
Straight line rate in the previous discussion. Use the appli-
Property Declining Balance cable convention, as explained in the following discus-
sions.
Class Method Rate Year
3-year 200% DB 66.667% 3rd
Half-year convention. If this convention applies, you de-
5-year 200% DB 40.0 4th duct a half-year of depreciation for the first year and the
7-year 200% DB 28.571 5th last year that you depreciate the property. You deduct a
10-year 200% DB 20.0 7th full year of depreciation for any other year during the re-
covery period.
15-year 150% DB 10.0 7th Figure your depreciation deduction for the year you
20-year 150% DB 7.5 9th place the property in service by dividing the depreciation
for a full year by 2. If you dispose of the property before
the end of the recovery period, figure your depreciation
Straight Line Method
deduction for the year of the disposition the same way. If
When using the straight line method, you apply a different you hold the property for the entire recovery period, your
depreciation rate each year to the adjusted basis of your depreciation deduction for the year that includes the final
property. You must use the applicable convention in the 6 months of the recovery period is the amount of your un-
year you place the property in service and the year you recovered basis in the property.

dispose of the property. Mid-quarter convention. If this convention applies, the
depreciation you can deduct for the first year you depreci-
You figure depreciation for the year you place property
ate the property depends on the quarter in which you
in service as follows.
place the property in service.
1. Multiply your adjusted basis in the property by the A quarter of a full 12-month tax year is a period of 3
straight line rate. months. The first quarter in a year begins on the first day

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of the tax year. The second quarter begins on the first day                  is in service 4 full months (September, October, Novem-
of the fourth month of the tax year. The third quarter be-                   ber, and December). Your numerator is 4.5 (4 full months 
gins on the first day of the seventh month of the tax year.                  plus 0.5). You multiply the depreciation for a full year by 
The  fourth  quarter  begins  on  the  first  day  of  the  tenth            4.5/12, or 0.375.
month of the tax year. A calendar year is divided into the 
following quarters.                                                          Examples

                                                                             The following examples show how to figure depreciation 
Quarter                                              Months
                                                                             under  MACRS  without  using  the  percentage  tables.  Fig-
First. . . . . . . . . . . . . .             January, February, March
                                                                             ures are rounded for purposes of the examples. Assume 
Second. . . . . . . . . . . .                                April, May, June
                                                                             for all the examples that you use a calendar year as your 
Third. . . . . . . . . . . . . .               July, August, September       tax year.
Fourth . . . . . . . . . . . . .   October, November, December
                                                                             Example  1—200%  DB  method  and  half-year  con-
Figure  your  depreciation  deduction  for  the  year  you                   vention. In  February,  you  placed  in  service  depreciable 
place the property in service by multiplying the deprecia-                   property  with  a  5-year  recovery  period  and  a  basis  of 
tion for a full year by the percentage listed below for the                  $1,000. You do not elect to take the section 179 deduction 
quarter you place the property in service.                                   and the property does not qualify for a special deprecia-
                                                                             tion allowance. You use GDS and the 200% DB method to 
Quarter                                                          Percentage  figure your depreciation. When the SL method results in 
First. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  87.5%      an equal or larger deduction, you switch to the SL method. 
Second. . . . . . . . . . . . . . . . . . . . . . . . . . .      62.5        You  did  not  place  any  property  in  service  in  the  last  3 
Third. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   37.5        months of the year, so you must use the half-year conven-
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12.5        tion.
                                                                             First year. You figure the depreciation rate under the 
If you dispose of the property before the end of the re-                     200% DB method by dividing 2 (200%) by 5 (the number 
covery period, figure your depreciation deduction for the                    of  years  in  the  recovery  period).  The  result  is  40%.  You 
year of the disposition by multiplying a full year of depreci-               multiply the adjusted basis of the property ($1,000) by the 
ation  by  the  percentage  listed  below  for  the  quarter  you            40% DB rate. You apply the half-year convention by divid-
dispose of the property.                                                     ing the result ($400) by 2. Depreciation for the first year 
                                                                             under the 200% DB method is $200.
Quarter                                                          Percentage  You figure the depreciation rate under the SL method 
                                                                             by dividing 1 by 5, the number of years in the recovery pe-
First. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5%       riod. The result is 20%.You multiply the adjusted basis of 
Second. . . . . . . . . . . . . . . . . . . . . . . . . . . .    37.5        the property ($1,000) by the 20% SL rate. You apply the 
Third. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.5        half-year  convention  by  dividing  the  result  ($200)  by  2. 
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.5        Depreciation  for  the  first  year  under  the  SL  method  is 
                                                                             $100.
If you hold the property for the entire recovery period,                     The DB method provides a larger deduction, so you de-
your depreciation deduction for the year that includes the                   duct the $200 figured under the 200% DB method.
final quarter of the recovery period is the amount of your                   Second year. You reduce the adjusted basis ($1,000) 
unrecovered basis in the property.                                           by the depreciation claimed in the first year ($200). You 
                                                                             multiply the result ($800) by the DB rate (40%). Deprecia-
Mid-month  convention.               If  this  convention  applies,  the 
                                                                             tion  for  the  second  year  under  the  200%  DB  method  is 
depreciation you can deduct for the first year that you de-
                                                                             $320.
preciate the property depends on the month in which you 
                                                                             You figure the SL depreciation rate by dividing 1 by 4.5, 
place the property in service. Figure your depreciation de-
                                                                             the  number  of  years  remaining  in  the  recovery  period. 
duction for the year you place the property in service by 
                                                                             (Based on the half-year convention, you used only half a 
multiplying  the  depreciation  for  a  full  year  by  a  fraction. 
                                                                             year of the recovery period in the first year.) You multiply 
The numerator of the fraction is the number of full months 
in the year that the property is in service plus  /  (or 0.5). 1 2           the reduced adjusted basis ($800) by the result (22.22%). 
                                                                             Depreciation under the SL method for the second year is 
The denominator is 12.
                                                                             $178.
If you dispose of the property before the end of the re-
                                                                             The DB method provides a larger deduction, so you de-
covery period, figure your depreciation deduction for the 
                                                                             duct the $320 figured under the 200% DB method.
year of the disposition the same way. If you hold the prop-
                                                                             Third year. You reduce the adjusted basis ($800) by 
erty for the entire recovery period, your depreciation de-
                                                                             the depreciation claimed in the second year ($320). You 
duction for the year that includes the final month of the re-
                                                                             multiply the result ($480) by the DB rate (40%). Deprecia-
covery period is the amount of your unrecovered basis in 
                                                                             tion for the third year under the 200% DB method is $192.
the property.

Example.         You  use  the  calendar  year  and  place  non-
residential real property in service in August. The property 

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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-
duct the $192 figured under the 200% DB method. Office furniture September 1,000
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 three items of property. The safe and office furniture are
the depreciation claimed in the fourth year ($115) to get 7-year property and the computer is 5-year property.
the reduced adjusted basis of $173. You figure the SL de- First- and second-year depreciation for safe. The
preciation rate by dividing 1 by 1.5. You multiply the re- 200% DB rate for 7-year property is 0.28571. You deter-
duced adjusted basis ($173) by the result (66.67%). De- mine this by dividing 2.00 (200%) by 7 years. The depreci-
preciation 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
method, and the mid-month convention to figure your de- furniture ($1,000) by 0.28571 to get the depreciation of
preciation. $286 for the full year. You placed the furniture in service in
First year. You figure the SL depreciation rate for the the third quarter of your tax year, so you multiply $286 by
building by dividing 1 by 39 years. The result is 0.02564. 37.5% (the mid-quarter percentage for the third quarter).
The depreciation for a full year is $2,564 ($100,000 × The result, $107, is your deduction for depreciation on the
0.02564). Under the mid-month convention, you treat the furniture for the first year.
property as placed in service in the middle of January. For the second year, the adjusted basis of the furniture
You get 11.5 months of depreciation for the year. Ex- is $893. You figure this by subtracting the first year's de-
pressed as a decimal, the fraction of 11.5 months divided preciation ($107) from the basis of the furniture ($1,000).
by 12 months is 0.958. Your first-year depreciation for the Your depreciation for the second year is $255 ($893 ×
building is $2,456 ($2,564 × 0.958). 0.28571).
Second year. You subtract $2,456 from $100,000 to First- and second-year depreciation for computer.
get your adjusted basis of $97,544 for the second year. The 200% DB rate for 5-year property is 0.40. You deter-
The SL rate is 0.02629. This is 1 divided by the remaining mine this by dividing 2.00 (200%) by 5 years. The depreci-
recovery period of 38.042 years (39 years reduced by ation for the computer for a full year is $2,000 ($5,000 ×
11.5 months or 0.958). Your depreciation for the building 0.40). You placed the computer in service in the fourth
for the second year is $2,564 ($97,544 × 0.02629). quarter of your tax year, so you multiply the $2,000 by
Third year. The adjusted basis is $94,980 ($97,544 − 12.5% (the mid-quarter percentage for the fourth quarter).
$2,564). The SL rate is 0.027 (1 divided by 37.042 re- The result, $250, is your deduction for depreciation on the
maining years). Your depreciation for the third year is computer for the first year.
$2,564 ($94,980 × 0.027). For the second year, the adjusted basis of the com-
puter is $4,750. You figure this by subtracting the first
Example 3—200% DB method and mid-quarter year's depreciation ($250) from the basis of the computer
convention. During the year, you bought and placed in ($5,000). Your depreciation deduction for the second year
service in your business the following items. is $1,900 ($4,750 × 0.40).

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Example 4—200% DB method and half-year con- For acquired property that has a longer recovery period
vention. Last year, in July, you bought and placed in or less accelerated depreciation method than the ex-
service in your business a new item of 7-year property. changed or involuntarily converted property, you must
This was the only item of property you placed in service generally depreciate the carryover basis of the acquired
last year. The property cost $39,000 and you elected a property as if it were placed in service in the same tax
$24,000 section 179 deduction. You also made an elec- year as the exchanged or involuntarily converted property.
tion under section 168(k)(7) not to deduct the special de- You also generally continue to use the longer recovery pe-
preciation allowance for 7-year property placed in service riod and less accelerated depreciation method of the ac-
last year. Your unadjusted basis for the property is quired property.
$15,000. Because you did not place any property in serv-
ice in the last 3 months of your tax year, you used the If the MACRS property you acquired in the exchange or
half-year convention. You figured your deduction using involuntary conversion is qualified property, discussed
the percentages in Table A-1 for 7-year property. Last earlier in chapter 3 under What Is Qualified Property, you
year, your depreciation was $2,144 ($15,000 × 14.29% can claim a special depreciation allowance on the carry-
(0.1429)). over basis. Special rules apply to vehicles acquired in a
In July of this year, your property was vandalized. You trade-in. For information on how to figure depreciation for
had a deductible casualty loss of $3,000. You spent a vehicle acquired in a trade-in that is subject to the pas-
$3,500 to put the property back in operational order. Your senger automobile limits, see Deductions For Passenger
adjusted basis at the end of this year is $13,356. You fig- Automobiles Acquired in a Trade-in under Do the Passen-
ured this by first subtracting the first year's depreciation ger Automobile Limits Apply? in chapter 5.
($2,144) and the casualty loss ($3,000) from the unadjus-
Like-kind exchanges completed after December
ted basis of $15,000. To this amount ($9,856), you then
31, 2017, are generally limited to exchanges of
added the $3,500 repair cost. CAUTION!
real property not held primarily for sale.
You cannot use the table percentages to figure your
depreciation for this property for this year because of the
Election out. Instead of using the above rules, you
adjustments to basis. You must figure the deduction your-
can elect, for depreciation purposes, to treat the adjusted
self. You determine the DB rate by dividing 2.00 (200%)
basis of the exchanged or involuntarily converted property
by 7 years. The result is 0.28571 or 28.571%. You multiply
as if disposed of at the time of the exchange or involuntary
the adjusted basis of your property ($13,356) by the DB
conversion. Treat the carryover basis and excess basis, if
rate of 0.28571 to get your depreciation deduction of
any, for the acquired property as if placed in service the
$3,816 for this year.
later of the date you acquired it or the time of the disposi-
tion of the exchanged or involuntarily converted property.
Figuring the Deduction for Property The depreciable basis of the new property is the adjusted
Acquired in a Nontaxable Exchange basis of the exchanged or involuntarily converted property
plus any additional amount you paid for it. The election, if
If your property has a carryover basis because you ac- made, applies to both the acquired property and the ex-
quired it in a nontaxable transfer such as a like-kind ex- changed or involuntarily converted property. This election
change or involuntary conversion, you must generally fig- does not affect the amount of gain or loss recognized on
ure depreciation for the property as if the transfer had not the exchange or involuntary conversion.
occurred. However, see Like-kind exchanges and involun- When to make the election. You must make the
tary conversions, earlier, in chapter 3 under How Much election on a timely filed return (including extensions) for
Can You Deduct; and Property Acquired in a Like-kind Ex- the year of replacement. The election must be made sep-
change or Involuntary Conversion next. arately by each person acquiring replacement property. In
the case of a partnership, S corporation, or consolidated
Property Acquired in a Like-kind Exchange group, the election is made by the partnership, by the S
or Involuntary Conversion corporation, or by the common parent of a consolidated
group, respectively. Once made, the election may not be
You must generally depreciate the carryover basis of revoked without IRS consent.
property acquired in a like-kind exchange or involuntary For more information and special rules, see the Instruc-
conversion over the remaining recovery period of the tions for Form 4562.
property exchanged or involuntarily converted. You also
generally continue to use the same depreciation method Property Acquired in a Nontaxable Transfer
and convention used for the exchanged or involuntarily
converted property. This applies only to acquired property You must depreciate MACRS property acquired by a cor-
with the same or a shorter recovery period and the same poration or partnership in certain nontaxable transfers
or more accelerated depreciation method than the prop- over the property's remaining recovery period in the trans-
erty exchanged or involuntarily converted. The excess ba- feror's hands, as if the transfer had not occurred. You
sis (the part of the acquired property's basis that exceeds must continue to use the same depreciation method and
its carryover basis), if any, of the acquired property is trea- convention as the transferor. You can depreciate the part
ted as newly placed in service property. of the property's basis that exceeds its carryover basis

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(the transferor's adjusted basis in the property) as newly month, you generally include the full month in the number
purchased MACRS property. of months in the tax year. You determine the midpoint of
the tax year by dividing the number of months in the tax
The nontaxable transfers covered by this rule include year by 2. For the half-year convention, you treat property
the following. as placed in service or disposed of on either the first day
• A distribution in complete liquidation of a subsidiary. or the midpoint of a month.
For example, a short tax year that begins on June 20
• A transfer to a corporation controlled by the transferor. and ends on December 31 consists of 7 months. You use
• An exchange of property solely for corporate stock or only full months for this determination, so you treat the tax
securities in a reorganization. year as beginning on June 1 instead of June 20. The mid-
point of the tax year is the middle of September (3 /1 2
• A contribution of property to a partnership in exchange months from the beginning of the tax year). You treat
for a partnership interest. property as placed in service or disposed of on this mid-
• A partnership distribution of property to a partner. point.

Example. Tara Corporation, a calendar year taxpayer,
Figuring the Deduction for a Short was incorporated on March 15. For purposes of the
Tax Year half-year convention, it has a short tax year of 10 months,
ending on December 31, 2022. 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, 2022.
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
covery period (other than the year the property is placed ending on the last day of a month, the tax year consists of
in service or disposed of). the number of days in the tax year. You determine the
midpoint of the tax year by dividing the number of days in
For more information on figuring depreciation for a the tax year by 2. For the half-year convention, you treat
short tax year, see Revenue Procedure 89-15, 1989-1 property as placed in service or disposed of on either the
C.B. 816. first day or the midpoint of a month. If the result of dividing
the number of days in the tax year by 2 is not the first day
Using the Applicable Convention in a Short or the midpoint of a month, you treat the property as
Tax Year placed in service or disposed of on the nearest preceding
first day or midpoint of a month.
The applicable convention establishes the date property is
Mid-quarter convention. To determine if you must use
treated as placed in service and disposed of. Depreciation
the mid-quarter convention, compare the basis of property
is allowable only for that part of the tax year the property is
you place in service in the last 3 months of your tax year to
treated as in service. The recovery period begins on the
that of property you place in service during the full tax
placed in service date determined by applying the con-
year. The length of your tax year does not matter. If you
vention. The remaining recovery period at the beginning
have a short tax year of 3 months or less, use the
of the next tax year is the full recovery period less the part
mid-quarter convention for all applicable property you
for which depreciation was allowable in the first tax year.
place in service during that tax year.
The following discussions explain how to use the appli- You treat property under the mid-quarter convention as
cable convention in a short tax year. placed in service or disposed of on the midpoint of the
quarter of the tax year in which it is placed in service or
Mid-month convention. Under the mid-month conven- disposed of. Divide a short tax year into 4 quarters and
tion, you always treat your property as placed in service or determine the midpoint of each quarter.
disposed of on the midpoint of the month it is placed in For a short tax year of 4 or 8 full calendar months, de-
service or disposed of. You apply this rule without regard termine quarters on the basis of whole months. The mid-
to your tax year. point of each quarter is either the first day or the midpoint
of a month. Treat property as placed in service or dis-
Half-year convention. Under the half-year convention, posed of on this midpoint.
you treat property as placed in service or disposed of on To determine the midpoint of a quarter for a short tax
the midpoint of the tax year it is placed in service or dis- year of other than 4 or 8 full calendar months, complete
posed of. the following steps.
First or last day of month. For a short tax year begin- 1. Determine the number of days in your short tax year.
ning on the first day of a month or ending on the last day
2. Determine the number of days in each quarter by di-
of a month, the tax year consists of the number of months
viding the number of days in your short tax year by 4.
in the tax year. If the short tax year includes part of a

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3. Determine the midpoint of each quarter by dividing Example 1—half-year convention. Tara Corpora-
the number of days in each quarter by 2. tion, with a short tax year beginning March 15 and ending
December 31, placed in service on March 16 an item of
If the result of (3) gives you a midpoint of a quarter that
5-year property with a basis of $1,000. This is the only
is on a day other than the first day or midpoint of a month,
property the corporation placed in service during the short
treat the property as placed in service or disposed of on
tax year. Tara does not elect to claim a section 179 de-
the nearest preceding first day or midpoint of that month.
duction and the property does not qualify for a special de-
Example. Tara Corporation, a calendar year taxpayer, preciation allowance. The depreciation method for this
was incorporated and began business on March 15. It has property is the 200% declining balance method. The de-
a short tax year of 9 / months, ending on December 31. 1 2 preciation rate is 40% and Tara applies the half-year con-
During December, it placed property in service for which it vention.
must use the mid-quarter convention. This is a short tax Tara treats the property as placed in service on
year of other than 4 or 8 full calendar months, so it must August 1. The determination of this August 1 date is ex-
determine the midpoint of each quarter. plained in the example illustrating the half-year convention
under Using the Applicable Convention in a Short Tax
1. First, it determines that its short tax year beginning Year, earlier. Tara is allowed 5 months of depreciation for
March 15 and ending December 31 consists of 292 the short tax year that consists of 10 months. The corpo-
days. ration first multiplies the basis ($1,000) by 40% (the de-
2. Next, it divides 292 by 4 to determine the length of clining balance rate) to get the depreciation for a full tax
each quarter, 73 days. year of $400. The corporation then multiplies $400 by /5 12
to get the short tax year depreciation of $167.
3. Finally, it divides 73 by 2 to determine the midpoint of
each quarter, the 37th day. Example 2—mid-quarter convention. Tara Corpora-
tion, with a short tax year beginning March 15 and ending
The following table shows the quarters of Tara Corpo- December 31, placed in service on October 16 an item of
ration's short tax year, the midpoint of each quarter, and 5-year property with a basis of $1,000. Tara does not elect
the date in each quarter that Tara must treat its property to claim a section 179 deduction and the property does
as placed in service. not qualify for a special depreciation allowance. The de-
preciation method for this property is the 200% declining
Quarter Midpoint Placed in balance method. The depreciation rate is 40%. The cor-
Service poration must apply the mid-quarter convention because
the property was the only item placed in service that year
3/15 – 5/26 4/20 4/15 and it was placed in service in the last 3 months of the tax
5/27 – 8/07 7/02 7/01 year.
8/08 – 10/19 9/13 9/01 Tara treats the property as placed in service on Sep-
tember 1. This date is shown in the table provided in the
10/20 – 12/31 11/25 11/15 example illustrating the mid-quarter convention under Us-
ing the Applicable Convention in a Short Tax Year, earlier,
The last quarter of the short tax year begins on October for property that Tara Corporation placed in service during
20, which is 73 days from December 31, the end of the tax the quarter that begins on August 8 and ends on October
year. The 37th day of the last quarter is November 25, 19. Under MACRS, Tara is allowed 4 months of deprecia-
which is the midpoint of the quarter. November 25 is not tion for the short tax year that consists of 10 months. The
the first day or the midpoint of November, so Tara Corpo- corporation first multiplies the basis ($1,000) by 40% to
ration must treat the property as placed in service in the get the depreciation for a full tax year of $400. The corpo-
middle of November (the nearest preceding first day or ration then multiplies $400 by / to get the short tax year 4 12
midpoint of that month). depreciation of $133.

Property Placed in Service in a Short Property Placed in Service Before a Short
Tax Year Tax Year

To figure your MACRS depreciation deduction for the If you have a short tax year after the tax year in which you
short tax year, you must first determine the depreciation began depreciating property, you must change the way
for a full tax year. You do this by multiplying your basis in you figure depreciation for that property. If you were using
the property by the applicable depreciation rate. Then, de- the percentage tables, you can no longer use them. You
termine the depreciation for the short tax year. Do this by must figure depreciation for the short tax year and each
multiplying the depreciation for a full tax year by a fraction. later tax year as explained next.
The numerator (top number) of the fraction is the number
of months (including parts of a month) the property is trea-
ted as in service during the tax year (applying the applica-
ble convention). The denominator (bottom number) is 12.
See Depreciation After a Short Tax Year, later, for infor-
mation on how to figure depreciation in later years.

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Depreciation After a Short Tax Year extends from August 1 to July 31. Tara deducted 5
months of the first recovery year on its short-year tax re-
You can use either of the following methods to figure the turn. Seven months of the first recovery year and 5
depreciation for years after a short tax year. months of the second recovery year fall within the next tax
• The simplified method. year. The depreciation for the next tax year is $333, which
is the sum of the following.
• The allocation method.
• $233—The depreciation for the first recovery year
You must use the method you choose consistently. ($400 × / ).7 12
Using the simplified method for a 12-month year. Un- • $100—The depreciation for the second recovery year.
der the simplified method, you figure the depreciation for a This is figured by multiplying the adjusted basis of
later 12-month year in the recovery period by multiplying $600 ($1,000 − $400) by 40% (0.40), then multiplying
the adjusted basis of your property at the beginning of the the $240 result by / .5 12
year by the applicable depreciation rate.
Using the allocation method for an early disposition.
Example. Assume the same facts as in Example 1 un- If you dispose of property before the end of the recovery
der Property Placed in Service in a Short Tax Year, ear- period in a later tax year, determine the depreciation for
lier. The Tara Corporation claimed depreciation of $167 the year of disposition by multiplying the depreciation fig-
for its short tax year. The adjusted basis on January 1 of ured for each recovery year or part of a recovery year in-
the next year is $833 ($1,000 − $167). Tara's depreciation cluded in the tax year by a fraction. The numerator of the
for that next year is 40% of $833, or $333. fraction is the number of months (including parts of
months) the property is treated as in service in the tax
Using the simplified method for a short tax year. If a year (applying the applicable convention). The denomina-
later tax year in the recovery period is a short tax year, you tor is 12. If there is more than one recovery year in the tax
figure depreciation for that year by multiplying the adjus- year, you add together the depreciation for each recovery
ted basis of the property at the beginning of the tax year 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.
How Do You Use General
Using the simplified method for an early disposition.
If you dispose of property in a later tax year before the end Asset Accounts?
of the recovery period, determine the depreciation for the
year of disposition by multiplying the adjusted basis of the
Terms you may need to know
property at the beginning of the tax year by the applicable
depreciation rate and then multiplying the result by a frac- (see Glossary):
tion. The fraction's numerator is the number of months (in- Adjusted basis
cluding parts of a month) the property is treated as in serv-
ice during the tax year (applying the applicable Amortization
convention). Its denominator is 12. Amount realized
Using the allocation method for a 12-month or short Basis
tax year. Under the allocation method, you figure the de- Convention
preciation for each later tax year by allocating to that year
Disposition
the depreciation attributable to the parts of the recovery
years that fall within that year. Whether your tax year is a Exchange
12-month or short tax year, you figure the depreciation by Placed in service
determining which recovery years are included in that
year. For each recovery year included, multiply the depre- Recovery period
ciation attributable to that recovery year by a fraction. The Section 1245 property
fraction's numerator is the number of months (including
parts of a month) that are included in both the tax year and Unadjusted basis
the recovery year. Its denominator is 12. The allowable
depreciation for the tax year is the sum of the depreciation
figured for each recovery year. To make it easier to figure MACRS depreciation, you can
group separate properties into one or more general asset
Example. Assume the same facts as in Example 1 un- accounts (GAAs). You can then depreciate all the proper-
der Property Placed in Service in a Short Tax Year, ear- ties in each account as a single item of property.
lier. The Tara Corporation's first tax year after the short tax
year is a full year of 12 months, beginning January 1 and Property you cannot include. You cannot include prop-
ending December 31. The first recovery year for the erty in a GAA if you use it in both a personal activity and a
5-year property placed in service during the short tax year trade or business (or for the production of income) in the

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year in which you first place it in service. If property you in- section 179 deduction on the machines and the machines
cluded in a GAA is later used in a personal activity, see did not qualify for a special depreciation allowance. The
Terminating GAA Treatment, later. depreciation allowance for 2021 is $2,000 [($10,000 ×
40% (0.40)) ÷ 2]. As of January 1, 2023, the depreciation
Property generating foreign source income. For infor- reserve account is $2,000.
mation on the GAA treatment of property that generates
foreign source income, see sections 1.168(i)-1(c)(1)(ii) Passenger automobiles. To figure depreciation on pas-
and (f) of the regulations. senger automobiles in a GAA, apply the deduction limits
discussed in chapter 5 under Do the Passenger Automo-
Change in use. Special rules apply to figuring deprecia- bile Limits Apply. Multiply the amount determined using
tion for property in a GAA for which the use changes dur- these limits by the number of automobiles originally inclu-
ing the tax year. Examples include a change in use result- ded in the account, reduced by the total number of auto-
ing in a shorter recovery period and/or a more accelerated mobiles removed from the GAA, as discussed under Ter-
depreciation method or a change in use resulting in a lon- minating GAA Treatment, later.
ger recovery period and/or a less accelerated deprecia-
tion method. See sections 1.168(i)-1(h) and 1.168(i)-4 of
the regulations. Disposing of GAA Property

When you dispose of property included in a GAA, the fol-
Grouping Property lowing rules generally apply.
Each GAA must include only property you placed in serv- • Neither the unadjusted depreciable basis (defined
later) nor the depreciation reserve account of the GAA
ice in the same tax year and that has the following in com-
is affected. You continue to depreciate the account as
mon.
if the disposition had not occurred.
• Recovery period.
• The property is treated as having an adjusted basis of
• Depreciation method. zero, so you cannot realize a loss on the disposition. If
• Convention. the property is transferred to a supplies, scrap, or sim-
ilar account, its basis in that account is zero.
The following rules also apply when you establish a Any amount realized on the disposition is treated as
•
GAA. ordinary income, up to the limit discussed later under
• Mid-quarter convention. Property subject to the Treatment of amount realized.
mid-quarter convention can only be grouped into a
However, these rules do not apply to any disposition
GAA with property placed in service in the same quar-
described later under Terminating GAA Treatment.
ter of the tax year.
• Mid-month convention. Property subject to the Disposition. Property in a GAA is considered disposed
mid-month convention can only be grouped into a of when you do any of the following.
GAA with property placed in service in the same • Permanently withdraw it from use in your trade or
month of the tax year. business or from the production of income.
• Passenger automobiles. Passenger automobiles • Transfer it to a supplies, scrap, or similar account.
subject to the limits on passenger automobile depreci-
ation must be grouped into a separate GAA. • Sell, exchange, retire, physically abandon, or destroy
it.
See section 1.168(i)-1(c)(2)(ii) of the regulations for addi-
tional rules that apply when you establish a GAA. The retirement of a structural component of real property
is not a disposition unless it is a partial disposition. See
section 1.168(i)-1(e)(1) of the regulations.
Figuring Depreciation for a GAA
Treatment of amount realized. When you dispose of
After you have set up a GAA, you generally figure the property in a GAA, you must recognize any amount real-
MACRS depreciation for it by using the applicable depre- ized from the disposition as ordinary income, up to a limit.
ciation method, recovery period, and convention for the The limit is:
property in the GAA. For each GAA, record the deprecia-
tion allowance in a separate depreciation reserve ac- 1. The unadjusted depreciable basis of the GAA, plus
count. 2. Any expensed costs for property in the GAA that are
subject to recapture as depreciation (not including
Example. Make & Sell, a calendar year corporation,
any expensed costs for property that you removed
set up a GAA for 10 machines. The machines cost a total
from the GAA under the rules discussed later under
of $10,000 and were placed in service in June 2022. One
Terminating GAA Treatment), minus
of the machines cost $8,200 and the rest cost a total of
$1,800. This GAA is depreciated under the 200% declin- 3. Any amount previously recognized as ordinary in-
ing balance method with a 5-year recovery period and a come upon the disposition of other property from the
half-year convention. Make & Sell did not claim the GAA.

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Unadjusted depreciable basis. The unadjusted de- Terminating GAA Treatment
preciable basis of a GAA is the total of the unadjusted de-
preciable bases of all the property in the GAA. The unad- You must remove the following property from a GAA.
justed depreciable basis of an item of property in a GAA is
the amount you would use to figure gain or loss on its • Property held by a partnership that terminates under
section 708(b)(1).
sale, but figured without reducing your original basis by
any depreciation allowed or allowable in earlier years. • Property you dispose of in a nonrecognition transac-
However, you do reduce your original basis by other tion or an abusive transaction.
amounts, including any amortization deduction, section • Property you dispose of in a qualifying disposition or in
179 deduction, special depreciation allowance, and elec- a disposition of all the property in the GAA, if you
tric vehicle credit. choose to terminate GAA treatment.
Expensed costs. Expensed costs that are subject to • Property you dispose of in a like-kind exchange or an
recapture as depreciation include the following. involuntary conversion.
1. The section 179 deduction. • Property you change to personal use.
2. Amortization deductions for the following. • Property for which you must recapture any allowable
credit or deduction, such as the investment credit, the
a. Pollution control facilities. credit for qualified electric vehicles, the credit for alter-
b. Removal of barriers for the elderly and disabled. native fuel vehicle refueling property placed in service
before 2023, the section 179 deduction, or the deduc-
c. Tertiary injectants. tion for clean-fuel vehicles and clean-fuel vehicle refu-
d. Reforestation expenses. eling property placed in service before 2006.
If you remove property from a GAA, you must make the
Example 1. The facts are the same as in the example following adjustments.
under Figuring Depreciation for a GAA, earlier. In Febru-
ary 2023, Make & Sell sells the machine that cost $8,200 1. Reduce the unadjusted depreciable basis of the GAA
to an unrelated person for $9,000. The machine is treated by the unadjusted depreciable basis of the property
as having an adjusted basis of zero. as of the first day of the tax year in which the disposi-
On its 2023 tax return, Make & Sell recognizes the tion, change in use, partnership technical termination,
$9,000 amount realized as ordinary income because it is or recapture event occurs. You can use any reasona-
not more than the GAA's unadjusted depreciable basis ble method that is consistently applied to determine
($10,000) plus any expensed cost (for example, the sec- the unadjusted depreciable basis of the property you
tion 179 deduction) for property in the GAA ($0), minus remove from a GAA.
any amounts previously recognized as ordinary income 2. Reduce the depreciation reserve account by the de-
because of dispositions of other property from the GAA preciation allowed or allowable for the property (com-
($0). puted in the same way as computed for the GAA) as
The unadjusted depreciable basis and depreciation re- of the end of the tax year immediately preceding the
serve of the GAA are not affected by the sale of the ma- year in which the disposition, change in use, or recap-
chine. The depreciation allowance for the GAA in 2023 is ture event occurs.
$3,200 [($10,000 − $2,000) × 40% (0.40)].
These adjustments have no effect on the recognition and
Example 2. Assume the same facts as in Example 1. character of prior dispositions subject to the rules dis-
In June 2024, Make & Sell sells seven machines to an un- cussed earlier under Disposing of GAA Property.
related person for a total of $1,100. These machines are
treated as having an adjusted basis of zero. Nonrecognition transactions. If you dispose of GAA
On its 2024 tax return, Make & Sell recognizes $1,000 property in a nonrecognition transaction, you must remove
as ordinary income. This is the GAA's unadjusted depreci- it from the GAA. The following are nonrecognition transac-
able basis ($10,000) plus the expensed costs ($0), minus tions.
the amount previously recognized as ordinary income • The receipt by one corporation of property distributed
($9,000). The remaining amount realized of $100 ($1,100 in complete liquidation of another corporation.
− $1,000) is section 1231 gain (discussed in chapter 3 of
Pub. 544). • The transfer of property to a corporation solely in ex-
change for stock in that corporation if the transferor is
The unadjusted depreciable basis and depreciation re-
in control of the corporation immediately after the ex-
serve of the GAA are not affected by the disposition of the
change.
machines. The depreciation allowance for the GAA in
2024 is $1,920 [($10,000 − $5,200) × 40% (0.40)]. • The transfer of property by a corporation that is a party
to a reorganization in exchange solely for stock and
securities in another corporation that is also a party to
the reorganization.
• The contribution of property to a partnership in ex-
change for an interest in the partnership.

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• The distribution of property (including money) from a If there is a gain, the amount subject to recapture as or-
partnership to a partner. dinary income is the smaller of the following.
• Any transaction between members of the same affili- 1. The depreciation allowed or allowable for the prop-
ated group during any year for which the group makes erty, including any expensed cost (such as section
a consolidated return. 179 deductions) or the special depreciation allowance
for the property.
Rules for recipient (transferee). The recipient of the
property (the person to whom it is transferred) must in- 2. The result of the following.
clude your (the transferor's) adjusted basis in the property
in a GAA. If you transferred either all of the property, the a. The original unadjusted depreciable basis of the
last item of property, or the remaining portion of the last GAA (plus, for section 1245 property originally in-
item of property, in a GAA, the recipient’s basis in the cluded in the GAA, any expensed cost), minus
property is the result of the following. b. The total gain previously recognized as ordinary
• The adjusted depreciable basis of the GAA as of the income on the disposition of property from the
beginning of your tax year in which the transaction GAA.
takes place, minus
Qualifying dispositions. If you dispose of GAA property
• The depreciation allowable to you for the year of the in a qualifying disposition, you can choose to remove the
transfer. property from the GAA. A qualifying disposition is one that
For this purpose, the adjusted depreciable basis of a does not involve all the property, or the last item of prop-
GAA is the unadjusted depreciable basis of the GAA mi- erty, remaining in a GAA and that is described by any of
nus any depreciation allowed or allowable for the GAA. the following.
1. A disposition that is a direct result of fire, storm, ship-
Abusive transactions. If you dispose of GAA property in
wreck, other casualty, or theft.
an abusive transaction, you must remove it from the GAA.
A disposition is an abusive transaction if it is not a nonre- 2. A charitable contribution for which a deduction is al-
cognition transaction (described earlier) or a like-kind ex- lowed.
change or involuntary conversion and a main purpose for
3. A disposition that is a direct result of a cessation, ter-
the disposition is to get a tax benefit or a result that would
mination, or disposition of a business, manufacturing
not be available without the use of a GAA. Examples of
or other income-producing process, operation, facility,
abusive transactions include the following.
plant, or other unit (other than by transfer to a sup-
1. A transaction with a main purpose of shifting income plies, scrap, or similar account).
or deductions among taxpayers in a way that would
4. A nontaxable transaction other than a nonrecognition
not be possible without choosing to use a GAA to take
transaction (described earlier), a like-kind exchange
advantage of differing effective tax rates.
or involuntary conversion, a technical termination of a
2. A choice to use a GAA with a main purpose of dispos- partnership, or a transaction that is nontaxable only
ing of property from the GAA so that you can use an because it is a disposition from a GAA.
expiring net operating loss or credit. For example, if
If you choose to remove the property from the GAA, fig-
you have a net operating loss carryover or a credit
ure your gain, loss, or other deduction resulting from the
carryover, the following transactions will be consid-
disposition in the manner described earlier under Abusive
ered abusive transactions unless there is strong evi-
transactions.
dence to the contrary.
a. A transfer of GAA property to a related person. Like-kind exchanges and involuntary conversions. If
you dispose of GAA property as a result of a like-kind ex-
b. A transfer of GAA property under an agreement change or involuntary conversion, you must remove from
where the property continues to be used, or is the GAA the property that you transferred. See chapter 1
available for use, by you. of Pub. 544 for information on these transactions. Figure
Figuring gain or loss. You must determine the gain, your gain, loss, or other deduction resulting from the dis-
loss, or other deduction due to an abusive transaction by position in the manner described earlier under Abusive
taking into account the property's adjusted basis. The ad- transactions.
justed basis of the property at the time of the disposition is
Example. Sankofa, a calendar year corporation, main-
the result of the following.
tains one GAA for 12 machines. Each machine costs
• The unadjusted depreciable basis of the property, mi- $15,000 and was placed in service in 2020. Of the 12 ma-
nus chines, nine cost a total of $135,000 and are used in San-
• The depreciation allowed or allowable for the property kofa's New York plant and three machines cost $45,000
figured by using the depreciation method, recovery and are used in Sankofa's New Jersey plant. Assume this
period, and convention that applied to the GAA in GAA uses the 200% declining balance depreciation
which the property was included. method, a 5-year recovery period, and a half-year conven-
tion. Sankofa does not claim the section 179 deduction

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and the machines do not qualify for a special depreciation half-year convention. Duforcelf does not claim the section
allowance. As of January 1, 2022, the depreciation re- 179 deduction and the calculators do not qualify for a spe-
serve account for the GAA is $93,600. cial depreciation allowance. In 2021, Duforcelf sells 200 of
In May 2022, Sankofa sells its entire manufacturing the calculators to an unrelated person for $10,000. The
plant in New Jersey to an unrelated person. The sales $10,000 is recognized as ordinary income.
proceeds allocated to each of the three machines at the In March 2022, Duforcelf sells the remaining calcula-
New Jersey plant is $5,000. This transaction is a qualify- tors in the GAA to an unrelated person for $35,000. Dufor-
ing disposition, so Sankofa chooses to remove the three celf decides to end the GAA.
machines from the GAA and figure the gain, loss, or other On the date of the disposition, the adjusted depreciable
deduction by taking into account their adjusted bases. basis of the account is $23,040 (unadjusted depreciable
For Sankofa's 2022 return, the depreciation allowance basis of $60,000 minus the depreciation allowed or allow-
for the GAA is figured as follows. As of December 31, able of $36,960). In 2022, Duforcelf recognizes a gain of
2021, the depreciation allowed or allowable for the three $11,960. This is the amount realized of $35,000 minus the
machines at the New Jersey plant is $23,400. As of Janu- adjusted depreciable basis of $23,040. The gain subject
ary 1, 2022, the unadjusted depreciable basis of the GAA to recapture as ordinary income is limited to the deprecia-
is reduced from $180,000 to $135,000 ($180,000 minus tion allowed or allowable minus the amounts previously
the $45,000 unadjusted depreciable bases of the three recognized as ordinary income ($36,960 − $10,000 =
machines), and the depreciation reserve account is de- $26,960). Therefore, the entire gain of $11,960 is recap-
creased from $93,600 to $70,200 ($93,600 minus tured as ordinary income.
$23,400 depreciation allowed or allowable for the three
machines as of December 31, 2021). The depreciation al- Electing To Use a GAA
lowance for the GAA in 2022 is $25,920 [($135,000 −
$70,200) × 40% (0.40)]. An election to include property in a GAA is made sepa-
For Sankofa's 2022 return, gain or loss for each of the rately by each owner of the property. This means that an
three machines at the New Jersey plant is determined as election to include property in a GAA must be made by
follows. The depreciation allowed or allowable in 2022 for each member of a consolidated group and at the partner-
each machine is $1,440 [(($15,000 − $7,800) × 40% ship or S corporation level (and not by each partner or
(0.40)) ÷ 2]. The adjusted basis of each machine is $5,760 shareholder separately).
(the adjusted depreciable basis of $7,200 removed from
the account less the $1,440 depreciation allowed or allow- How to make the election. Make the election by com-
able in 2022). As a result, the loss recognized in 2022 for pleting line 18 of Form 4562.
each machine is $760 ($5,760 − $5,000). This loss is sub-
ject to section 1231 treatment. See chapter 3 of Pub. 544 When to make the election. You must make the elec-
for information on section 1231 losses. tion on a timely filed tax return (including extensions) for
the year in which you place in service the property inclu-
Disposition of all property in a GAA. If you dispose of ded in the GAA. However, if you timely filed your return for
all the property, or the last item of property, in a GAA, you the year without making the election, you can still make
can choose to end the GAA. If you make this choice, you the election by filing an amended return within 6 months of
figure the gain or loss by comparing the adjusted depreci- the due date of the return (excluding extensions). Attach
able basis of the GAA with the amount realized. the election to the amended return and write “Filed pur-
If there is a gain, the amount subject to recapture as or- suant to section 301.9100-2” on the election statement.
dinary income is limited to the result of the following.
You must maintain records that identify the prop-
• The depreciation allowed or allowable for the GAA, in- erty included in each GAA, that establish the un-
cluding any expensed cost (such as section 179 de- RECORDS adjusted depreciable basis and depreciation re-
ductions or the additional depreciation allowed or al- serve of the GAA, and that reflect the amount realized
lowable for the GAA), minus during the year upon dispositions from each GAA. How-
• The total gain previously recognized as ordinary in- ever, see chapter 2 for the recordkeeping requirements
come on the disposition of property from the GAA. for section 179 property.

Like-kind exchanges and involuntary conversions.
Revoking an election. You can revoke an election to
If you dispose of all the property or the last item of prop-
use a GAA only in the following situations.
erty in a GAA as a result of a like-kind exchange or invol-
untary conversion, the GAA terminates. You must figure • You include in the GAA property that generates for-
the gain or loss in the manner described above under Dis- eign source income both U.S. and foreign source in-
position of all property in a GAA. come, or combined gross income of a foreign sales
corporation, a domestic international sales corpora-
Example. Duforcelf, a calendar year corporation, tion, or a possessions corporation and its related sup-
maintains a GAA for 1,000 calculators that cost a total of plier, and that inclusion results in a substantial distor-
$60,000 and were placed in service in 2019. Assume this tion of income.
GAA is depreciated under the 200% declining balance
method, has a recovery period of 5 years, and uses a • You remove property from the GAA as described un-
der Terminating GAA Treatment, earlier.

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5.
When Do You Recapture

MACRS Depreciation? Additional Rules for

Listed Property
Terms you may need to know
(see Glossary):
Disposition Introduction
Nonresidential real property This chapter discusses the deduction limits and other spe-
Recapture cial rules that apply to certain listed property. Listed prop-
erty includes cars and other property used for transporta-
Residential rental property
tion, property used for entertainment, and certain
computers.
Deductions for listed property (other than certain
When you dispose of property that you depreciated using leased property) are subject to the following special rules
MACRS, any gain on the disposition is generally recap- and limits.
tured (included in income) as ordinary income up to the
amount of the depreciation previously allowed or allowa- • Deduction for employees. If your use of the property
ble for the property. Depreciation, for this purpose, in- is not for your employer's convenience or is not re-
cludes the following. quired as a condition of your employment, you cannot
deduct depreciation or rent expenses for your use of
• Any section 179 deduction claimed on the property. the property as an employee.
• Any deduction under section 179B of the Internal Rev- • Business-use requirement. If the property is not
enue Code for capital costs to comply with Environ- used predominantly (more than 50%) for qualified
mental Protection Agency sulfur regulations. business use, you cannot claim the section 179 de-
• Any deduction under section 179C of the Internal Rev- duction or a special depreciation allowance. In addi-
enue Code for certain qualified refinery property tion, you must figure any depreciation deduction un-
placed in service after August 8, 2005, and before der MACRS using the straight line method over the
January 1, 2014. ADS recovery period. You may also have to recapture
(include in income) any excess depreciation claimed
• Any deduction under section 179D of the Internal Rev- in previous years. A similar inclusion amount applies
enue Code for certain energy efficient commercial to certain leased property.
building property placed in service after December 31,
2005. • Passenger automobile limits and rules. Annual
limits apply to depreciation deductions (including sec-
• Any deduction under section 179E of the Internal Rev- tion 179 deductions and any special depreciation al-
enue Code for qualified advanced mine safety equip- lowance) for certain passenger automobiles. You can
ment property placed in service after December 20, continue to deduct depreciation for the unrecovered
2006, and before January 1, 2018. basis resulting from these limits after the end of the re-
• Any deduction under section 190 of the Internal Reve- covery period.
nue Code for removal of barriers to the disabled and This chapter defines listed property and explains the
the elderly. special rules and depreciation deduction limits that apply,
• Any deduction under section 193 of the Internal Reve- including the special inclusion amount rule for leased
nue Code for tertiary injectants. property. It also discusses the recordkeeping rules for lis-
ted property and explains how to report information about
• Any special depreciation allowance previously al- the property on your tax return.
lowed or allowable for the property (unless you elec-
ted not to claim it).
Useful Items
There is no recapture for residential rental and nonresi- You may want to see:
dential real property unless that property is qualified prop-
erty for which you claimed a special depreciation allow- Publication
ance. For more information on depreciation recapture, see 463 463 Travel, Gift, and Car Expenses
Pub. 544.
535 535 Business Expenses
587 587 Business Use of Your Home

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Form (and Instructions) Qualified nonpersonal use vehicles. Qualified nonper-
2106 2106 Employee Business Expenses sonal use vehicles are vehicles that by their nature are not
likely to be used more than a minimal amount for personal
4562 4562 Depreciation and Amortization
purposes. They include the trucks and vans listed as ex-
4797 4797 Sales of Business Property cepted vehicles under Other Property Used for Transpor-
See chapter 6 for information about getting publications tation next. They also include trucks and vans that have
and forms. been specially modified so that they are not likely to be
used more than a minimal amount for personal purposes,
such as by installation of permanent shelving and painting
the vehicle to display advertising or the company's name.
What Is Listed Property?
For a detailed discussion of passenger automobiles, in-
cluding leased passenger automobiles, see Pub. 463.
Terms you may need to know
(see Glossary): Other Property Used for
Capitalized Transportation
Commuting Although vehicles used to transport persons or
Improvement ! property for pay or hire and vehicles rated at more
CAUTION than the 6,000-pound threshold are not passen-
Recovery period ger automobiles, they are still “other property used for
Straight line method transportation” and are subject to the special rules for lis-
ted property.

Listed property is any of the following. Other property used for transportation includes trucks,
buses, boats, airplanes, motorcycles, and any other vehi-
• Passenger automobiles (as defined later).
cles used to transport persons or goods.
• Any other property used for transportation, unless it is
an excepted vehicle. Excepted vehicles. Other property used for transporta-
tion does not include the following qualified nonpersonal
• Property generally used for entertainment, recreation,
use vehicles (defined earlier under Passenger Automo-
or amusement (including photographic, phonographic,
biles).
communication, and video recording equipment).
• Clearly marked police and fire vehicles.
Improvements to listed property. An improvement
made to listed property that must be capitalized is treated • Unmarked vehicles used by law enforcement officers
if the use is officially authorized.
as a new item of depreciable property. The recovery pe-
riod and method of depreciation that apply to the listed • Ambulances used as such and hearses used as such.
property as a whole also apply to the improvement. For Any vehicle with a loaded gross vehicle weight of over
•
example, if you must depreciate the listed property using 14,000 pounds that is designed to carry cargo.
the straight line method, you must also depreciate the im-
provement using the straight line method. • Bucket trucks (cherry pickers), cement mixers, dump
trucks (including garbage trucks), flatbed trucks, and
refrigerated trucks.
Passenger Automobiles
• Combines, cranes and derricks, and forklifts.
A passenger automobile is any four-wheeled vehicle
made primarily for use on public streets, roads, and high- • Delivery trucks with seating only for the driver, or only
for the driver plus a folding jump seat.
ways and rated at 6,000 pounds or less of unloaded gross
vehicle weight (6,000 pounds or less of gross vehicle • Qualified moving vans.
weight for trucks and vans). It includes any part, compo- Qualified specialized utility repair trucks.
•
nent, or other item physically attached to the automobile
at the time of purchase or usually included in the purchase • School buses used in transporting students and em-
price of an automobile. ployees of schools.
The following vehicles are not considered passenger • Other buses with a capacity of at least 20 passengers
automobiles for these purposes. that are used as passenger buses.
• An ambulance, hearse, or combination ambu- • Tractors and other special purpose farm vehicles.
lance-hearse used directly in a trade or business. Clearly marked police or fire vehicle. A clearly
• A vehicle used directly in the trade or business of marked police or fire vehicle is a vehicle that meets all the
transporting persons or property for pay or hire. following requirements.
• A truck or van that is a qualified nonpersonal use vehi- • It is owned or leased by a governmental unit or an
cle. agency or instrumentality of a governmental unit.

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• It is required to be used for commuting by a police offi- If these requirements are not met, you cannot deduct
cer or firefighter who, when not on a regular shift, is on depreciation (including the section 179 deduction) or rent
call at all times. expenses for your use of the property as an employee.

• It is prohibited from being used for personal use (other Note. Employee expenses for transportation and for
than commuting) outside the limit of the police officer's the depreciation of certain listed property (such as com-
arrest powers or the firefighter's obligation to respond puters placed in service before 2018) paid or incurred in a
to an emergency. tax year beginning after December 31, 2017, and before
• It is clearly marked with painted insignia or words that January 1, 2026, may not be claimed as a miscellaneous
make it readily apparent that it is a police or fire vehi- itemized deduction subject to the 2% floor. If you are not
cle. A marking on a license plate is not a clear marking entitled to claim these expenses as an above-the-line de-
for these purposes. duction, you may not claim a deduction for the expense
on your 2022 return.
Qualified moving van. A qualified moving van is any
truck or van used by a professional moving company for Employer's convenience. Whether the use of listed
moving household or business goods if the following re- property is for your employer's convenience must be de-
quirements are met. termined from all the facts. The use is for your employer's
• No personal use of the van is allowed other than for convenience if it is for a substantial business reason of the
travel to and from a move site or for minor personal employer. The use of listed property during your regular
use, such as a stop for lunch on the way from one working hours to carry on your employer's business is
move site to another. generally for the employer's convenience.

• Personal use for travel to and from a move site hap- Condition of employment. Whether the use of listed
pens no more than five times a month on average. property is a condition of your employment depends on all
• Personal use is limited to situations in which it is more the facts and circumstances. The use of property must be
convenient to the employer, because of the location of required for you to perform your duties properly. Your em-
the employee's residence in relation to the location of ployer does not have to require explicitly that you use the
the move site, for the van not to be returned to the em- property. However, a mere statement by the employer
ployer's business location. that the use of the property is a condition of your employ-
ment is not sufficient.
Qualified specialized utility repair truck. A truck is
a qualified specialized utility repair truck if it is not a van or Example 1. Virginia Sycamore is employed as a cou-
pickup truck and all the following apply. rier with We Deliver, which provides local courier services.
Virginia owns and uses a motorcycle to deliver packages
• The truck was specifically designed for and is used to
to downtown offices. We Deliver explicitly requires all de-
carry heavy tools, testing equipment, or parts.
livery persons to own a car or motorcycle for use in their
• Shelves, racks, or other permanent interior construc- employment. Virginia's use of the motorcycle is for the
tion has been installed to carry and store the tools, convenience of We Deliver and is required as a condition
equipment, or parts and would make it unlikely that of employment.
the truck would be used, other than minimally, for per-
sonal purposes. Example 2. You are an inspector for Uplift, a construc-
tion company with many sites in the local area. You must
• The employer requires the employee to drive the truck travel to these sites on a regular basis. Uplift does not fur-
home in order to be able to respond in emergency sit- nish an automobile or explicitly require you to use your
uations for purposes of restoring or maintaining elec- own automobile. However, it pays you for any costs you
tricity, gas, telephone, water, sewer, or steam utility incur in traveling to the various sites. The use of your own
services. automobile or a rental automobile is for the convenience
of Uplift and is required as a condition of employment.

Can Employees Claim a Example 3. Assume the same facts as in Example 2,
except that Uplift furnishes a car to you, and you choose
Deduction? to use your own car and receive payment for using it. The
use of your own car is neither for the convenience of Uplift
If you are an employee, you can claim a depreciation de- nor required as a condition of employment.
duction for the use of your listed property (whether owned
or rented) in performing services as an employee only if Example 4. Marilyn Lee is a pilot for Y Company, a
your use is a business use. The use of your property in small charter airline. Y requires pilots to obtain 80 hours of
performing services as an employee is a business use flight time annually in addition to flight time spent with the
only if both the following requirements are met. airline. Pilots can usually obtain these hours by flying with
the Air Force Reserve or by flying part-time with another
• The use is for your employer's convenience. airline. Marilyn owns an airplane. The use of that airplane
• The use is required as a condition of your employ-
ment.

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to obtain the required flight hours is neither for the conven-         which it is no longer used predominantly for qualified 
ience of the employer nor required as a condition of em-               business 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-
                                                                     cient. For example, if you lease only one passenger auto-
   Commuting                                                         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 per-
                                                                     sonal purposes and charges the employee for the use is 
   Nonresidential real property                                      not regularly engaged in the business of leasing the prop-
   Placed in service                                                 erty used by the employee.
   Recapture
                                                                     How To Allocate Use
   Recovery period
   Straight line method                                              To  determine  whether  the  business-use  requirement  is 
                                                                     met, you must allocate the use of any item of listed prop-
 
                                                                     erty  used  for  more  than  one  purpose  during  the  year 
                                                                     among its various uses.
You  can  claim  the  section  179  deduction  and  a  special 
depreciation allowance for listed property and depreciate            For passenger automobiles and other means of trans-
listed  property  using  GDS  and  a  declining  balance             portation, allocate the property's use on the basis of mile-
method  if  the  property  meets  the  business-use  require-        age. You determine the percentage of qualified business 
ment.  To  meet  this  requirement,  listed  property  must  be      use by dividing the number of miles you drove the vehicle 
used  predominantly  (more  than  50%  of  its  total  use)  for     for business purposes during the year by the total number 
qualified business use. If this requirement is not met, the          of miles you drove the vehicle for all purposes (including 
following rules apply.                                               business miles) during the year.
 • Property not used predominantly for qualified busi-
                                                                     For other listed property, allocate the property's use on 
   ness use during the year it is placed in service does 
                                                                     the basis of the most appropriate unit of time the property 
   not qualify for the section 179 deduction.
                                                                     is  actually  used  (rather  than  merely  being  available  for 
 • Property not used predominantly for qualified busi-               use). For example, you can determine the percentage of 
   ness use during the year it is placed in service does             business use of an item of listed property by dividing the 
   not qualify for a special depreciation allowance.                 number of hours you used the item of listed property for 
 • Any depreciation deduction under MACRS for prop-                  business purposes during the year by the total number of 
   erty not used predominantly for qualified business use            hours you used the item of listed property for all purposes 
   during any year must be figured using the straight line           (including business use) during the year.

   method over the ADS recovery period. This rule ap-                Entertainment  use. Treat  the  use  of  listed  property  for 
   plies each year of the recovery period.                           entertainment,  recreation,  or  amusement  purposes  as  a 
 • Excess depreciation on property previously used pre-              business use only to the extent you can deduct expenses 
   dominantly for qualified business use must be                     (other than interest and property tax expenses) due to its 
   recaptured (included in income) in the first year in              use as an ordinary and necessary business expense.

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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
• More than 5% of the outstanding stock of the corpora-
in a car while commuting to work. Similarly, a business
tion.
call made on an otherwise personal trip does not change
the character of a trip from personal to business. The fact • Stock possessing more than 5% of the total combined
that an automobile is used to display material that adverti- voting power of all stock in the corporation.
ses the owner's or user's trade or business does not con-
vert 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
of the personal use of the automobile in Richard's gross
Employee deductions. If you are an employee, do not
income and properly withholds tax on it. The use of the
treat your use of listed property as business use unless it
automobile is pay for the performance of services by a re-
is for your employer's convenience and is required as a
lated person, so it is not a qualified business use.
condition of your employment. See Can Employees Claim
a Deduction, earlier. Example 2. John, in Example 1, allows unrelated em-
ployees to use company automobiles for personal purpo-
Qualified Business Use ses. John does not include the value of the personal use
of the company automobiles as part of their compensation
Qualified business use of listed property is any use of the and does not withhold tax on the value of the use of the
property in your trade or business. However, it does not automobiles. This use of company automobiles by em-
include the following uses. ployees is not a qualified business use.
• The leasing of property to any 5% owner or related
Example 3. James Company Inc. owns several auto-
person (to the extent the property is used by a 5%
mobiles that its employees use for business purposes.
owner or person related to the owner or lessee of the
The employees are also allowed to take the automobiles
property).
home at night. The FMV of each employee's use of an au-
• The use of property as pay for the services of a 5% tomobile for any personal purpose, such as commuting to
owner or related person. and from work, is reported as income to the employee and
• The use of property as pay for services of any person James Company withholds tax on it. This use of company
(other than a 5% owner or related person), unless the automobiles by employees, even for personal purposes,
value of the use is included in that person's gross in- is a qualified business use for the company.
come and income tax is withheld on that amount
where required. Investment Use

Property does not stop being used predominantly The use of property to produce income in a nonbusiness
! for qualified business use because of a transfer at activity (investment use) is not a qualified business use.
CAUTION death.
However, you can treat the investment use as business
use to figure the depreciation deduction for the property in
Exception for leasing or compensatory use of air- a given year.
craft. Treat the leasing of any aircraft by a 5% owner or
related person, or the compensatory use of any aircraft, Example 1. You use an item of listed property 50% of
as a qualified business use if at least 25% of the total use the time to manage your investments. You also use the
of the aircraft during the year is for a qualified business item of listed property 40% of the time in your part-time
use. consumer research business. Your item of listed property
is listed property because it is not used at a regular

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business establishment. You do not use the item of listed Total section 179 deduction ($10,000) and
property predominantly for qualified business use. There- depreciation claimed ($6,618) for 2018 through
fore, you cannot elect a section 179 deduction or claim a 2021. (Depreciation is from Table A-1.). . . . . . . $16,618
special depreciation allowance for the item of listed prop-
Minus: Depreciation allowable (Table
erty. You must depreciate it using the straight line method
A-8):
over the ADS recovery period. Your combined business/ 2018 — 10% of $18,000 . . . . . . . . . . $1,800
investment use for determining your depreciation deduc- 2019 — 20% of $18,000 . . . . . . . . . . 3,600
tion is 90%. 2020 — 20% of $18,000 . . . . . . . . . . 3,600
2021 — 20% of $18,000 . . . . . . . . . . 3,600 12,600
Example 2. If you use your item of listed property 30%
of the time to manage your investments and 60% of the Excess depreciation. . . . . . . . . . . . . . . . . . . . . $4,018
time in your consumer research business, it is used pre-
dominantly for qualified business use. You can elect a If Ellen's use of the truck does not change to 50% for
section 179 deduction and, if you do not deduct all the business and 50% for personal purposes until 2024, there
item of listed property’s cost, you can claim a special de- will be no excess depreciation. The total depreciation al-
preciation allowance and depreciate the item of listed lowable using Table A-8 through 2024 will be $18,000,
property using the 200% declining balance method over which equals the total of the section 179 deduction and
the GDS recovery period. Your combined business/invest- depreciation Ellen will have claimed.
ment use for determining your depreciation deduction is
90%. Where to figure and report recapture. Use Form 4797,
Part IV, to figure the recapture amount. Report the recap-
ture amount as other income on the same form or sched-
Recapture of Excess Depreciation ule on which you took the depreciation deduction. For ex-
ample, report the recapture amount as other income on
If you used listed property more than 50% in a qualified
Schedule C (Form 1040) if you took the depreciation de-
business use in the year you placed it in service, you must
duction on Schedule C. If you took the depreciation de-
recapture (include in income) excess depreciation in the
duction on Form 2106, report the recapture amount as
first year you use it 50% or less. You also increase the ad-
other income on Schedule 1 (Form 1040), line 8z.
justed basis of your property by the same amount.

Excess depreciation is: Lessee's Inclusion Amount
1. The depreciation allowable for the property (including
any section 179 deduction and special depreciation If you use leased listed property other than a passenger
allowance claimed) for years before the first year you automobile for business/investment use, you must include
do not use the property predominantly for qualified an amount in your income in the first year your qualified
business use, minus business-use percentage is 50% or less. Your qualified
business-use percentage is the part of the property's total
2. The depreciation that would have been allowable for use that is qualified business use (defined earlier). For the
those years if you had not used the property predomi- inclusion amount rules for a leased passenger automo-
nantly for qualified business use in the year you bile, see Leasing a Car in chapter 4 of Pub. 463.
placed it in service.
The inclusion amount is the sum of Amount A and
To determine the amount in (2) above, you must refigure Amount B, described next. However, see the special rules
the depreciation using the straight line method and the for the inclusion amount, later, if your lease begins in the
ADS recovery period. last 9 months of your tax year or is for less than 1 year.

Example. In June 2018, Ellen Rye purchased and Amount A. Amount A is:
placed in service a pickup truck that cost $18,000. Ellen
used it only for qualified business use for 2018 through 1. The FMV of the property, multiplied by
2021. Ellen claimed a section 179 deduction of $10,000 2. The business/investment use for the first tax year the
based on the purchase of the truck. Ellen began depreci- qualified business-use percentage is 50% or less,
ating it using the 200% DB method over a 5-year GDS re- multiplied by
covery period. The pickup truck's gross vehicle weight
was over 6,000 pounds, so it was not subject to the pas- 3. The applicable percentage from Table A-19 in Appen-
senger automobile limits discussed later under Do the dix A.
Passenger Automobile Limits Apply. During 2022, Ellen The FMV of the property is the value on the first day of
used the truck 50% for business and 50% for personal the lease term. If the capitalized cost of an item of listed
purposes. Ellen includes $4,018 excess depreciation in property is specified in the lease agreement, you must
her gross income for 2022. The excess depreciation is de- treat that amount as the FMV.
termined as follows.
Amount B. Amount B is:
1. The FMV of the property, multiplied by

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2. The average of the business/investment use for all tax                         Larry's  deductible  rent  for  the  item  of  listed  property  for 
years the property was leased that precede the first                              2022 is $800.
tax year the qualified business-use percentage is                                  Larry uses the inclusion amount worksheet to figure the 
50% or less, multiplied by                                                        amount that must be included in income for 2021. Larry’s 
                                                                                  inclusion  amount  is  $224,  which  is  the  sum  of  −$238 
3. The applicable percentage from Table A-20 in Appen-
                                                                                  (Amount A) and $462 (Amount B).
dix A.
Maximum  inclusion  amount.       The  inclusion  amount                              Inclusion Amount Worksheet
cannot be more than the sum of the deductible amounts of                                for Leased Listed Property 
rent for the tax year in which the lessee must include the                                Keep for Your Records
amount in gross income.
                                                                                  1. Fair market value . . . . . . . . . . . . . . . . . . . . .              $3,000
Inclusion amount worksheet. The following worksheet                               2. Business/investment use for first year 
is  provided  to  help  you  figure  the  inclusion  amount  for                      business use is 50% or less . . . . . . . . . . .                       40%
leased listed property.
                                                                                  3. Multiply line 1 by line 2 . . . . . . . . . . . . . . . .                1,200
    Inclusion Amount Worksheet                                                    4. Rate (%) from Table A-19 . . . . . . . . . . . . . −19.8%
    for Leased Listed Property                                                    5. Multiply line 3 by line 4. This is Amount 
      Keep for Your Records                                                           A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . −238
                                                                                  6. Fair market value . . . . . . . . . . . . . . . . . . . . .              3,000
1. Fair market value . . . . . . . . . . . . . . . . . . . . . . .               
                                                                                  7. Average business/investment use for 
2. Business/investment use for first year                                             years property leased before the first 
    business use is 50% or less . . . . . . . . . . . . .                             year business use is 50% or less . . . . . .                            70%
3. Multiply line 1 by line 2 . . . . . . . . . . . . . . . . . .                  8. Multiply line 6 by line 7 . . . . . . . . . . . . . . . .                2,100
4. Rate (%) from Table A-19 . . . . . . . . . . . . . . .                         9. Rate (%) from Table A-20 . . . . . . . . . . . . .                       22.0%
5. Multiply line 3 by line 4. This is Amount                                      10. Multiply line 8 by line 9. This is Amount 
    A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 462
6. Fair market value . . . . . . . . . . . . . . . . . . . . . . .                11. Add line 5 and line 10. This is your 
7. Average business/investment use for                                                inclusion amount. Enter here and as 
    years property leased before the first year                                       other income on the form or schedule 
    business use is 50% or less . . . . . . . . . . . . .                             on which you originally took the 
8. Multiply line 6 by line 7 . . . . . . . . . . . . . . . . . .                      deduction (for example, Schedule C or F 
9. Rate (%) from Table A-20 . . . . . . . . . . . . . . .                             (Form 1040), Schedule 1 (Form 1040), 
                                                                                      Form 1120, etc.) . . . . . . . . . . . . . . . . . . . . .              $224
10. Multiply line 8 by line 9. This is Amount 
    B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  
11. Add line 5 and line 10. This is your 
    inclusion amount. Enter here and as other                                     Lease  beginning  in  the  last  9  months  of  your  tax 
                                                                                  year. The inclusion amount is subject to a special rule if 
    income on the form or schedule on which 
                                                                                  all the following apply.
    you originally took the deduction (for 
    example, Schedule C or F (Form 1040),                                         • The lease term begins within 9 months before the 
    Schedule 1 (Form 1040), Form 1120,                                              close of your tax year.
    etc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       You do not use the property predominantly (more than 
                                                                                  •
                                                                                    50%) for qualified business use during that part of the 
                                                                                    tax year.
Example.  On February 1, 2020, Larry House, a calen-
dar year taxpayer, leased and placed in service an item of                        • The lease term continues into your next tax year.
listed property with an FMV of $3,000. The lease is for a                         Under  this  special  rule,  add  the  inclusion  amount  to  in-
period  of  5  years.  Larry  does  not  use  the  item  of  listed               come in the next tax year. Figure the inclusion amount by 
property at a regular business establishment, so it is listed                     taking  into  account  the  average  of  the  business/invest-
property. Larry’s business use of the property (all of which                      ment use for both tax years (line 2 of the Inclusion Amount 
is qualified business use) is 80% in 2020, 60% in 2021,                           Worksheet for Leased Listed Property) and the applicable 
and 40% in 2022. Larry must add an inclusion amount to                            percentage  for  the  tax  year  the  lease  term  begins.  Skip 
gross income for 2022, the first tax year Larry’s qualified                       lines  6  through  9  of  the  worksheet  and  enter  zero  on 
business-use percentage is 50% or less. The item of lis-                          line 10.
ted  property  has  a  5-year  recovery  period  under  both 
GDS and ADS. 2022 is the third tax year of the lease, so                           Example 1.  On August 1, 2021, Julie Rule, a calendar 
the  applicable  percentage  from Table  A-19  is  −19.8%.                        year taxpayer, leased and placed in service an item of lis-
The  applicable  percentage  from Table  A-20  is  22%.                           ted property. The property is 5-year property with an FMV 

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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-
Recovery period
ness use of the property was 50% in 2021 and 90% in
2022. Julie paid rent of $3,600 for 2021, of which $3,240
is deductible. Julie must include $147 in income in 2022.
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 2021 for a passenger automobile (defined earlier) each year is
and 2022, and the applicable percentage for year 1 from limited.
Table A-19. Amount B is zero. This section describes the maximum depreciation de-
duction amounts for 2022 and explains how to deduct, af-
Lease for less than 1 year. A special rule for the inclu-
ter the recovery period, the unrecovered basis of your
sion amount applies if the lease term is less than 1 year
property that results from applying the passenger automo-
and you do not use the property predominantly (more than
bile limits.
50%) for qualified business use. The amount included in
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.
Maximum Depreciation Deduction
Example 2. On October 1, 2021, John Joyce, a calen-
dar year taxpayer, leased and placed in service an item of The passenger automobile limits are the maximum depre-
listed property that is 3-year property. This property had ciation amounts you can deduct for a passenger automo-
an FMV of $15,000 and a recovery period of 5 years un- bile. They are based on the date you placed the automo-
der ADS. The lease term was 6 months (ending on March bile in service.
31, 2022), during which John used the property 45% in
business. John must include $71 in income in 2022. The Passenger Automobiles
$71 is the sum of Amount A and Amount B. Amount A is
The maximum deduction amounts for most passenger au-
$71 ($15,000 × 45% (0.45) × 2.1% (0.021) × 183/365), the
tomobiles are shown in the following table.
product of the FMV, the average business use for both
years, and the applicable percentage for year 1 from Ta-
ble A-19, prorated for the length of the lease. Amount B is
zero.

Where to report the inclusion amount. Report the in-
clusion amount figured as described in the preceding dis-
cussions as other income on the same form or schedule
on which you took the deduction for your rental costs. For
example, report the inclusion amount as other income on
Schedule C (Form 1040) if you took the deduction on
Schedule C. If you took the deduction for rental costs on
Form 2106, report the inclusion amount as other income
on Schedule 1 (Form 1040), line 8z.

Do the Passenger Automobile

Limits Apply?

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

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Maximum Depreciation Deduction for Passenger Au-                         2010        11,060  4       4,900 2,950         1,775
tomobiles (Including Trucks and Vans) Acquired Af-
 ter September 27, 2017, and Placed in Service in                       2009         10,9605         4,800 2,850         1,775
                           2022                                         2008         10,960  5       4,800 2,850         1,775
 Date                                                 4th &             2007           3,060         4,900 2,850          1,775
 Placed           1st      2nd      3rd               Later             2006           2,960         4,800 2,850          1,775
 in Service       Year     Year     Year              Year         1 If you elected not to claim any special depreciation allowance 
 2022          $19,2001    $18,000  $10,800           $6,460       or the vehicle is not qualified property, the maximum deduction is 
 2021          $18,2002    $16,400  $9,800            $5,860       $3,160. 
 2020          $18,1003    $16,100  $9,700            $5,760       2 If you elected not to claim any special depreciation allowance 
 2019          $18,1003    $16,100  $9,700            $5,760
                                                                   or the vehicle is not qualified property, the maximum deduction is 
 2018          $18,0004    $16,000  $9,600            $5,760       $3,160. Also, if you placed the vehicle in service in a tax year 
1If you elected not to claim any special depreciation allowance or beginning in 2015 and ending in 2016, and you elected to 
the vehicle is not qualified property, the maximum depreciation    accelerate certain credits in lieu of the special depreciation for 
deduction is $11,200.                                              that tax year, the maximum deduction is $3,160.
2 If you elected not to claim any special depreciation allowance   3 If you elected not to claim any special depreciation allowance 
or the vehicle is not qualified property, the maximum 
depreciation deduction is $10,200.                                 or the vehicle is not qualified property, the maximum deduction is 
                                                                   $3,160.
3 If you elected not to claim any special depreciation allowance 
or the vehicle is not qualified property, the maximum              4 If you elected not to claim any special depreciation allowance 
depreciation deduction is $10,100.                                 or the vehicle is not qualified property, the maximum deduction is 
4 If you elected not to claim any special depreciation allowance   $3,060.
or the vehicle is not qualified property, the maximum              5 If you elected not to claim any special depreciation allowance 
depreciation deduction is $10,000.                                 for the vehicle or the vehicle is not qualified property, the 
                                                                   maximum deduction is $2,960. 
Maximum Depreciation Deduction for Passenger Au-
tomobiles (Including Trucks and Vans) Acquired Be-                         If your business/investment use of the automobile 
fore September 28, 2017, and Placed in Service Be-                    !    is less than 100%, you must reduce the maximum 
                          fore 2020                                CAUTION deduction  amount  by  multiplying  the  maximum 
                                                                   amount by the percentage of business/investment use de-
 Date                                                 4th &
                                                                   termined on an annual basis during the tax year.
 Placed           1st      2nd      3rd               Later
 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   the fraction is the number of months and partial months in 
or the vehicle is not qualified property, the maximum              the short tax year, and the denominator is 12.
depreciation deduction is $10,100. 
2 If you elected not to claim any special depreciation allowance      Example.  On April 15, 2022, you bought and placed in 
or the vehicle is not qualified property, the maximum              service a new car for $14,500. You used the car only in 
depreciation 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 
Maximum Depreciation Deduction for Passenger Au-                   elected  not  to  claim  any  special  depreciation  allowance 
 tomobiles Placed in Service Before 2018                           for  the  5-year  property.  Under  MACRS,  a  car  is  5-year 
                                                                   property. Because you placed your car in service on April 
 Date                                                 4th &        15 and used it only for business, you use the percentages 
 Placed              1st   2nd      3rd               Later        in Table  A-1  to  figure  your  MACRS  depreciation  on  the 
 in Service          Year  Year     Year              Years        car. You multiple the $14,500 unadjusted basis of your car 
 2017             $11,1601 $5,100   $3,050            $1,875       by  0.20  to  get  your  MACRS  depreciation  of  $2,900  for 
                                                                   2022. This $2,900 is below the maximum depreciation de-
 2016              11,1601 5,100    3,050             1,875        duction  of  $10,200  for  passenger  automobiles  placed  in 
 2015              11,1602 5,100    3,050             1,875        service in 2022. You can deduct the full $2,900.
 2014              11,1603 5,100    3,050             1,875
                                                                   Electric Vehicles
 2013              11,1603 5,100    3,050             1,875
 2012              11,1603 5,100    3,050             1,875        The maximum depreciation deductions for passenger au-
                                                                   tomobiles that are produced to run primarily on electricity 
 2011              11,0604 4,900    2,950             1,775        are  higher  than  those  for  other  automobiles.  The  maxi-
                                                                   mum  deduction  amounts  for  electric  vehicles  placed  in 

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service after August 5, 1997, and before January 1, 2007, 2012 11,3604 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
cles classified as passenger automobiles or use the table 2009 11,060
ous section titled Passenger Automobiles for electric vehi- 7 4,900 2,950 1,775
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
2006 3,260 5,200 3,150 1,875
for Electric Vehicles
1 If you elected not to claim any special depreciation allowance
Date 4th & or 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
2006 $8,980 $14,400 $8,650 $5,225 or 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
1/01/2003– 22,8803 14,600 8,750 5,225 or 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
for the vehicle or the vehicle is not qualified property, or the or 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
2 If you acquired the vehicle before 5/06/03, the maximum or 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
property, or the vehicle is qualified Liberty Zone property, the or 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 Depreciation Worksheet for
vans placed in service after 2002 are higher than those for Passenger Automobiles
other passenger automobiles. The maximum deduction
You can use the following worksheet to figure your depre-
amounts for trucks and vans are shown in the following ta-
ciation deduction using the percentage tables. Then, use
ble.
the information from this worksheet to prepare Form 4562.
Maximum Depreciation Deduction
for Trucks and Vans Placed in Service Before 2018 Depreciation Worksheet for
Passenger Automobiles
Date 4th & Keep for Your Records
Placed 1st 2nd 3rd Later
in Service Year Year Year Years Part I
2017 $11,5601 $5,700 $3,450 $2,075 1. MACRS system (GDS or
ADS) . . . . . . . . . . . . . . . . . . . . . . .
2016 11,5601 5,700 3,350 2,075
2. Property class . . . . . . . . . . . . . .
2015 11,4602 5,600 3,350 1,975
3. Date placed in service . . . . . . .
2014 11,4603 5,500 3,350 1,975 4. Recovery period . . . . . . . . . . . .
2013 11,3604 5,400 3,250 1,975

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5. Method and convention . . . . . .                           Note.
6. Depreciation rate (from                                     1) If line 16 is equal to line 11, stop here. Your 
    tables) . . . . . . . . . . . . . . . . . . . . .          depreciation deduction (including your special 
7. Maximum depreciation                                        depreciation allowance) is limited to the amount on 
    deduction for this year from the                           line 11. 
    appropriate table . . . . . . . . . . . .                  2) If line 16 is less than line 11, complete Part III.
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 
    service . . . . . . . . . . . . . . . . . . . . .        19.   Multiply line 18 by line 6. This 
                                                                   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
    allowance) is limited to the amount on line 9.            When figuring the amount to enter on line 12, do not reduce 
    2) If line 10 is less than line 9, complete Part II.   your cost or other basis by any section 179 deduction you 
                                                           claimed for your car.
                       Part II                              2 Reduce the basis by the lesser of $4,000 or 10% of the cost 
11. Subtract line 10 from line 9.                          of the vehicle even if the credit is less than that amount.
    This is the limit on the amount 
    you can deduct for 
    depreciation (including any 
    special depreciation                                   Deductions After the Recovery Period
    allowance) . . . . . . . . . . . . . . . . .           
12. Cost or other basis (reduced                           If the depreciation deductions for your automobile are re-
    by any alternative motor                               duced  under  the  passenger  automobile  limits,  you  will 
    vehicle credit  or credit for 1                        have unrecovered basis in your automobile at the end of 
    electric vehicles ) . . . . . . . . . . .2             the recovery period. If you continue to use the automobile 
13. Multiply line 12 by line 8. This                       for business, you can deduct that unrecovered basis after 
    is your business/investment                            the  recovery  period  ends.  You  can  claim  a  depreciation 
    cost . . . . . . . . . . . . . . . . . . . . . . . .   deduction in each succeeding tax year until you recover 
                                                           your full basis in the car. The maximum amount you can 
14. Section 179 deduction claimed                          deduct  each  year  is  determined  by  the  date  you  placed 
    in the year you placed the car                         the car in service and your business/investment-use per-
    in service . . . . . . . . . . . . . . . . . . .      
                                                           centage. See Maximum Depreciation Deduction, earlier.
15. Subtract line 14 from line 13. 
    This is your tentative basis for                         Unrecovered basis is the cost or other basis of the pas-
    depreciation . . . . . . . . . . . . . . . .           senger automobile reduced by any clean-fuel vehicle de-
16. Multiply line 15 by the                                duction,  electric  vehicle  credit,  depreciation,  and  section 
    applicable percentage if the                           179 deductions that would have been allowable if you had 
    special depreciation allowance                         used the car 100% for business and investment use and 
    applies. This is your special                          the passenger automobile limits had not applied.
    depreciation allowance.                                        You cannot claim a depreciation deduction for lis-
    Enter -0- if this is not the year                        !     ted  property  other  than  passenger  automobiles 
    you placed the car in service,                         CAUTION after the recovery period ends. There is no unrec-
    the car is not qualified property,                     overed  basis  at  the  end  of  the  recovery  period  because 
    or you elected not to claim a                          you are considered to have used this property 100% for 
    special depreciation                                   business and investment purposes during all of the recov-
    allowance . . . . . . . . . . . . . . . . . .          ery period.

                                                             Example.   In  May  2016,  you  bought  and  placed  in 
                                                           service  a  car  costing  $31,500.  The  car  was  5-year 

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property under GDS (MACRS). You did not elect a section Like-kind exchanges completed after December
179 deduction and elected not to claim any special depre- ! 31, 2017, are generally limited to exchanges of
ciation allowance for the 5-year property. You used the CAUTION real property not held primarily for sale. Section
car exclusively for business during the recovery period 1.168(i)-6 of the regulations does not reflect this change in
(2016 through 2021). You figured your depreciation as law.
shown below.

Year Percentage Amount Limit Allowed
What Records Must Be Kept?
2016 20.0% $6,300 $3,160 $3,160
2017 32.0 10,080 5,100 5,100
2018 19.2 6,048 3,050 3,050 Terms you may need to know
2019 11.52 3,629 1,875 1,875 (see Glossary):
2020 11.52 3,629 1,875 1,875
2020 5.76 1,814 1,875 1,875 Business/investment use
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,935 Circumstantial evidence
Documentary evidence
At the end of 2021 you had an unrecovered basis of
$14,565 ($31,500 − $16,935). If in 2022 and later years
you continue to use the car 100% for business, you can
deduct each year the lesser of $1,875 or your remaining You cannot take any depreciation or section 179 deduc-
unrecovered basis. tion for the use of listed property unless you can prove
If your business use of the car had been less than your business/investment use with adequate records or
100% during any year, your depreciation deduction would with sufficient evidence to support your own statements.
have been less than the maximum amount allowable for For listed property, you must keep records for as long as
that year. However, in figuring your unrecovered basis in any recapture can still occur. Recapture can occur in any
the car, you would still reduce your basis by the maximum tax year of the recovery period.
amount allowable as if the business use had been 100%.
For example, if you had used your car 60% for business Adequate Records
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-
Deductions for Passenger diture or use. You do not have to record information in an
Automobiles Acquired in a Trade-In account book, diary, or similar record if the information is
already shown on the receipt. However, your records
If you acquire a passenger automobile in a trade-in, de- should back up your receipts in an orderly manner.
preciate the carryover basis separately as if the trade-in
did not occur. Depreciate the part of the new automobile's Elements of expenditure or use. Your records or other
basis that exceeds its carryover basis (excess basis) as if documentary evidence must support all the following.
it were newly placed in service property. This excess ba-
• The amount of each separate expenditure, such as
sis is the additional cash paid for the new automobile in
the cost of acquiring the item, maintenance and repair
the trade-in.
costs, capital improvement costs, lease payments,
The depreciation figured for the two components of the and any other expenses.
basis (carryover basis and excess basis) is subject to a • The amount of each business and investment use
single passenger automobile limit. Special rules apply in (based on an appropriate measure, such as mileage
determining the passenger automobile limits. These rules for vehicles and time for other listed property), and the
and examples are discussed in section 1.168(i)-6(d)(3) of total use of the property for the tax year.
the regulations.
• The date of the expenditure or use.
Instead of figuring depreciation for the carryover basis • The business or investment purpose for the expendi-
and the excess basis separately, you can elect to treat the ture or use.
old automobile as disposed of and both of the basis com-
Written documents of your expenditure or use are gen-
ponents for the new automobile as if placed in service at
erally better evidence than oral statements alone. You do
the time of the trade-in. For more information, including
not have to keep a daily log. However, some type of re-
how to make this election, see Election out under Property
cord containing the elements of an expenditure or the
Acquired in a Like-Kind Exchange or Involuntary Conver-
business or investment use of listed property made at or
sion in chapter 4, and sections 1.168(i)-6(i) and
near the time of the expenditure or use and backed up by
1.168(i)-6(j) of the regulations.

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other documents is preferable to a statement you prepare can include a stop at the business in between deliveries
later. by a single record of miles driven. You can account for the
use of a passenger automobile by a salesperson for a
Timeliness. You must record the elements of an expen- business trip away from home over a period of time by a
diture or use at the time you have full knowledge of the el- single record of miles traveled. Minimal personal use
ements. An expense account statement made from an ac- (such as a stop for lunch between two business stops) is
count book, diary, or similar record prepared or not an interruption of business use.
maintained at or near the time of the expenditure or use is
generally considered a timely record if, in the regular Confidential information. If any of the information on
course of business: the elements of an expenditure or use is confidential, you
do not need to include it in the account book or similar re-
• The statement is given by an employee to the em-
cord if you record it at or near the time of the expenditure
ployer, or
or use. You must keep it elsewhere and make it available
• The statement is given by an independent contractor as support to the IRS director for your area on request.
to the client or customer.
Substantial compliance. If you have not fully supported
For example, a log maintained on a weekly basis, that
a particular element of an expenditure or use, but have
accounts for use during the week, will be considered a re-
complied with the adequate records requirement for the
cord made at or near the time of use.
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 If you fail to establish to the satisfaction of the IRS di-
to 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 • By your own oral or written statement containing de-
established sales route will not normally need a written ex- tailed information as to the element.
planation of the business purpose of their travel.
• By other evidence sufficient to establish the element.
Business use supported. An adequate record contains If the element is the cost or amount, time, place, or date
enough information on each element of every business or of an expenditure or use, its supporting evidence must be
investment use. The amount of detail required to support direct evidence, such as oral testimony by witnesses or a
the use depends on the facts and circumstances. For ex- written statement setting forth detailed information about
ample, a taxpayer who uses a truck for both business and the element or the documentary evidence. If the element
personal purposes and whose only business use of the is the business purpose of an expenditure, its supporting
truck is to make customer deliveries on an established evidence can be circumstantial evidence.
route can satisfy the requirement by recording the length
of the route, including the total number of miles driven dur- Sampling. You can maintain an adequate record for part
ing the tax year and the date of each trip at or near the of a tax year and use that record to support your business
time of the trip. and investment use of listed property for the entire tax
Although you must generally prepare an adequate writ- year if it can be shown by other evidence that the periods
ten record, you can prepare a record of the business use for which you maintain an adequate record are represen-
of listed property in a computer memory device that uses tative of the use throughout the year.
a logging program.
Example 1. You are a sole proprietor and calendar
Separate or combined expenditures or uses. Each year taxpayer who operates an interior decorating busi-
use by you is normally considered a separate use. How- ness out of your home. You use your automobile for local
ever, you can combine repeated uses as a single item. business visits to the homes or offices of clients, for meet-
Record each expenditure as a separate item. Do not ings with suppliers and subcontractors, and to pick up and
combine it with other expenditures. If you choose, how- deliver items to clients. There is no other business use of
ever, you can combine amounts you spent for the use of the automobile, but you and family members also use it for
listed property during a tax year, such as for gasoline or personal purposes. You maintain adequate records for the
automobile repairs. If you combine these expenses, you first 3 months of the year showing that 75% of the automo-
do not need to support the business purpose of each ex- bile use was for business. Subcontractor invoices and
pense. Instead, you can divide the expenses based on the paid bills show that your business continued at approxi-
total business use of the listed property. mately the same rate for the rest of the year. If there is no
You can account for uses that can be considered part change in circumstances, such as the purchase of a sec-
of a single use, such as a round trip or uninterrupted busi- ond car for exclusive use in your business, the determina-
ness use, by a single record. For example, you can ac- tion that your combined business/investment use of the
count for the use of a truck to make deliveries at several automobile for the tax year is 75% rests on sufficient sup-
locations that begin and end at the business premises and porting evidence.

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Example 2. Assume the same facts as in Example 1, 1. You maintain a written policy statement that prohibits
except that you maintain adequate records during the first one of the following uses of the vehicles.
week of every month showing that 75% of your use of the
a. All personal use including commuting.
automobile is for business. Your business invoices show
that your business continued at the same rate during the b. Personal use, other than commuting, by employ-
later weeks of each month so that your weekly records are ees who are not officers, directors, or 1%-or-more
representative of the automobile's business use through- owners.
out the month. The determination that your business/
2. You treat all use of the vehicles by your employees as
investment use of the automobile for the tax year is 75%
personal use.
rests on sufficient supporting evidence.
3. You provide more than five vehicles for use by your
Example 3. You are a sole proprietor and calendar employees, and you keep in your records the informa-
year taxpayer who works as a sales representative in a tion on their use given to you by the employees.
large metropolitan area for a company that manufactures
household products. For the first 3 weeks of each month, 4. For demonstrator automobiles provided to full-time
you occasionally used your own automobile for business salespersons, you maintain a written policy statement
travel within the metropolitan area. During these weeks, that limits the total mileage outside the salesperson's
your business use of the automobile does not follow a normal working hours and prohibits use of the auto-
consistent pattern. During the fourth week of each month, mobile by anyone else, for vacation trips, or to store
you delivered all business orders taken during the previ- personal possessions.

ous month. The business use of your automobile, as sup- Exceptions. If you file Form 2106, and you are not re-
ported by adequate records, is 70% of its total use during quired to file Form 4562, report information about listed
that fourth week. The determination based on the record property on that form and not on Form 4562. Also, if you
maintained during the fourth week of the month that your file Schedule C (Form 1040) and are claiming the stand-
business/investment use of the automobile for the tax year ard mileage rate or actual vehicle expenses (except de-
is 70% does not rest on sufficient supporting evidence be- preciation) and you are not required to file Form 4562 for
cause your use during that week is not representative of any other reason, report vehicle information in Part IV of
use during other periods. Schedule C and not on Form 4562.
Loss of records. When you establish that failure to pro-
duce adequate records is due to loss of the records
through circumstances beyond your control, such as How To Get Tax Help
through fire, flood, earthquake, or other casualty, you
have the right to support a deduction by reasonable re- If you have questions about a tax issue; need help prepar-
construction of your expenditures and use. ing your tax return; or want to download free publications,
forms, or instructions, go to IRS.gov to find resources that
can help you right away.

How Is Listed Property Preparing and filing your tax return. After receiving all
your wage and earnings statements (Forms W-2, W-2G,
Information Reported?
1099-R, 1099-MISC, 1099-NEC, etc.); unemployment
You must provide the information about your listed prop- compensation statements (by mail or in a digital format) or
erty requested in Section A of Part V of Form 4562, if you other government payment statements (Form 1099-G);
claim either of the following deductions. and interest, dividend, and retirement statements from
banks and investment firms (Forms 1099), you have sev-
• Any deduction for a vehicle. eral options to choose from to prepare and file your tax re-
• A depreciation deduction for any other listed property. turn. You can prepare the tax return yourself, see if you
qualify for free tax preparation, or hire a tax professional to
If you claim any deduction for a vehicle, you must also prepare your return.
provide the information requested in Section B. If you pro-
vide the vehicle for your employee's use, the employee Free options for tax preparation. Go to IRS.gov to see
must give you this information. If you provide any vehicle your options for preparing and filing your return online or
for use by an employee, you must first answer the ques- in your local community, if you qualify, which include the
tions in Section C to see if you meet an exception to com- following.
pleting Section B for that vehicle.
• Free File. This program lets you prepare and file your
Vehicles used by your employees. You do not have to federal individual income tax return for free using
complete Section B of Part V, for vehicles used by your brand-name tax-preparation-and-filing software or
employees who are not more-than-5% owners or related Free File fillable forms. However, state tax preparation
persons if you meet at least one of the following require- may not be available through Free File. Go to IRS.gov/
ments. FreeFile to see if you qualify for free online federal tax
preparation, e-filing, and direct deposit or payment
options.

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• VITA. The Volunteer Income Tax Assistance (VITA) • You may also be able to access tax law information in
program offers free tax help to people with your electronic filing software.
low-to-moderate incomes, persons with disabilities,
and limited-English-speaking taxpayers who need
Need someone to prepare your tax return? There are
help preparing their own tax returns. Go to IRS.gov/
various types of tax return preparers, including enrolled
VITA, download the free IRS2Go app, or call
agents, certified public accountants (CPAs), accountants,
800-906-9887 for information on free tax return prepa-
and many others who don’t have professional credentials.
ration.
If you choose to have someone prepare your tax return,
• TCE. The Tax Counseling for the Elderly (TCE) pro- choose that preparer wisely. A paid tax preparer is:
gram offers free tax help for all taxpayers, particularly
those who are 60 years of age and older. TCE volun- • Primarily responsible for the overall substantive accu-
racy of your return,
teers specialize in answering questions about pen-
sions and retirement-related issues unique to seniors. • Required to sign the return, and
Go to IRS.gov/TCE, download the free IRS2Go app,
• Required to include their preparer tax identification
or call 888-227-7669 for information on free tax return
number (PTIN).
preparation.
Although the tax preparer always signs the return,
• MilTax. Members of the U.S. Armed Forces and
you're ultimately responsible for providing all the informa-
qualified veterans may use MilTax, a free tax service
tion required for the preparer to accurately prepare your
offered by the Department of Defense through Military
return. Anyone paid to prepare tax returns for others
OneSource. For more information, go to
should have a thorough understanding of tax matters. For
MilitaryOneSource MilitaryOneSource.mil/MilTax ( ).
more information on how to choose a tax preparer, go to
Also, the IRS offers Free Fillable Forms, which can
Tips for Choosing a Tax Preparer on IRS.gov.
be completed online and then filed electronically re-
gardless of income. Coronavirus. Go to IRS.gov/Coronavirus for links to in-
formation on the impact of the coronavirus, as well as tax
Using online tools to help prepare your return. Go to
relief available for individuals and families, small and large
IRS.gov/Tools for the following.
businesses, and tax-exempt organizations.
• The Earned Income Tax Credit Assistant IRS.gov/ (
EITCAssistant) determines if you’re eligible for the Employers can register to use Business Services On-
earned income credit (EIC). line. The Social Security Administration (SSA) offers on-
line service at SSA.gov/employer for fast, free, and secure
• The Online EIN Application IRS.gov/EIN ( ) helps you
online W-2 filing options to CPAs, accountants, enrolled
get an employer identification number (EIN) at no
agents, and individuals who process Form W-2, Wage
cost.
and Tax Statement, and Form W-2c, Corrected Wage and
• The Tax Withholding Estimator IRS.gov/W4app ( ) Tax Statement.
makes it easier for you to estimate the federal income
tax you want your employer to withhold from your pay- IRS social media. Go to IRS.gov/SocialMedia to see the
check. This is tax withholding. See how your withhold- various social media tools the IRS uses to share the latest
ing affects your refund, take-home pay, or tax due. information on tax changes, scam alerts, initiatives, prod-
ucts, and services. At the IRS, privacy and security are
• The First-Time Homebuyer Credit Account Look-up our highest priority. We use these tools to share public in-
(IRS.gov/HomeBuyer) tool provides information on formation with you. Don’t post your social security number
your repayments and account balance. (SSN) or other confidential information on social media
• The Sales Tax Deduction Calculator IRS.gov/ ( sites. Always protect your identity when using any social
SalesTax) figures the amount you can claim if you networking site.
itemize deductions on Schedule A (Form 1040). The following IRS YouTube channels provide short, in-
formative videos on various tax-related topics in English,
Getting answers to your tax questions. On
Spanish, and ASL.
IRS.gov, you can get up-to-date information on
current events and changes in tax law. • Youtube.com/irsvideos.
• IRS.gov/Help: A variety of tools to help you get an- • Youtube.com/irsvideosmultilingua.
swers to some of the most common tax questions. • Youtube.com/irsvideosASL.
• IRS.gov/ITA: The Interactive Tax Assistant, a tool that
will ask you questions and, based on your input, pro- Watching IRS videos. The IRS Video portal
vide answers on a number of tax law topics. (IRSVideos.gov) contains video and audio presentations
for individuals, small businesses, and tax professionals.
• IRS.gov/Forms: Find forms, instructions, and publica-
tions. You will find details on the most recent tax Online tax information in other languages. You can
changes and interactive links to help you find answers find information on IRS.gov/MyLanguage if English isn’t
to your questions. your native language.

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Free Over-the-Phone Interpreter (OPI) Service. The • View digital copies of select notices from the IRS.
IRS is committed to serving our multilingual customers by
• Approve or reject authorization requests from tax pro-
offering OPI services. The OPI Service is a federally fun-
fessionals.
ded program and is available at Taxpayer Assistance
Centers (TACs), other IRS offices, and every VITA/TCE • View your address on file or manage your communi-
return site. The OPI Service is accessible in more than cation preferences.
350 languages.
Tax Pro Account. This tool lets your tax professional
Accessibility Helpline available for taxpayers with submit an authorization request to access your individual
disabilities. Taxpayers who need information about ac- taxpayer IRS online account. For more information, go to
cessibility services can call 833-690-0598. The Accessi- IRS.gov/TaxProAccount.
bility Helpline can answer questions related to current and
future accessibility products and services available in al- Using direct deposit. The fastest way to receive a tax
ternative media formats (for example, braille, large print, refund is to file electronically and choose direct deposit,
audio, etc.). The Accessibility Helpline does not have ac- which securely and electronically transfers your refund di-
cess to your IRS account. For help with tax law, refunds, rectly into your financial account. Direct deposit also
or account-related issues, go to IRS.gov/LetUsHelp. avoids the possibility that your check could be lost, stolen,
destroyed, or returned undeliverable to the IRS. Eight in
Note. Form 9000, Alternative Media Preference, or 10 taxpayers use direct deposit to receive their refunds. If
Form 9000(SP) allows you to elect to receive certain types you don’t have a bank account, go to IRS.gov/
of written correspondence in the following formats. DirectDeposit for more information on where to find a
bank or credit union that can open an account online.
• Standard Print.
• Large Print. Getting a transcript of your return. The quickest way
to get a copy of your tax transcript is to go to IRS.gov/
• Braille. Transcripts. Click on either “Get Transcript Online” or “Get
• Audio (MP3). Transcript by Mail” to order a free copy of your transcript.
• Plain Text File (TXT). If you prefer, you can order your transcript by calling
800-908-9946.
• Braille Ready File (BRF).
Reporting and resolving your tax-related identity
Disasters. Go to Disaster Assistance and Emergency theft issues.
Relief for Individuals and Businesses to review the availa-
ble 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-
phone calls, or social media channels to request or
Getting tax publications and instructions in eBook
verify personal or financial information. This includes
format. You can also download and view popular tax
requests for personal identification numbers (PINs),
publications and instructions (including the Instructions for
passwords, or similar information for credit cards,
Form 1040) on mobile devices as eBooks at IRS.gov/
banks, or other financial accounts.
eBooks.
• Go to IRS.gov/IdentityTheft, the IRS Identity Theft
Note. IRS eBooks have been tested using Apple's Central webpage, for information on identity theft and
iBooks for iPad. Our eBooks haven’t been tested on other data security protection for taxpayers, tax professio-
dedicated eBook readers, and eBook functionality may nals, and businesses. If your SSN has been lost or
not operate as intended. stolen or you suspect you’re a victim of tax-related
identity theft, you can learn what steps you should
Access your online account (individual taxpayers take.
only). Go to IRS.gov/Account to securely access infor-
mation about your federal tax account. • Get an Identity Protection PIN (IP PIN). IP PINs are
six-digit numbers assigned to taxpayers to help pre-
• View the amount you owe and a breakdown by tax vent the misuse of their SSNs on fraudulent federal in-
year. come tax returns. When you have an IP PIN, it pre-
• See payment plan details or apply for a new payment vents someone else from filing a tax return with your
plan. SSN. To learn more, go to IRS.gov/IPPIN.

• Make a payment or view 5 years of payment history Ways to check on the status of your refund.
and any pending or scheduled payments.
• Go to IRS.gov/Refunds.
• Access your tax records, including key data from your
most recent tax return, and transcripts.

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• Download the official IRS2Go app to your mobile de- Understanding an IRS notice or letter you’ve re-
vice to check your refund status. ceived. Go to IRS.gov/Notices to find additional informa-
• Call the automated refund hotline at 800-829-1954. tion about responding to an IRS notice or letter.

Note. The IRS can’t issue refunds before mid-Febru- Note. You can use Schedule LEP (Form 1040), Re-
ary for returns that claimed the EIC or the additional child quest for Change in Language Preference, to state a pref-
tax credit (ACTC). This applies to the entire refund, not erence to receive notices, letters, or other written commu-
just the portion associated with these credits. nications from the IRS in an alternative language. You
may not immediately receive written communications in
Making a tax payment. Go to IRS.gov/Payments for in- the requested language. The IRS’s commitment to LEP
formation on how to make a payment using any of the fol- taxpayers is part of a multi-year timeline that is scheduled
lowing options. to begin providing translations in 2023. You will continue
to receive communications, including notices and letters
• IRS Direct Pay: Pay your individual tax bill or estima- in English until they are translated to your preferred lan-
ted tax payment directly from your checking or sav- guage.
ings account at no cost to you.
• Debit or Credit Card: Choose an approved payment Contacting your local IRS office. Keep in mind, many
processor to pay online or by phone. questions can be answered on IRS.gov without visiting an
IRS TAC. Go to IRS.gov/LetUsHelp for the topics people
• Electronic Funds Withdrawal: Schedule a payment ask about most. If you still need help, IRS TACs provide
when filing your federal taxes using tax return prepara- tax help when a tax issue can’t be handled online or by
tion software or through a tax professional. phone. All TACs now provide service by appointment, so
• Electronic Federal Tax Payment System: Best option you’ll know in advance that you can get the service you
for businesses. Enrollment is required. need without long wait times. Before you visit, go to
IRS.gov/TACLocator to find the nearest TAC and to check
• Check or Money Order: Mail your payment to the ad-
hours, available services, and appointment options. Or,
dress listed on the notice or instructions.
on the IRS2Go app, under the Stay Connected tab,
• Cash: You may be able to pay your taxes with cash at choose the Contact Us option and click on “Local Offices.”
a participating retail store.
• Same-Day Wire: You may be able to do same-day The Taxpayer Advocate Service (TAS)
wire from your financial institution. Contact your finan- Is Here To Help You
cial institution for availability, cost, and time frames.
What Is TAS?
Note. The IRS uses the latest encryption technology to
ensure that the electronic payments you make online, by TAS is an independent organization within the IRS that
phone, or from a mobile device using the IRS2Go app are helps taxpayers and protects taxpayer rights. Their job is
safe and secure. Paying electronically is quick, easy, and to ensure that every taxpayer is treated fairly and that you
faster than mailing in a check or money order. know and understand your rights under the Taxpayer Bill
of Rights.
What if I can’t pay now? Go to IRS.gov/Payments for
more information about your options. How Can You Learn About Your Taxpayer
• Apply for an online payment agreement IRS.gov/ ( Rights?
OPA) to meet your tax obligation in monthly install-
ments if you can’t pay your taxes in full today. Once The Taxpayer Bill of Rights describes 10 basic rights that
you complete the online process, you will receive im- all taxpayers have when dealing with the IRS. Go to
mediate notification of whether your agreement has TaxpayerAdvocate.IRS.gov to help you understand what
been approved. these rights mean to you and how they apply. These are
your rights. Know them. Use them.
• Use the Offer in Compromise Pre-Qualifier to see if
you can settle your tax debt for less than the full
amount you owe. For more information on the Offer in What Can TAS Do for You?
Compromise program, go to IRS.gov/OIC.
TAS can help you resolve problems that you can’t resolve
Filing an amended return. Go to IRS.gov/Form1040X with the IRS. And their service is free. If you qualify for
for information and updates. their assistance, you will be assigned to one advocate
who will work with you throughout the process and will do
Checking the status of your amended return. Go to everything possible to resolve your issue. TAS can help
IRS.gov/WMAR to track the status of Form 1040-X amen- you if:
ded returns. • Your problem is causing financial difficulty for you,
your family, or your business;
Note. It can take up to 3 weeks from the date you filed
your amended return for it to show up in our system, and • You face (or your business is facing) an immediate
processing it can take up to 16 weeks. threat of adverse action; or

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• You’ve tried repeatedly to contact the IRS but no one Low Income Taxpayer Clinics (LITCs)
has responded, or the IRS hasn’t responded by the
date promised. LITCs are independent from the IRS. LITCs represent in-
dividuals whose income is below a certain level and need
How Can You Reach TAS? to resolve tax problems with the IRS, such as audits, ap-
peals, and tax collection disputes. In addition, LITCs can
TAS has offices in every state, the District of Columbia, provide information about taxpayer rights and responsibili-
and Puerto Rico. Your local advocate’s number is in your ties in different languages for individuals who speak Eng-
local directory and at TaxpayerAdvocate.IRS.gov/ lish as a second language. Services are offered for free or
Contact-Us. You can also call them at 877-777-4778. a small fee for eligible taxpayers. To find an LITC near
you, go to TaxpayerAdvocate.IRS.gov/about-us/Low-
How Else Does TAS Help Taxpayers? Income-Taxpayer-Clinics-LITC or see IRS Pub. 4134, Low
Income Taxpayer Clinic List.
TAS works to resolve large-scale problems that affect
many taxpayers. If you know of one of these broad issues,
report it to them at IRS.gov/SAMS.

TAS for Tax Professionals

TAS can provide a variety of information for tax professio-
nals, including tax law updates and guidance, TAS pro-
grams, and ways to let TAS know about systemic prob-
lems you’ve seen in your practice.

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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

Page 70                                                                Publication 946 (2022)

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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

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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 (2022)                                                                                                   Page 73

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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

Page 74                                                                          Publication 946 (2022)

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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 (2022)                                                                                                   Page 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

Page 76                                                                            Publication 946 (2022)

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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 (2022)                                                                                                   Page 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

Page 78                                                                             Publication 946 (2022)

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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 (2022)                                                                                                   Page 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

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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 (2022)                                                                                                   Page 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

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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

Publication 946 (2022)                                                                                                   Page 83

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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

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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

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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

Page 86                                                                             Publication 946 (2022)

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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 (2022)                                                                                                   Page 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

Page 88                                                                             Publication 946 (2022)

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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

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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

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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 (2022)                                                                                                   Page 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

Page 92                                                                             Publication 946 (2022)

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

                        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  Recov-        Table B-2.  If the property is not listed  13-year  class  life  and  a  7-year  recov-
ery Periods has two sections. The first  in  Table  B-1,  check  Table  B-2  to  find  ery period for GDS. If you elect to use 
section, Specific  Depreciable  Assets           the activity in which the property is be- ADS, the recovery period is 13 years. If 
Used in All Business Activities, Except          ing  used  and  use  the  recovery  period  you  only  looked  at  Table  B-1,  you 
as Noted, generally lists assets used in  shown  in  the  appropriate  column  fol- would  select  asset  class  00.3,               Land 
all  business  activities.  It  is  shown  as  lowing the description.                          Improvements,  and  incorrectly  use  a 
Table B-1. The second section, Depre-                                                           recovery period of 15 years for GDS or 
ciable  Assets  Used  in  the  Following         Property  not  in  either  table. If  the      20 years for ADS.
Activities, describes  assets  used  only        activity  or  the  property  is  not  included 
in certain activities. It is shown as Ta-        in either table, check the end of Table        Example  2.     You  produce  rubber 
ble B-2.                                         B-2 to find Certain Property for Which         products.  During  the  year,  you  made 
                                                 Recovery Periods Assigned. This prop- substantial  improvements  to  the  land 
                                                 erty generally has a recovery period of  on which your rubber plant is located. 
How To Use the Tables                            7 years for GDS or 12 years for ADS.  You check Table B-1 and find land im-
You will need to look at both Table B-1          See Which Property Class Applies Un-           provements  under  asset  class  00.3. 
and Table B-2 to find the correct recov-         der GDS? and Which Recovery Period             You  then  check  Table  B-2  and  find 
ery period. Generally, if the property is        Applies? in chapter 4 for the class lives  your  activity,  producing  rubber  prod-
listed in Table B-1, you use the recov-          or  the  recovery  periods  for  GDS  and  ucts, under asset class 30.1,  Manufac-
ery  period  shown  in  that  table.  How-       ADS for the following.                         ture  of  Rubber  Products.  Reading  the 
                                                                                                headings and descriptions under asset 
ever, if the property is specifically listed     • Residential rental property and 
                                                                                                class 30.1, you find that it does not in-
in Table B-2 under the type of activity            nonresidential real property (also 
                                                                                                clude  land  improvements.  Therefore, 
in which it is used, you use the recov-            see Appendix A, Chart 2).
ery  period  listed  under  the  activity  in                                                   you use the recovery period under as-
that  table.  Use  the  tables  in  the  order   • Qualified rent-to-own property.              set class 00.3. The land improvements 
shown  below  to  determine  the  recov-         • A motorsport entertainment com-              have a 20-year class life and a 15-year 
ery  period  of  your  depreciable  prop-          plex.                                        recovery period for GDS. If you elect to 
                                                                                                use  ADS,  the  recovery  period  is  20 
                                                 •
erty.                                              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        April 11, 2005.                              set class 57.0, Distributive Trades and 
                                                                                                Services, which includes   assets used 
of the activity. If the activity is not de-      • Natural gas gathering and distribu-          in  wholesale  and  retail  trade.  This 
scribed in Table B-2 or if the activity is         tion lines placed in service after           asset class does not specifically list of-
described 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 
                                                                                                not listed in Table B-1 but it is an asset 
cannot be less than 125% of the lease            your activity, paper manufacturing, un-
                                                                                                used in your retail business. The cash 
term  for  any  property  leased  under  a       der  asset  class  26.1, Manufacture  of 
                                                                                                register  has  a  9-year  class  life  and  a 
leasing  arrangement  to  a  tax-exempt          Pulp and Paper. You use the recovery 
                                                                                                5-year recovery period for GDS. If you 
organization, governmental unit, or for-         period under this asset class because 
                                                                                                elect  to  use  the  ADS  method,  the  re-
eign person or entity (other than a part-        it  specifically  includes  land  improve-
                                                                                                covery period is 9 years.
nership).                                        ments. The land improvements have a 

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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 allow- erty. The GDS of MACRS uses the
able and casualty losses. 150% and 200% declining balance Listed property: Passenger automo-
methods for certain types of property. biles; any other property used for
Amortization: A ratable deduction for A depreciation rate (percentage) is de- transportation; and property of a type
the cost of intangible property over its termined by dividing the declining bal- generally used for entertainment, rec-
useful life. ance percentage by the recovery pe- reation, 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 a tax-exempt activity, or a personal ac-
taxes or a mortgage. Exchange: To barter, swap, part with, tivity.
give, or transfer property for other
Basis: A measure of an individual's in- property 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
ized amount is not deductible as a cur- executor, administrator, receiver, or of 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 gross rental income is from dwelling
ery period for most types of property not confined to a name but can also be units.
under the General Depreciation attached 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 Useful life: An estimate of how long
actual operating expenses. of years, or an income interest in a an item of property can be expected to
trust. It generally refers to a present or be usable in trade or business or to
Straight line method: A way to figure future interest in income from property produce income.
depreciation for property that ratably or the right to use property that termi-
deducts the same amount for each nates or fails upon the lapse of time,
year in the recovery period. The rate the occurrence of an event, or the fail-
(in percentage terms) is determined by ure of an event to occur.
dividing 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    29
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   31                        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   28                                  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   55
B                                                Exclusion from MACRS    11                            Passenger automobile     51
Basis:                                           General asset account  49                             Qualified business use   54
  Adjustments  12 21 34 35, , ,                  Not to claim special depreciation                     Recordkeeping    61
                                                     allowance  25                                     Related person   54
  Basis for depreciation 30                      Section 179 deduction  21                             Reporting on Form 4562    63
  Casualty loss  35                              Straight line method 34
  Change in use  12                            Electric vehicle 58                                    M
  Cost 11                                      Employee:
  Depreciable basis  25                          Depreciation deduction  52                           Maximum deduction:
  Other than cost 12                             How to claim depreciation 13                          Electric vehicles 58
  Recapture of clean-fuel vehicle deduction or Employee deduction, listed property                 52  Passenger automobiles    57
     credit 34                                                                                         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   38
                                                 Without using percentage tables   38                  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 35                    General asset account:                                  Percentage tables  34
Changing accounting method      13               Abusive transaction  48                               Property classes  27
Communication equipment (See Listed              Disposing of property 46                              Recovery periods  31
  property)                                      Grouping property in 46                               Short tax year 43
Commuting   54                                   Nonrecognition transaction  47                        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 28
Copyright  10                                                                                         Nontaxable transfer of MACRS property  42
 (See also Section 197 intangibles)
Correcting depreciation deductions    13       I                                                      O
Cost basis  11                                 Idle property 7                                        Office in the home 5 31, 
                                               Improvements    12 32, 
D                                              Income forecast method    10                           Ownership, incidents of   4
Declining balance:                             Incorrect depreciation deductions     13
  Method   38                                  index 6 7 11 13 15 17 25 45 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 58
Depreciation:                                    Income forecast method  10                            Limit on   57
  Deduction:                                     Straight line method 9                                Maximum depreciation deduction   57
     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 5        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 27                                Rental home (See Residential rental property) Special depreciation allowance:
  Depreciable 3                             Rented property, improvements       13         Election not to claim 25
  Idle 7                                    Repairs 12                                     Qualified property 23
  Improvements  12                          Residential rental property      28            Recapture   26
  Leased  4 17,                             Retail motor fuels outlet 29                  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    49
  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 17
Q                                             Business use required  16                   Trucks 59
Qualified leasehold improvement property,     Carryover 20
  defined  29                                 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 34   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   15
  MACRS depreciation   50                     Excepted     17                             W
  Section 179 deduction  22                   Purchase required   16                      When to use ADS  27
  Special depreciation allowance 26           Recapture  22                               Worksheet:
Recordkeeping:                                Recordkeeping  21                            Leased listed property 56
  Listed property 61                          S corporation rules 21                       MACRS      36
  Section 179 21                            Settlement fees  11
Recovery periods:                           Short tax year:
  ADS  31                                     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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