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Irs 1040ez Forms

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Irs 1040ez Forms

Irs 1040ez forms Publication 929 - Additional Material Table of Contents How To Get Tax HelpLow Income Taxpayer Clinics This image is too large to be displayed in the current screen. Irs 1040ez forms Please click the link to view the image. Irs 1040ez forms Form 1040A, page 1, for Joshua A. Irs 1040ez forms Blake This image is too large to be displayed in the current screen. Irs 1040ez forms Please click the link to view the image. Irs 1040ez forms Form 1040A, page 2, for Joshua A. Irs 1040ez forms Blake This image is too large to be displayed in the current screen. Irs 1040ez forms Please click the link to view the image. Irs 1040ez forms Form 8615 for Joshua A. Irs 1040ez forms Blake Filled-in Qualified Dividends and Capital Gain Tax Worksheet #1 Before you begin: Be sure you do not have to file Form 1040 (see the instructions for Form 1040A, line 10) 1. Irs 1040ez forms Enter the amount from Form 1040A, line 27 1. Irs 1040ez forms 48,800*       2. Irs 1040ez forms Enter the amount from Form 1040A, line 9b 2. Irs 1040ez forms 300*           3. Irs 1040ez forms Enter the amount from Form 1040A, line 10 3. Irs 1040ez forms 200*           4. Irs 1040ez forms Add lines 2 and 3 4. Irs 1040ez forms 500       5. Irs 1040ez forms Subtract line 4 from line 1. Irs 1040ez forms If zero or less, enter -0- 5. Irs 1040ez forms 48,300       6. Irs 1040ez forms Enter the smaller of:                 •The amount on line 1, or                   •$36,250 if single or married filing separately,                   $72,500 if married filing jointly or qualifying widow(er),   or 6. Irs 1040ez forms 48,800*         $48,600 if head of household. Irs 1040ez forms                   7. Irs 1040ez forms Enter the smaller of line 5 or line 6 7. Irs 1040ez forms 48,300       8. Irs 1040ez forms Subtract line 7 from line 6. Irs 1040ez forms This amount is taxed at 0% 8. Irs 1040ez forms   500       9. Irs 1040ez forms Enter the smaller of line 1 or line 4 9. Irs 1040ez forms 500       10. Irs 1040ez forms Enter the amount from line 8 10. Irs 1040ez forms   500       11. Irs 1040ez forms Subtract line 10 from line 9 11. Irs 1040ez forms  -0-       12. Irs 1040ez forms Multiply line 11 by 15% (. Irs 1040ez forms 15) 12. Irs 1040ez forms -0-   13. Irs 1040ez forms Use the Tax Table to figure the tax on the amount on line 5. Irs 1040ez forms Enter the tax here 13. Irs 1040ez forms 6,356   14. Irs 1040ez forms Add lines 12 and 13 14. Irs 1040ez forms 6,356   15. Irs 1040ez forms Use the Tax Table to figure the tax on the amount on line 1. Irs 1040ez forms Enter the tax here 15. Irs 1040ez forms 6,431   16. Irs 1040ez forms Tax on all taxable income. Irs 1040ez forms Enter the smaller of line 14 or line 15 here and on Form 1040A, line 28 16. Irs 1040ez forms 6,356       *See the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 9 tax in the Form 8615 instructions. Irs 1040ez forms Filled-in Qualified Dividends and Capital Gain Tax Worksheet #2 Before you begin: Be sure you do not have to file Form 1040 (see the instructions for Form 1040A, line 10) 1. Irs 1040ez forms Enter the amount from Form 1040A, line 27 1. Irs 1040ez forms 1,650*       2. Irs 1040ez forms Enter the amount from Form 1040A, line 9b 2. Irs 1040ez forms 750*           3. Irs 1040ez forms Enter the amount from Form 1040A, line 10 3. Irs 1040ez forms 500*           4. Irs 1040ez forms Add lines 2 and 3 4. Irs 1040ez forms 1,250       5. Irs 1040ez forms Subtract line 4 from line 1. Irs 1040ez forms If zero or less, enter -0- 5. Irs 1040ez forms  400       6. Irs 1040ez forms Enter the smaller of:                 •The amount on line 1, or                   •$36,250 if single or married filing separately,                   $72,500 if married filing jointly or qualifying   widow(er), or 6. Irs 1040ez forms 1,650*         $48,600 if head of household. Irs 1040ez forms                   7. Irs 1040ez forms Enter the smaller of line 5 or line 6 7. Irs 1040ez forms   400       8. Irs 1040ez forms Subtract line 7 from line 6. Irs 1040ez forms This amount is taxed at 0% 8. Irs 1040ez forms 1,250       9. Irs 1040ez forms Enter the smaller of line 1 or line 4 9. Irs 1040ez forms 1,250       10. Irs 1040ez forms Enter the amount from line 8 10. Irs 1040ez forms 1,250       11. Irs 1040ez forms Subtract line 10 from line 9 11. Irs 1040ez forms -0-       12. Irs 1040ez forms Multiply line 11 by 15% (. Irs 1040ez forms 15) 12. Irs 1040ez forms -0-   13. Irs 1040ez forms Use the Tax Table to figure the tax on the amount on line 5. Irs 1040ez forms Enter the tax here 13. Irs 1040ez forms 41*   14. Irs 1040ez forms Add lines 12 and 13 14. Irs 1040ez forms 41   15. Irs 1040ez forms Use the Tax Table to figure the tax on the amount on line 1. Irs 1040ez forms Enter the tax here 15. Irs 1040ez forms 166*   16. Irs 1040ez forms Tax on all taxable income. Irs 1040ez forms Enter the smaller of line 14 or line 15 here and on Form 1040A, line 28 16. Irs 1040ez forms 41       *See the instructions under Using the Qualified Dividends and Capital Gain Tax Worksheet for line 15 tax in the Form 8615 instructions. Irs 1040ez forms Filled-in Qualified Dividends and Capital Gain Tax Worksheet #3 Before you begin: Be sure you do not have to file Form 1040 (see the instructions for Form 1040A, line 10) 1. Irs 1040ez forms Enter the amount from Form 1040A, line 27 1. Irs 1040ez forms 2,450       2. Irs 1040ez forms Enter the amount from Form 1040A, line 9b 2. Irs 1040ez forms 1,050           3. Irs 1040ez forms Enter the amount from Form 1040A, line 10 3. Irs 1040ez forms 700           4. Irs 1040ez forms Add lines 2 and 3 4. Irs 1040ez forms 1,750       5. Irs 1040ez forms Subtract line 4 from line 1. Irs 1040ez forms If zero or less, enter -0- 5. Irs 1040ez forms    700       6. Irs 1040ez forms Enter the smaller of:                 •The amount on line 1, or                   •$36,250 if single or married filing separately,                   $72,500 if married filing jointly or qualifying   widow(er), or 6. Irs 1040ez forms 2,450         $48,600 if head of household. Irs 1040ez forms                   7. Irs 1040ez forms Enter the smaller of line 5 or line 6 7. Irs 1040ez forms  700       8. Irs 1040ez forms Subtract line 7 from line 6. Irs 1040ez forms This amount is taxed at 0% 8. Irs 1040ez forms 1,750       9. Irs 1040ez forms Enter the smaller of line 1 or line 4 9. Irs 1040ez forms 1,750       10. Irs 1040ez forms Enter the amount from line 8 10. Irs 1040ez forms 1,750       11. Irs 1040ez forms Subtract line 10 from line 9 11. Irs 1040ez forms -0-       12. Irs 1040ez forms Multiply line 11 by 15% (. Irs 1040ez forms 15) 12. Irs 1040ez forms -0-   13. Irs 1040ez forms Use the Tax Table to figure the tax on the amount on line 5. Irs 1040ez forms Enter the tax here 13. Irs 1040ez forms  71   14. Irs 1040ez forms Add lines 12 and 13 14. Irs 1040ez forms  71   15. Irs 1040ez forms Use the Tax Table to figure the tax on the amount on line 1. Irs 1040ez forms Enter the tax here 15. Irs 1040ez forms 246   16. Irs 1040ez forms Tax on all taxable income. Irs 1040ez forms Enter the smaller of line 14 or line 15 here and on Form 1040A, line 28 16. Irs 1040ez forms  71         How To Get Tax Help Whether it's help with a tax issue, preparing your tax return or a need for a free publication or form, get the help you need the way you want it: online, use a smart phone, call or walk in to an IRS office or volunteer site near you. Irs 1040ez forms Free help with your tax return. Irs 1040ez forms   You can get free help preparing your return nationwide from IRS-certified volunteers. Irs 1040ez forms The Volunteer Income Tax Assistance (VITA) program helps low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers. Irs 1040ez forms The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Irs 1040ez forms Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Irs 1040ez forms In addition, some VITA and TCE sites provide taxpayers the opportunity to prepare their own return with help from an IRS-certified volunteer. Irs 1040ez forms To find the nearest VITA or TCE site, you can use the VITA Locator Tool on IRS. Irs 1040ez forms gov, download the IRS2Go app, or call 1-800-906-9887. Irs 1040ez forms   As part of the TCE program, AARP offers the Tax-Aide counseling program. Irs 1040ez forms To find the nearest AARP Tax-Aide site, visit AARP's website at www. Irs 1040ez forms aarp. Irs 1040ez forms org/money/taxaide or call 1-888-227-7669. Irs 1040ez forms For more information on these programs, go to IRS. Irs 1040ez forms gov and enter “VITA” in the search box. Irs 1040ez forms Internet. Irs 1040ez forms    IRS. Irs 1040ez forms gov and IRS2Go are ready when you are —24 hours a day, 7 days a week. Irs 1040ez forms Download the free IRS2Go app from the iTunes app store or from Google Play. Irs 1040ez forms Use it to check your refund status, order transcripts of your tax returns or tax account, watch the IRS YouTube channel, get IRS news as soon as it's released to the public, subscribe to filing season updates or daily tax tips, and follow the IRS Twitter news feed, @IRSnews, to get the latest federal tax news, including information about tax law changes and important IRS programs. Irs 1040ez forms Check the status of your 2013 refund with the Where's My Refund? application on IRS. Irs 1040ez forms gov or download the IRS2Go app and select the Refund Status option. Irs 1040ez forms The IRS issues more than 9 out of 10 refunds in less than 21 days. Irs 1040ez forms Using these applications, you can start checking on the status of your return within 24 hours after we receive your e-filed return or 4 weeks after you mail a paper return. Irs 1040ez forms You will also be given a personalized refund date as soon as the IRS processes your tax return and approves your refund. Irs 1040ez forms The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Irs 1040ez forms Use the Interactive Tax Assistant (ITA) to research your tax questions. Irs 1040ez forms No need to wait on the phone or stand in line. Irs 1040ez forms The ITA is available 24 hours a day, 7 days a week, and provides you with a variety of tax information related to general filing topics, deductions, credits, and income. Irs 1040ez forms When you reach the response screen, you can print the entire interview and the final response for your records. Irs 1040ez forms New subject areas are added on a regular basis. Irs 1040ez forms  Answers not provided through ITA may be found in Tax Trails, one of the Tax Topics on IRS. Irs 1040ez forms gov which contain general individual and business tax information or by searching the IRS Tax Map, which includes an international subject index. Irs 1040ez forms You can use the IRS Tax Map, to search publications and instructions by topic or keyword. Irs 1040ez forms The IRS Tax Map integrates forms and publications into one research tool and provides single-point access to tax law information by subject. Irs 1040ez forms When the user searches the IRS Tax Map, they will be provided with links to related content in existing IRS publications, forms and instructions, questions and answers, and Tax Topics. Irs 1040ez forms Coming this filing season, you can immediately view and print for free all 5 types of individual federal tax transcripts (tax returns, tax account, record of account, wage and income statement, and certification of non-filing) using Get Transcript. Irs 1040ez forms You can also ask the IRS to mail a return or an account transcript to you. Irs 1040ez forms Only the mail option is available by choosing the Tax Records option on the IRS2Go app by selecting Mail Transcript on IRS. Irs 1040ez forms gov or by calling 1-800-908-9946. Irs 1040ez forms Tax return and tax account transcripts are generally available for the current year and the past three years. Irs 1040ez forms Determine if you are eligible for the EITC and estimate the amount of the credit with the Earned Income Tax Credit (EITC) Assistant. Irs 1040ez forms Visit Understanding Your IRS Notice or Letter to get answers to questions about a notice or letter you received from the IRS. Irs 1040ez forms If you received the First Time Homebuyer Credit, you can use the First Time Homebuyer Credit Account Look-up tool for information on your repayments and account balance. Irs 1040ez forms Check the status of your amended return using Where's My Amended Return? Go to IRS. Irs 1040ez forms gov and enter Where's My Amended Return? in the search box. Irs 1040ez forms You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Irs 1040ez forms It can take up to 3 weeks from the date you mailed it to show up in our system. Irs 1040ez forms Make a payment using one of several safe and convenient electronic payment options available on IRS. Irs 1040ez forms gov. Irs 1040ez forms Select the Payment tab on the front page of IRS. Irs 1040ez forms gov for more information. Irs 1040ez forms Determine if you are eligible and apply for an online payment agreement, if you owe more tax than you can pay today. Irs 1040ez forms Figure your income tax withholding with the IRS Withholding Calculator on IRS. Irs 1040ez forms gov. Irs 1040ez forms Use it if you've had too much or too little withheld, your personal situation has changed, you're starting a new job or you just want to see if you're having the right amount withheld. Irs 1040ez forms Determine if you might be subject to the Alternative Minimum Tax by using the Alternative Minimum Tax Assistant on IRS. Irs 1040ez forms gov. Irs 1040ez forms Request an Electronic Filing PIN by going to IRS. Irs 1040ez forms gov and entering Electronic Filing PIN in the search box. Irs 1040ez forms Download forms, instructions and publications, including accessible versions for people with disabilities. Irs 1040ez forms Locate the nearest Taxpayer Assistance Center (TAC) using the Office Locator tool on IRS. Irs 1040ez forms gov, or choose the Contact Us option on the IRS2Go app and search Local Offices. Irs 1040ez forms An employee can answer questions about your tax account or help you set up a payment plan. Irs 1040ez forms Before you visit, check the Office Locator on IRS. Irs 1040ez forms gov, or Local Offices under Contact Us on IRS2Go to confirm the address, phone number, days and hours of operation, and the services provided. Irs 1040ez forms If you have a special need, such as a disability, you can request an appointment. Irs 1040ez forms Call the local number listed in the Office Locator, or look in the phone book under United States Government, Internal Revenue Service. Irs 1040ez forms Apply for an Employer Identification Number (EIN). Irs 1040ez forms Go to IRS. Irs 1040ez forms gov and enter Apply for an EIN in the search box. Irs 1040ez forms Read the Internal Revenue Code, regulations, or other official guidance. Irs 1040ez forms Read Internal Revenue Bulletins. Irs 1040ez forms Sign up to receive local and national tax news and more by email. Irs 1040ez forms Just click on “subscriptions” above the search box on IRS. Irs 1040ez forms gov and choose from a variety of options. Irs 1040ez forms    Phone. Irs 1040ez forms You can call the IRS, or you can carry it in your pocket with the IRS2Go app on your smart phone or tablet. Irs 1040ez forms Download the free IRS2Go app from the iTunes app store or from Google Play. Irs 1040ez forms Call to locate the nearest volunteer help site, 1-800-906-9887 or you can use the VITA Locator Tool on IRS. Irs 1040ez forms gov, or download the IRS2Go app. Irs 1040ez forms Low-to-moderate income, elderly, people with disabilities, and limited English proficient taxpayers can get free help with their tax return from the nationwide Volunteer Income Tax Assistance (VITA) program. Irs 1040ez forms The Tax Counseling for the Elderly (TCE) program helps taxpayers age 60 and older with their tax returns. Irs 1040ez forms Most VITA and TCE sites offer free electronic filing. Irs 1040ez forms Some VITA and TCE sites provide IRS-certified volunteers who can help prepare your tax return. Irs 1040ez forms Through the TCE program, AARP offers the Tax-Aide counseling program; call 1-888-227-7669 to find the nearest Tax-Aide location. Irs 1040ez forms Call the automated Where's My Refund? information hotline to check the status of your 2013 refund 24 hours a day, 7 days a week at 1-800-829-1954. Irs 1040ez forms If you e-file, you can start checking on the status of your return within 24 hours after the IRS receives your tax return or 4 weeks after you've mailed a paper return. Irs 1040ez forms The IRS issues more than 9 out of 10 refunds in less than 21 days. Irs 1040ez forms Where's My Refund? will give you a personalized refund date as soon as the IRS processes your tax return and approves your refund. Irs 1040ez forms Before you call this automated hotline, have your 2013 tax return handy so you can enter your social security number, your filing status, and the exact whole dollar amount of your refund. Irs 1040ez forms The IRS updates Where's My Refund? every 24 hours, usually overnight, so you only need to check once a day. Irs 1040ez forms Note, the above information is for our automated hotline. Irs 1040ez forms Our live phone and walk-in assistors can research the status of your refund only if it's been 21 days or more since you filed electronically or more than 6 weeks since you mailed your paper return. Irs 1040ez forms Call the Amended Return Hotline, 1-866-464-2050, to check the status of your amended return. Irs 1040ez forms You can generally expect your amended return to be processed up to 12 weeks from the date we receive it. Irs 1040ez forms It can take up to 3 weeks from the date you mailed it to show up in our system. Irs 1040ez forms Call 1-800-TAX-FORM (1-800-829-3676) to order current-year forms, instructions, publications, and prior-year forms and instructions (limited to 5 years). Irs 1040ez forms You should receive your order within 10 business days. Irs 1040ez forms Call TeleTax, 1-800-829-4477, to listen to pre-recorded messages covering general and business tax information. Irs 1040ez forms If, between January and April 15, you still have questions about the Form 1040, 1040A, or 1040EZ (like filing requirements, dependents, credits, Schedule D, pensions and IRAs or self-employment taxes), call 1-800-829-1040. Irs 1040ez forms Call using TTY/TDD equipment, 1-800-829-4059 to ask tax questions or order forms and publications. Irs 1040ez forms The TTY/TDD telephone number is for people who are deaf, hard of hearing, or have a speech disability. Irs 1040ez forms These individuals can also contact the IRS through relay services such as the Federal Relay Service. Irs 1040ez forms    Walk-in. Irs 1040ez forms You can find a selection of forms, publications and services — in-person. Irs 1040ez forms Products. Irs 1040ez forms You can walk in to some post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Irs 1040ez forms Some IRS offices, libraries, and city and county government offices have a collection of products available to photocopy from reproducible proofs. Irs 1040ez forms Services. Irs 1040ez forms You can walk in to your local TAC for face-to-face tax help. Irs 1040ez forms An employee can answer questions about your tax account or help you set up a payment plan. Irs 1040ez forms Before visiting, use the Office Locator tool on IRS. Irs 1040ez forms gov, or choose the Contact Us option on the IRS2Go app and search Local Offices for days and hours of operation, and services provided. Irs 1040ez forms    Mail. Irs 1040ez forms You can send your order for forms, instructions, and publications to the address below. Irs 1040ez forms You should receive a response within 10 business days after your request is received. Irs 1040ez forms Internal Revenue Service 1201 N. Irs 1040ez forms Mitsubishi Motorway Bloomington, IL 61705-6613    The Taxpayer Advocate Service Is Here to Help You. Irs 1040ez forms The Taxpayer Advocate Service (TAS) is your voice at the IRS. Irs 1040ez forms Our job is to ensure that every taxpayer is treated fairly and that you know and understand your rights. Irs 1040ez forms   What can TAS do for you? We can offer you free help with IRS problems that you can't resolve on your own. Irs 1040ez forms We know this process can be confusing, but the worst thing you can do is nothing at all! TAS can help if you can't resolve your tax problem and: Your problem is causing financial difficulties for you, your family, or your business. Irs 1040ez forms You face (or your business is facing) an immediate threat of adverse action. Irs 1040ez forms You've tried repeatedly to contact the IRS but no one has responded, or the IRS hasn't responded by the date promised. Irs 1040ez forms   If you qualify for our help, you'll be assigned to one advocate who'll be with you at every turn and will do everything possible to resolve your problem. Irs 1040ez forms Here's why we can help: TAS is an independent organization within the IRS. Irs 1040ez forms Our advocates know how to work with the IRS. Irs 1040ez forms Our services are free and tailored to meet your needs. Irs 1040ez forms We have offices in every state, the District of Columbia, and Puerto Rico. Irs 1040ez forms   How can you reach us? If you think TAS can help you, call your local advocate, whose number is in your local directory and at Taxpayer Advocate, or call us toll-free at 1-877-777-4778. Irs 1040ez forms   How else does TAS help taxpayers?  TAS also works to resolve large-scale, systemic problems that affect many taxpayers. Irs 1040ez forms If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System. Irs 1040ez forms Low Income Taxpayer Clinics Low Income Taxpayer Clinics (LITCs) serve individuals whose income is below a certain level and need to resolve tax problems such as audits, appeals and tax collection disputes. Irs 1040ez forms Some clinics can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Irs 1040ez forms Visit Taxpayer Advocate or see IRS Publication 4134, Low Income Taxpayer Clinic List. Irs 1040ez forms Prev  Up  Next   Home   More Online Publications
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The Irs 1040ez Forms

Irs 1040ez forms 4. Irs 1040ez forms   Figuring Depreciation Under MACRS Table of Contents Introduction Useful Items - You may want to see: Which Depreciation System (GDS or ADS) Applies? Which Property Class Applies Under GDS?Rent-to-own dealer. Irs 1040ez forms Rent-to-own contract. Irs 1040ez forms What Is the Placed in Service Date? What Is the Basis for Depreciation? Which Recovery Period Applies?Recovery Periods Under GDS Recovery Periods Under ADS Additions and Improvements Which Convention Applies? Which Depreciation Method Applies?Depreciation Methods for Farm Property Electing a Different Method How Is the Depreciation Deduction Figured?Using the MACRS Percentage Tables Figuring the Deduction Without Using the Tables Figuring the Deduction for Property Acquired in a Nontaxable Exchange Figuring the Deduction for a Short Tax Year How Do You Use General Asset Accounts?Grouping Property Figuring Depreciation for a GAA Disposing of GAA Property Terminating GAA Treatment Electing To Use a GAA When Do You Recapture MACRS Depreciation? Introduction The Modified Accelerated Cost Recovery System (MACRS) is used to recover the basis of most business and investment property placed in service after 1986. Irs 1040ez forms MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Irs 1040ez forms Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. Irs 1040ez forms To be sure you can use MACRS to figure depreciation for your property, see What Method Can You Use To Depreciate Your Property in chapter 1. Irs 1040ez forms This chapter explains how to determine which MACRS depreciation system applies to your property. Irs 1040ez forms It also discusses other information you need to know before you can figure depreciation under MACRS. Irs 1040ez forms This information includes the property's recovery class, placed in service date, and basis, as well as the applicable recovery period, convention, and depreciation method. Irs 1040ez forms It explains how to use this information to figure your depreciation deduction and how to use a general asset account to depreciate a group of properties. Irs 1040ez forms Finally, it explains when and how to recapture MACRS depreciation. Irs 1040ez forms Useful Items - You may want to see: Publication 225 Farmer's Tax Guide 463 Travel, Entertainment, Gift, and Car  Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 587 Business Use of Your Home (Including Use by Daycare Providers) Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization See chapter 6 for information about getting publications and forms. Irs 1040ez forms Which Depreciation System (GDS or ADS) Applies? Your use of either the General Depreciation System (GDS) or the Alternative Depreciation System (ADS) to depreciate property under MACRS determines what depreciation method and recovery period you use. Irs 1040ez forms You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Irs 1040ez forms If you placed your property in service in 2013, complete Part III of Form 4562 to report depreciation using MACRS. Irs 1040ez forms Complete section B of Part III to report depreciation using GDS, and complete section C of Part III to report depreciation using ADS. Irs 1040ez forms If you placed your property in service before 2013 and are required to file Form 4562, report depreciation using either GDS or ADS on line 17 in Part III. Irs 1040ez forms Required use of ADS. Irs 1040ez forms   You must use ADS for the following property. Irs 1040ez forms Listed property used 50% or less in a qualified business use. Irs 1040ez forms See chapter 5 for information on listed property. Irs 1040ez forms Any tangible property used predominantly outside the United States during the year. Irs 1040ez forms Any tax-exempt use property. Irs 1040ez forms Any tax-exempt bond-financed property. Irs 1040ez forms All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the uniform capitalization rules to certain farming costs is in effect. Irs 1040ez forms Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts. Irs 1040ez forms If you are required to use ADS to depreciate your property, you cannot claim any special depreciation allowance (discussed in chapter 3) for the property. Irs 1040ez forms Electing ADS. Irs 1040ez forms   Although your property may qualify for GDS, you can elect to use ADS. Irs 1040ez forms The election generally must cover all property in the same property class that you placed in service during the year. Irs 1040ez forms However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. Irs 1040ez forms Once you make this election, you can never revoke it. Irs 1040ez forms   You make the election by completing line 20 in Part III of Form 4562. Irs 1040ez forms Which Property Class Applies Under GDS? The following is a list of the nine property classifications under GDS and examples of the types of property included in each class. Irs 1040ez forms These property classes are also listed under column (a) in section B, Part III, of Form 4562. Irs 1040ez forms For detailed information on property classes, see Appendix B, Table of Class Lives and Recovery Periods, in this publication. Irs 1040ez forms 3-year property. Irs 1040ez forms Tractor units for over-the-road use. Irs 1040ez forms Any race horse over 2 years old when placed in service. Irs 1040ez forms (All race horses placed in service after December 31, 2008, and before January 1, 2014, are deemed to be 3-year property, regardless of age. Irs 1040ez forms ) Any other horse (other than a race horse) over 12 years old when placed in service. Irs 1040ez forms Qualified rent-to-own property (defined later). Irs 1040ez forms 5-year property. Irs 1040ez forms Automobiles, taxis, buses, and trucks. Irs 1040ez forms Computers and peripheral equipment. Irs 1040ez forms Office machinery (such as typewriters, calculators, and copiers). Irs 1040ez forms Any property used in research and experimentation. Irs 1040ez forms Breeding cattle and dairy cattle. Irs 1040ez forms Appliances, carpets, furniture, etc. Irs 1040ez forms , used in a residential rental real estate activity. Irs 1040ez forms Certain geothermal, solar, and wind energy property. Irs 1040ez forms 7-year property. Irs 1040ez forms Office furniture and fixtures (such as desks, files, and safes). Irs 1040ez forms Agricultural machinery and equipment. Irs 1040ez forms Any property that does not have a class life and has not been designated by law as being in any other class. Irs 1040ez forms Certain motorsports entertainment complex property (defined later) placed in service before January 1, 2014. Irs 1040ez forms Any natural gas gathering line placed in service after April 11, 2005. Irs 1040ez forms See Natural gas gathering line and electric transmission property , later. Irs 1040ez forms 10-year property. Irs 1040ez forms Vessels, barges, tugs, and similar water transportation equipment. Irs 1040ez forms Any single purpose agricultural or horticultural structure. Irs 1040ez forms Any tree or vine bearing fruits or nuts. Irs 1040ez forms Qualified small electric meter and qualified smart electric grid system (defined later) placed in service on or after October 3, 2008. Irs 1040ez forms 15-year property. Irs 1040ez forms Certain improvements made directly to land or added to it (such as shrubbery, fences, roads, sidewalks, and bridges). Irs 1040ez forms Any retail motor fuels outlet (defined later), such as a convenience store. Irs 1040ez forms Any municipal wastewater treatment plant. Irs 1040ez forms Any qualified leasehold improvement property (defined later) placed in service before January 1, 2014. Irs 1040ez forms Any qualified restaurant property (defined later) placed in service before January 1, 2014. Irs 1040ez forms Initial clearing and grading land improvements for gas utility property. Irs 1040ez forms Electric transmission property (that is section 1245 property) used in the transmission at 69 or more kilovolts of electricity placed in service after April 11, 2005. Irs 1040ez forms See Natural gas gathering line and electric transmission property , later. Irs 1040ez forms Any natural gas distribution line placed in service after April 11, 2005 and before January 1, 2011. Irs 1040ez forms Any qualified retail improvement property placed in service before January 1, 2014. Irs 1040ez forms 20-year property. Irs 1040ez forms Farm buildings (other than single purpose agricultural or horticultural structures). Irs 1040ez forms Municipal sewers not classified as 25-year property. Irs 1040ez forms Initial clearing and grading land improvements for electric utility transmission and distribution plants. Irs 1040ez forms 25-year property. Irs 1040ez forms This class is water utility property, which is either of the following. Irs 1040ez forms Property that is an integral part of the gathering, treatment, or commercial distribution of water, and that, without regard to this provision, would be 20-year property. Irs 1040ez forms Municipal sewers other than property placed in service under a binding contract in effect at all times since June 9, 1996. Irs 1040ez forms Residential rental property. Irs 1040ez forms This is any building or structure, such as a rental home (including a mobile home), if 80% or more of its gross rental income for the tax year is from dwelling units. Irs 1040ez forms A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. Irs 1040ez forms It does not include a unit in a hotel, motel, or other establishment where more than half the units are used on a transient basis. Irs 1040ez forms If you occupy any part of the building or structure for personal use, its gross rental income includes the fair rental value of the part you occupy. Irs 1040ez forms Nonresidential real property. Irs 1040ez forms This is section 1250 property, such as an office building, store, or warehouse, that is neither residential rental property nor property with a class life of less than 27. Irs 1040ez forms 5 years. Irs 1040ez forms Qualified rent-to-own property. Irs 1040ez forms   Qualified rent-to-own property is property held by a rent-to-own dealer for purposes of being subject to a rent-to-own contract. Irs 1040ez forms It is tangible personal property generally used in the home for personal use. Irs 1040ez forms It includes computers and peripheral equipment, televisions, videocassette recorders, stereos, camcorders, appliances, furniture, washing machines and dryers, refrigerators, and other similar consumer durable property. Irs 1040ez forms Consumer durable property does not include real property, aircraft, boats, motor vehicles, or trailers. Irs 1040ez forms   If some of the property you rent to others under a rent-to-own agreement is of a type that may be used by the renters for either personal or business purposes, you still can treat this property as qualified property as long as it does not represent a significant portion of your leasing property. Irs 1040ez forms However, if this dual-use property does represent a significant portion of your leasing property, you must prove that this property is qualified rent-to-own property. Irs 1040ez forms Rent-to-own dealer. Irs 1040ez forms   You are a rent-to-own dealer if you meet all the following requirements. Irs 1040ez forms You regularly enter into rent-to-own contracts (defined below) in the ordinary course of your business for the use of consumer property. Irs 1040ez forms A substantial portion of these contracts end with the customer returning the property before making all the payments required to transfer ownership. Irs 1040ez forms The property is tangible personal property of a type generally used within the home for personal use. Irs 1040ez forms Rent-to-own contract. Irs 1040ez forms   This is any lease for the use of consumer property between a rent-to-own dealer and a customer who is an individual which— Is titled “Rent-to-Own Agreement,” “Lease Agreement with Ownership Option,” or other similar language. Irs 1040ez forms Provides a beginning date and a maximum period of time, not to exceed 156 weeks or 36 months from the beginning date, for which the contract can be in effect (including renewals or options to extend). Irs 1040ez forms Provides for regular periodic (weekly or monthly) payments that can be either level or decreasing. Irs 1040ez forms If the payments are decreasing, no payment can be less than 40% of the largest payment. Irs 1040ez forms Provides for total payments that generally exceed the normal retail price of the property plus interest. Irs 1040ez forms Provides for total payments that do not exceed $10,000 for each item of property. Irs 1040ez forms Provides that the customer has no legal obligation to make all payments outlined in the contract and that, at the end of each weekly or monthly payment period, the customer can either continue to use the property by making the next payment or return the property in good working order with no further obligations and no entitlement to a return of any prior payments. Irs 1040ez forms Provides that legal title to the property remains with the rent-to-own dealer until the customer makes either all the required payments or the early purchase payments required under the contract to acquire legal title. Irs 1040ez forms Provides that the customer has no right to sell, sublease, mortgage, pawn, pledge, or otherwise dispose of the property until all contract payments have been made. Irs 1040ez forms Motorsports entertainment complex. Irs 1040ez forms   This is a racing track facility permanently situated on land that hosts one or more racing events for automobiles, trucks, or motorcycles during the 36-month period after the first day of the month in which the facility is placed in service. Irs 1040ez forms The events must be open to the public for the price of admission. Irs 1040ez forms Qualified smart electric grid system. Irs 1040ez forms   A qualified smart electric grid system means any smart grid property used as part of a system for electric distribution grid communications, monitoring, and management placed in service after October 3, 2008, by a taxpayer who is a supplier of electrical energy or a provider of electrical energy services. Irs 1040ez forms Smart grid property includes electronics and related equipment that is capable of: Sensing, collecting, and monitoring data of or from all portions of a utility's electric distribution grid, Providing real-time, two-way communications to monitor or to manage the grid, and Providing real-time analysis of an event prediction based on collected data that can be used to provide electric distribution system reliability, quality, and performance. Irs 1040ez forms Retail motor fuels outlet. Irs 1040ez forms   Real property is a retail motor fuels outlet if it is used to a substantial extent in the retail marketing of petroleum or petroleum products (whether or not it is also used to sell food or other convenience items) and meets any one of the following three tests. Irs 1040ez forms It is not larger than 1,400 square feet. Irs 1040ez forms 50% or more of the gross revenues generated from the property are derived from petroleum sales. Irs 1040ez forms 50% or more of the floor space in the property is devoted to petroleum marketing sales. Irs 1040ez forms A retail motor fuels outlet does not include any facility related to petroleum and natural gas trunk pipelines. Irs 1040ez forms Qualified leasehold improvement property. Irs 1040ez forms    Generally, this is any improvement to an interior part of a building (placed in service before January 1, 2014) that is nonresidential real property, provided all of the requirements discussed in chapter 3 under Qualified leasehold improvement property are met. Irs 1040ez forms   In addition, an improvement made by the lessor does not qualify as qualified leasehold improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor's death or in any of the following types of transactions. Irs 1040ez forms A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or reacquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor's or distributor's basis in the property. Irs 1040ez forms Examples include the following. Irs 1040ez forms A complete liquidation of a subsidiary. Irs 1040ez forms A transfer to a corporation controlled by the transferor. Irs 1040ez forms An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Irs 1040ez forms Qualified restaurant property. Irs 1040ez forms   Qualified restaurant property is any section 1250 property that is a building placed in service after December 31, 2008, and before January 1, 2014. Irs 1040ez forms Also, more than 50% of the building's square footage must be devoted to preparation of meals and seating for on-premises consumption of prepared meals. Irs 1040ez forms Qualified smart electric meter. Irs 1040ez forms   A qualified smart electric meter is any time-based meter and related communication equipment which is placed in service by a supplier of electric energy or a provider of electric energy services and which is capable of being used by you as part of a system that: Measures and records electricity usage data on a time-differentiated basis in at least 24 separate time segments per day; Provides for the exchange of information between the supplier or provider and the customer's smart electric meter in support of time-based rates or other forms of demand response; Provides data to the supplier or provider so that the supplier or provider can provide energy usage information to customers electronically, and Provides all commercial and residential customers of such supplier or provider with net metering. Irs 1040ez forms Net metering means allowing a customer a credit, if any, as complies with applicable federal and state laws and regulations for providing electricity to the supplier or provider. Irs 1040ez forms Natural gas gathering line and electric transmission property. Irs 1040ez forms   Any natural gas gathering line placed in service after April 11, 2005, is treated as 7-year property, and electric transmission property (that is section 1245 property) used in the transmission at 69 or more kilovolts of electricity and any natural gas distribution line placed in service after April 11, 2005, are treated as 15-year property, if the following requirements are met. Irs 1040ez forms The original use of the property must have begun with you after April 11, 2005. Irs 1040ez forms Original use means the first use to which the property is put, whether or not by you. Irs 1040ez forms Therefore, property used by any person before April 12, 2005, is not original use. Irs 1040ez forms Original use includes additional capital expenditures you incurred to recondition or rebuild your property. Irs 1040ez forms However, original use does not include the cost of reconditioned or rebuilt property you acquired. Irs 1040ez forms Property containing used parts will not be treated as reconditioned or rebuilt if the cost of the used parts is not more than 20% of the total cost of the property. Irs 1040ez forms The property must not be placed in service under a binding contract in effect before April 12, 2005. Irs 1040ez forms The property must not be self-constructed property (property you manufacture, construct, or produce for your own use), if you began the manufacture, construction, or production of the property before April 12, 2005. Irs 1040ez forms Property that is manufactured, constructed, or produced for your use by another person under a written binding contract entered into by you or a related party before the manufacture, construction, or production of the property is considered to be manufactured, constructed, or produced by you. Irs 1040ez forms What Is the Placed in Service Date? You begin to claim depreciation when your property is placed in service for either use in a trade or business or the production of income. Irs 1040ez forms The placed in service date for your property is the date the property is ready and available for a specific use. Irs 1040ez forms It is therefore not necessarily the date it is first used. Irs 1040ez forms If you converted property held for personal use to use in a trade or business or for the production of income, treat the property as being placed in service on the conversion date. Irs 1040ez forms See Placed in Service under When Does Depreciation Begin and End in chapter 1 for examples illustrating when property is placed in service. Irs 1040ez forms What Is the Basis for Depreciation? The basis for depreciation of MACRS property is the property's cost or other basis multiplied by the percentage of business/investment use. Irs 1040ez forms For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . Irs 1040ez forms Reduce that amount by any credits and deductions allocable to the property. Irs 1040ez forms The following are examples of some credits and deductions that reduce basis. Irs 1040ez forms Any deduction for section 179 property. Irs 1040ez forms Any deduction under section 179B of the Internal Revenue Code for capital costs to comply with Environmental Protection Agency sulfur regulations. Irs 1040ez forms Any deduction under section 179C of the Internal Revenue Code for certain qualified refinery property placed in service after August 8, 2005, and before January 1, 2014. Irs 1040ez forms Any deduction under section 179D of the Internal Revenue Code for certain energy efficient commercial building property placed in service after December 31, 2005, and before January 1, 2014. Irs 1040ez forms Any deduction under section 179E of the Internal Revenue Code for qualified advanced mine safety equipment property placed in service after December 20, 2006, and before January 1, 2014 . Irs 1040ez forms Any deduction for removal of barriers to the disabled and the elderly. Irs 1040ez forms Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Irs 1040ez forms Any special depreciation allowance. Irs 1040ez forms Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. Irs 1040ez forms For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Irs 1040ez forms Enter the basis for depreciation under column (c) in Part III of Form 4562. Irs 1040ez forms For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . Irs 1040ez forms Which Recovery Period Applies? The recovery period of property is the number of years over which you recover its cost or other basis. Irs 1040ez forms It is determined based on the depreciation system (GDS or ADS) used. Irs 1040ez forms Recovery Periods Under GDS Under GDS, property that is not qualified Indian reservation property is depreciated over one of the following recovery periods. Irs 1040ez forms Property Class Recovery Period 3-year property   3 years 1   5-year property   5 years     7-year property   7 years     10-year property   10 years     15-year property   15 years 2   20-year property   20 years     25-year property   25 years 3   Residential rental property   27. Irs 1040ez forms 5 years     Nonresidential real property   39 years 4   15 years for qualified rent-to-own property placed in service before August 6, 1997. Irs 1040ez forms 239 years for property that is a retail motor fuels outlet placed in service before August 20, 1996 (31. Irs 1040ez forms 5 years if placed in service before May 13, 1993), unless you elected to depreciate it over 15 years. Irs 1040ez forms 320 years for property placed in service before June 13, 1996, or under a binding contract in effect before June 10, 1996. Irs 1040ez forms 431. Irs 1040ez forms 5 years for property placed in service before May 13, 1993 (or before January 1, 1994, if the purchase or construction of the property is under a binding contract in effect before May 13, 1993, or if construction began before May 13, 1993). Irs 1040ez forms The GDS recovery periods for property not listed above can be found in Appendix B, Table of Class Lives and Recovery Periods. Irs 1040ez forms Residential rental property and nonresidential real property are defined earlier under Which Depreciation System (GDS or ADS) Applies. Irs 1040ez forms Enter the appropriate recovery period on Form 4562 under column (d) in section B of Part III, unless already shown (for 25-year property, residential rental property, and nonresidential real property). Irs 1040ez forms Office in the home. Irs 1040ez forms   If your home is a personal-use single family residence and you begin to use part of your home as an office, depreciate that part of your home as nonresidential real property over 39 years (31. Irs 1040ez forms 5 years if you began using it for business before May 13, 1993). Irs 1040ez forms However, if your home is an apartment in an apartment building that you own and the building is residential rental property as defined earlier under Which Depreciation System (GDS or ADS) Applies , depreciate the part used as an office as residential rental property over 27. Irs 1040ez forms 5 years. Irs 1040ez forms See Publication 587 for a discussion of the tests you must meet to claim expenses, including depreciation, for the business use of your home. Irs 1040ez forms Home changed to rental use. Irs 1040ez forms   If you begin to rent a home that was your personal home before 1987, you depreciate it as residential rental property over 27. Irs 1040ez forms 5 years. Irs 1040ez forms Indian Reservation Property The recovery periods for qualified property you placed in service on an Indian reservation after 1993 and before 2014 are shorter than those listed earlier. Irs 1040ez forms The following table shows these shorter recovery periods. Irs 1040ez forms Property Class Recovery  Period 3-year property 2 years 5-year property 3 years 7-year property 4 years 10-year property 6 years 15-year property 9 years 20-year property 12 years Nonresidential real property 22 years Nonresidential real property is defined earlier under Which Property Class Applies Under GDS . Irs 1040ez forms Use this chart to find the correct percentage table to use for qualified Indian reservation property. Irs 1040ez forms IF your recovery period is: THEN use the following table in Appendix A: 2 years A-21 3 years A-1, A-2, A-3, A-4, or A-5 4 years A-22 6 years A-23 9 years A-14, A-15, A-16, A-17, or A-18 12 years A-14, A-15, A-16, A-17, or A-18 22 years A-24 Qualified property. Irs 1040ez forms   Property eligible for the shorter recovery periods are 3-, 5-, 7-, 10-, 15-, and 20-year property and nonresidential real property. Irs 1040ez forms You must use this property predominantly in the active conduct of a trade or business within an Indian reservation. Irs 1040ez forms The rental of real property that is located on an Indian reservation is treated as the active conduct of a trade or business within an Indian reservation. Irs 1040ez forms   The following property is not qualified property. Irs 1040ez forms Property used or located outside an Indian reservation on a regular basis, other than qualified infrastructure property. Irs 1040ez forms Property acquired directly or indirectly from a related person. Irs 1040ez forms Property placed in service for purposes of conducting or housing class I, II, or III gaming activities. Irs 1040ez forms These activities are defined in section 4 of the Indian Regulatory Act (25 U. Irs 1040ez forms S. Irs 1040ez forms C. Irs 1040ez forms 2703). Irs 1040ez forms Any property you must depreciate under ADS. Irs 1040ez forms Determine whether property is qualified without regard to the election to use ADS and after applying the special rules for listed property not used predominantly for qualified business use (discussed in chapter 5). Irs 1040ez forms Qualified infrastructure property. Irs 1040ez forms   Item (1) above does not apply to qualified infrastructure property located outside the reservation that is used to connect with qualified infrastructure property within the reservation. Irs 1040ez forms Qualified infrastructure property is property that meets all the following rules. Irs 1040ez forms It is qualified property, as defined earlier, except that it is outside the reservation. Irs 1040ez forms It benefits the tribal infrastructure. Irs 1040ez forms It is available to the general public. Irs 1040ez forms It is placed in service in connection with the active conduct of a trade or business within a reservation. Irs 1040ez forms Infrastructure property includes, but is not limited to, roads, power lines, water systems, railroad spurs, and communications facilities. Irs 1040ez forms Related person. Irs 1040ez forms   For purposes of item (2) above, see Related persons in the discussion on property owned or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 for a description of related persons. Irs 1040ez forms Indian reservation. Irs 1040ez forms   The term Indian reservation means a reservation as defined in section 3(d) of the Indian Financing Act of 1974 (25 U. Irs 1040ez forms S. Irs 1040ez forms C. Irs 1040ez forms 1452(d)) or section 4(10) of the Indian Child Welfare Act of 1978 (25 U. Irs 1040ez forms S. Irs 1040ez forms C. Irs 1040ez forms 1903(10)). Irs 1040ez forms Section 3(d) of the Indian Financing Act of 1974 defines reservation to include former Indian reservations in Oklahoma. Irs 1040ez forms For a definition of the term “former Indian reservations in Oklahoma,” see Notice 98-45 in Internal Revenue Bulletin 1998-35. Irs 1040ez forms Recovery Periods Under ADS The recovery periods for most property generally are longer under ADS than they are under GDS. Irs 1040ez forms The following table shows some of the ADS recovery periods. Irs 1040ez forms Property Recovery  Period Rent-to-own property 4 years Automobiles and light duty trucks 5 years Computers and peripheral equipment 5 years High technology telephone station equipment installed on customer premises 5 years High technology medical equipment 5 years Personal property with no class life 12 years Natural gas gathering lines 14 years Single purpose agricultural and horticultural structures 15 years Any tree or vine bearing fruit or nuts 20 years Initial clearing and grading land  improvements for gas utility property 20 years Initial clearing and grading land  improvements for electric utility  transmission and distribution plants 25 years Electric transmission property used in the transmission at 69 or more kilovolts of electricity 30 years Natural gas distribution lines 35 years Any qualified leasehold improvement property 39 years Any qualified restaurant property 39 years Nonresidential real property 40 years Residential rental property 40 years Section 1245 real property not listed in Appendix B 40 years Railroad grading and tunnel bore 50 years The ADS recovery periods for property not listed above can be found in the tables in Appendix B. Irs 1040ez forms Rent-to-own property, qualified leasehold improvement property, qualified restaurant property, residential rental property, and nonresidential real property are defined earlier under Which Property Class Applies Under GDS . Irs 1040ez forms Tax-exempt use property subject to a lease. Irs 1040ez forms   The ADS recovery period for any property leased under a lease agreement to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership) cannot be less than 125% of the lease term. Irs 1040ez forms Additions and Improvements An addition or improvement you make to depreciable property is treated as separate depreciable property. Irs 1040ez forms See How Do You Treat Repairs and Improvements in chapter 1 for a definition of improvements. Irs 1040ez forms Its property class and recovery period are the same as those that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. Irs 1040ez forms The recovery period begins on the later of the following dates. Irs 1040ez forms The date you place the addition or improvement in service. Irs 1040ez forms The date you place in service the property to which you made the addition or improvement. Irs 1040ez forms If the improvement you make is qualified leasehold improvement property, qualified restaurant property, or qualified retail improvement property, the GDS recovery period is 15 years (39 years under ADS). Irs 1040ez forms Example. Irs 1040ez forms You own a rental home that you have been renting out since 1981. Irs 1040ez forms If you put an addition on the home and place the addition in service this year, you would use MACRS to figure your depreciation deduction for the addition. Irs 1040ez forms Under GDS, the property class for the addition is residential rental property and its recovery period is 27. Irs 1040ez forms 5 years because the home to which the addition is made would be residential rental property if you had placed it in service this year. Irs 1040ez forms Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. Irs 1040ez forms The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. Irs 1040ez forms The mid-month convention. Irs 1040ez forms   Use this convention for nonresidential real property, residential rental property, and any railroad grading or tunnel bore. Irs 1040ez forms   Under this convention, you treat all property placed in service or disposed of during a month as placed in service or disposed of at the midpoint of the month. Irs 1040ez forms This means that a one-half month of depreciation is allowed for the month the property is placed in service or disposed of. Irs 1040ez forms   Your use of the mid-month convention is indicated by the “MM” already shown under column (e) in Part III of Form 4562. Irs 1040ez forms The mid-quarter convention. Irs 1040ez forms   Use this convention if the mid-month convention does not apply and the total depreciable bases of MACRS property you placed in service during the last 3 months of the tax year (excluding nonresidential real property, residential rental property, any railroad grading or tunnel bore, property placed in service and disposed of in the same year, and property that is being depreciated under a method other than MACRS) are more than 40% of the total depreciable bases of all MACRS property you placed in service during the entire year. Irs 1040ez forms   Under this convention, you treat all property placed in service or disposed of during any quarter of the tax year as placed in service or disposed of at the midpoint of that quarter. Irs 1040ez forms This means that 1½ months of depreciation is allowed for the quarter the property is placed in service or disposed of. Irs 1040ez forms   If you use this convention, enter “MQ” under column (e) in Part III of Form 4562. Irs 1040ez forms    For purposes of determining whether the mid-quarter convention applies, the depreciable basis of property you placed in service during the tax year reflects the reduction in basis for amounts expensed under section 179 and the part of the basis of property attributable to personal use. Irs 1040ez forms However, it does not reflect any reduction in basis for any special depreciation allowance. Irs 1040ez forms The half-year convention. Irs 1040ez forms   Use this convention if neither the mid-quarter convention nor the mid-month convention applies. Irs 1040ez forms   Under this convention, you treat all property placed in service or disposed of during a tax year as placed in service or disposed of at the midpoint of the year. Irs 1040ez forms This means that a one-half year of depreciation is allowed for the year the property is placed in service or disposed of. Irs 1040ez forms   If you use this convention, enter “HY” under column (e) in Part III of Form 4562. Irs 1040ez forms Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. Irs 1040ez forms The 200% declining balance method over a GDS recovery period. Irs 1040ez forms The 150% declining balance method over a GDS recovery period. Irs 1040ez forms The straight line method over a GDS recovery period. Irs 1040ez forms The straight line method over an ADS recovery period. Irs 1040ez forms For property placed in service before 1999, you could have elected the 150% declining balance method using the ADS recovery periods for certain property classes. Irs 1040ez forms If you made this election, continue to use the same method and recovery period for that property. Irs 1040ez forms Table 4–1 lists the types of property you can depreciate under each method. Irs 1040ez forms It also gives a brief explanation of the method, including any benefits that may apply. Irs 1040ez forms Depreciation Methods for Farm Property If you place personal property in service in a farming business after 1988, you generally must depreciate it under GDS using the 150% declining balance method unless you are a farmer who must depreciate the property under ADS using the straight line method or you elect to depreciate the property under GDS or ADS using the straight line method. Irs 1040ez forms You can depreciate real property using the straight line method under either GDS or ADS. Irs 1040ez forms Fruit or nut trees and vines. Irs 1040ez forms   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a recovery period of 10 years. Irs 1040ez forms ADS required for some farmers. Irs 1040ez forms   If you elect not to apply the uniform capitalization rules to any plant produced in your farming business, you must use ADS. Irs 1040ez forms You must use ADS for all property you place in service in any year the election is in effect. Irs 1040ez forms See the regulations under section 263A of the Internal Revenue Code for information on the uniform capitalization rules that apply to farm property. Irs 1040ez forms Electing a Different Method As shown in Table 4–1 , you can elect a different method for depreciation for certain types of property. Irs 1040ez forms You must make the election by the due date of the return (including extensions) for the year you placed the property in service. Irs 1040ez forms However, if you timely filed your return for the year without making the election, you still can make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Irs 1040ez forms Attach the election to the amended return and write “Filed pursuant to section 301. Irs 1040ez forms 9100-2” on the election statement. Irs 1040ez forms File the amended return at the same address you filed the original return. Irs 1040ez forms Once you make the election, you cannot change it. Irs 1040ez forms If you elect to use a different method for one item in a property class, you must apply the same method to all property in that class placed in service during the year of the election. Irs 1040ez forms However, you can make the election on a property-by-property basis for nonresidential real and residential rental property. Irs 1040ez forms 150% election. Irs 1040ez forms   Instead of using the 200% declining balance method over the GDS recovery period for nonfarm property in the 3-, 5-, 7-, and 10-year property classes, you can elect to use the 150% declining balance method. Irs 1040ez forms Make the election by entering “150 DB” under column (f) in Part III of Form 4562. Irs 1040ez forms Straight line election. Irs 1040ez forms   Instead of using either the 200% or 150% declining balance methods over the GDS recovery period, you can elect to use the straight line method over the GDS recovery period. Irs 1040ez forms Make the election by entering  “S/L” under column (f) in Part III of Form 4562. Irs 1040ez forms Election of ADS. Irs 1040ez forms   As explained earlier under Which Depreciation System (GDS or ADS) Applies , you can elect to use ADS even though your property may come under GDS. Irs 1040ez forms ADS uses the straight line method of depreciation over fixed ADS recovery periods. Irs 1040ez forms Most ADS recovery periods are listed in Appendix B, or see the table under Recovery Periods Under ADS , earlier. Irs 1040ez forms   Make the election by completing line 20 in Part III of Form 4562. Irs 1040ez forms Farm property. Irs 1040ez forms   Instead of using the 150% declining balance method over a GDS recovery period for property you use in a farming business (other than real property), you can elect to depreciate it using either of the following methods. Irs 1040ez forms The straight line method over a GDS recovery period. Irs 1040ez forms The straight line method over an ADS recovery period. Irs 1040ez forms Table 4-1. Irs 1040ez forms Depreciation Methods Note. Irs 1040ez forms The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. Irs 1040ez forms Method Type of Property Benefit GDS using 200% DB • Nonfarm 3-, 5-, 7-, and 10-year property • Provides a greater deduction during the earlier recovery years • Changes to SL when that method provides an equal or greater deduction GDS using 150% DB • All farm property (except real property) • All 15- and 20-year property (except qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property placed in service before January 1, 2014) • Nonfarm 3-, 5-, 7-, and 10-year property • Provides a greater deduction during the earlier recovery years • Changes to SL when that method provides an equal or greater deduction1 GDS using SL • Nonresidential real property • Qualified leasehold improvement property placed in service before January 1, 2014 • Qualified restaurant property placed in service before January 1, 2014 • Qualified retail improvement property placed in service before January 1, 2014 • Residential rental property • Trees or vines bearing fruit or nuts • Water utility property • All 3-, 5-, 7-, 10-, 15-, and 20-year property2 • Property for which you elected section 168(k)(4) • Provides for equal yearly deductions (except for the first and last years) ADS using SL • Listed property used 50% or less for business • Property used predominantly outside the U. Irs 1040ez forms S. Irs 1040ez forms  • Tax-exempt property • Tax-exempt bond-financed property • Farm property used when an election not to apply the uniform capitalization rules is in effect • Imported property3 • Any property for which you elect to use this method4 • Provides for equal yearly deductions (except for the first and last years) 1The MACRS percentage tables in Appendix A have the switch to the straight line method built into their rates 2See section 168(b)(5) of the Internal Revenue Code. Irs 1040ez forms 3See section 168(g)(6) of the Internal Revenue Code 4See section 168(g)(7) of the Internal Revenue Code How Is the Depreciation Deduction Figured? To figure your depreciation deduction under MACRS, you first determine the depreciation system, property class, placed in service date, basis amount, recovery period, convention, and depreciation method that applies to your property. Irs 1040ez forms Then, you are ready to figure your depreciation deduction. Irs 1040ez forms You can figure it using a percentage table provided by the IRS, or you can figure it yourself without using the table. Irs 1040ez forms Using the MACRS Percentage Tables To help you figure your deduction under MACRS, the IRS has established percentage tables that incorporate the applicable convention and depreciation method. Irs 1040ez forms These percentage tables are in Appendix A near the end of this publication. Irs 1040ez forms Which table to use. Irs 1040ez forms    Appendix A contains the MACRS Percentage Table Guide, which is designed to help you locate the correct percentage table to use for depreciating your property. Irs 1040ez forms The percentage tables immediately follow the guide. Irs 1040ez forms Rules Covering the Use of the Tables The following rules cover the use of the percentage tables. Irs 1040ez forms You must apply the rates in the percentage tables to your property's unadjusted basis. Irs 1040ez forms You cannot use the percentage tables for a short tax year. Irs 1040ez forms See Figuring the Deduction for a Short Tax Year, later, for information on the short tax year rules. Irs 1040ez forms Once you start using the percentage tables for any item of property, you generally must continue to use them for the entire recovery period of the property. Irs 1040ez forms You must stop using the tables if you adjust the basis of the property for any reason other than— Depreciation allowed or allowable, or An addition or improvement to that property that is depreciated as a separate item of property. Irs 1040ez forms Basis adjustments other than those made due to the items listed in (4) include an increase in basis for the recapture of a clean-fuel deduction or credit and a reduction in basis for a casualty loss. Irs 1040ez forms Basis adjustment due to recapture of clean-fuel vehicle deduction or credit. Irs 1040ez forms   If you increase the basis of your property because of the recapture of part or all of a deduction for clean-fuel vehicles or the credit for clean-fuel vehicle refueling property placed in service before January 1, 2006, you cannot continue to use the percentage tables. Irs 1040ez forms For the year of the adjustment and the remaining recovery period, you must figure the depreciation deduction yourself using the property's adjusted basis at the end of the year. Irs 1040ez forms See Figuring the Deduction Without Using the Tables, later. Irs 1040ez forms Basis adjustment due to casualty loss. Irs 1040ez forms   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. Irs 1040ez forms For the year of the adjustment and the remaining recovery period, you must figure the depreciation yourself using the property's adjusted basis at the end of the year. Irs 1040ez forms See Figuring the Deduction Without Using the Tables, later. Irs 1040ez forms Example. Irs 1040ez forms On October 26, 2012, Sandra Elm, a calendar year taxpayer, bought and placed in service in her business a new item of 7-year property. Irs 1040ez forms It cost $39,000 and she elected a section 179 deduction of $24,000. Irs 1040ez forms She also took a special depreciation allowance of $7,500 [50% of $15,000 ($39,000 − $24,000)]. Irs 1040ez forms Her unadjusted basis after the section 179 deduction and special depreciation allowance was $7,500 ($15,000 − $7,500). Irs 1040ez forms She figured her MACRS depreciation deduction using the percentage tables. Irs 1040ez forms For 2012, her MACRS depreciation deduction was $268. Irs 1040ez forms In July 2013, the property was vandalized and Sandra had a deductible casualty loss of $3,000. Irs 1040ez forms She must adjust the property's basis for the casualty loss, so she can no longer use the percentage tables. Irs 1040ez forms Her adjusted basis at the end of 2013, before figuring her 2013 depreciation, is $4,232. Irs 1040ez forms She figures that amount by subtracting the 2012 MACRS depreciation of $268 and the casualty loss of $3,000 from the unadjusted basis of $7,500. Irs 1040ez forms She must now figure her depreciation for 2013 without using the percentage tables. Irs 1040ez forms Figuring the Unadjusted Basis of Your Property You must apply the table rates to your property's unadjusted basis each year of the recovery period. Irs 1040ez forms Unadjusted basis is the same basis amount you would use to figure gain on a sale, but you figure it without reducing your original basis by any MACRS depreciation taken in earlier years. Irs 1040ez forms However, you do reduce your original basis by other amounts, including the following. Irs 1040ez forms Any amortization taken on the property. Irs 1040ez forms Any section 179 deduction claimed. Irs 1040ez forms Any special depreciation allowance taken on the property. Irs 1040ez forms For business property you purchase during the year, the unadjusted basis is its cost minus these and other applicable adjustments. Irs 1040ez forms If you trade property, your unadjusted basis in the property received is the cash paid plus the adjusted basis of the property traded minus these adjustments. Irs 1040ez forms MACRS Worksheet You can use this worksheet to help you figure your depreciation deduction using the percentage tables. Irs 1040ez forms Use a separate worksheet for each item of property. Irs 1040ez forms Then, use the information from this worksheet to prepare Form 4562. Irs 1040ez forms Do not use this worksheet for automobiles. Irs 1040ez forms Use the Depreciation Worksheet for Passenger Automobiles in chapter 5. Irs 1040ez forms MACRS Worksheet Part I   1. Irs 1040ez forms MACRS system (GDS or ADS)   2. Irs 1040ez forms Property class   3. Irs 1040ez forms Date placed in service   4. Irs 1040ez forms Recovery period   5. Irs 1040ez forms Method and convention   6. Irs 1040ez forms Depreciation rate (from tables)   Part II   7. Irs 1040ez forms Cost or other basis* $     8. Irs 1040ez forms Business/investment use   %   9. Irs 1040ez forms Multiply line 7 by line 8   $ 10. Irs 1040ez forms Total claimed for section 179 deduction and other items   $ 11. Irs 1040ez forms Subtract line 10 from line 9. Irs 1040ez forms This is your tentative basis for depreciation   $ 12. Irs 1040ez forms Multiply line 11 by . Irs 1040ez forms 50 if the 50% special depreciation allowance applies. Irs 1040ez forms This is your special depreciation allowance. Irs 1040ez forms Enter -0- if this is not the year you placed the property in service, the property is not qualified property, or you elected not to claim a special allowance   $ 13. Irs 1040ez forms Subtract line 12 from line 11. Irs 1040ez forms This is your basis for depreciation     14. Irs 1040ez forms Depreciation rate (from line 6)     15. Irs 1040ez forms Multiply line 13 by line 14. Irs 1040ez forms This is your MACRS depreciation deduction   $ *If real estate, do not include cost (basis) of land. Irs 1040ez forms The following example shows how to figure your MACRS depreciation deduction using the percentage tables and the MACRS worksheet. Irs 1040ez forms Example. Irs 1040ez forms You bought office furniture (7-year property) for $10,000 and placed it in service on August 11, 2013. Irs 1040ez forms You use the furniture only for business. Irs 1040ez forms This is the only property you placed in service this year. Irs 1040ez forms You did not elect a section 179 deduction and the property is not qualified property for purposes of claiming a special depreciation allowance so your property's unadjusted basis is its cost, $10,000. Irs 1040ez forms You use GDS and the half-year convention to figure your depreciation. Irs 1040ez forms You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-1. Irs 1040ez forms Multiply your property's unadjusted basis each year by the percentage for 7-year property given in Table A-1. Irs 1040ez forms You figure your depreciation deduction using the MACRS worksheet as follows. Irs 1040ez forms MACRS Worksheet Part I 1. Irs 1040ez forms MACRS system (GDS or ADS) GDS 2. Irs 1040ez forms Property class 7-year 3. Irs 1040ez forms Date placed in service 8/11/13 4. Irs 1040ez forms Recovery period 7-Year 5. Irs 1040ez forms Method and convention 200%DB/Half-Year 6. Irs 1040ez forms Depreciation rate (from tables) . Irs 1040ez forms 1429 Part II 7. Irs 1040ez forms Cost or other basis* $10,000     8. Irs 1040ez forms Business/investment use 100 %   9. Irs 1040ez forms Multiply line 7 by line 8   $10,000 10. Irs 1040ez forms Total claimed for section 179 deduction and other items   -0- 11. Irs 1040ez forms Subtract line 10 from line 9. Irs 1040ez forms This is your tentative basis for depreciation   $10,000 12. Irs 1040ez forms Multiply line 11 by . Irs 1040ez forms 50 if the 50% special depreciation allowance applies. Irs 1040ez forms This is your special depreciation allowance. Irs 1040ez forms 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. Irs 1040ez forms Subtract line 12 from line 11. Irs 1040ez forms This is your basis for depreciation   $10,000 14. Irs 1040ez forms Depreciation rate (from line 6)   . Irs 1040ez forms 1429 15. Irs 1040ez forms Multiply line 13 by line 14. Irs 1040ez forms This is your MACRS depreciation deduction   $1,429 *If real estate, do not include cost (basis) of land. Irs 1040ez forms If there are no adjustments to the basis of the property other than depreciation, your depreciation deduction for each subsequent year of the recovery period will be as follows. Irs 1040ez forms Year   Basis Percentage Deduction 2014 $ 10,000 24. Irs 1040ez forms 49%   $2,449   2015   10,000 17. Irs 1040ez forms 49   1,749   2016   10,000 12. Irs 1040ez forms 49   1,249   2017   10,000 8. Irs 1040ez forms 93   893   2018   10,000 8. Irs 1040ez forms 92   892   2019   10,000 8. Irs 1040ez forms 93   893   2020   10,000 4. Irs 1040ez forms 46   446   Examples The following examples are provided to show you how to use the percentage tables. Irs 1040ez forms In both examples, assume the following. Irs 1040ez forms You use the property only for business. Irs 1040ez forms You use the calendar year as your tax year. Irs 1040ez forms You use GDS for all the properties. Irs 1040ez forms Example 1. Irs 1040ez forms You bought a building and land for $120,000 and placed it in service on March 8. Irs 1040ez forms The sales contract showed that the building cost $100,000 and the land cost $20,000. Irs 1040ez forms It is nonresidential real property. Irs 1040ez forms The building's unadjusted basis is its original cost, $100,000. Irs 1040ez forms You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-7a. Irs 1040ez forms March is the third month of your tax year, so multiply the building's unadjusted basis, $100,000, by the percentages for the third month in Table A-7a. Irs 1040ez forms Your depreciation deduction for each of the first 3 years is as follows: Year   Basis Percentage Deduction 1st $ 100,000 2. Irs 1040ez forms 033%   $2,033   2nd   100,000 2. Irs 1040ez forms 564   2,564   3rd   100,000 2. Irs 1040ez forms 564   2,564   Example 2. Irs 1040ez forms During the year, you bought a machine (7-year property) for $4,000, office furniture (7-year property) for $1,000, and a computer (5-year property) for $5,000. Irs 1040ez forms You placed the machine in service in January, the furniture in September, and the computer in October. Irs 1040ez forms You do not elect a section 179 deduction and none of these items is qualified property for purposes of claiming a special depreciation allowance. Irs 1040ez forms You placed property in service during the last 3 months of the year, so you must first determine if you have to use the mid-quarter convention. Irs 1040ez forms The total bases of all property you placed in service during the year is $10,000. Irs 1040ez forms The $5,000 basis of the computer, which you placed in service during the last 3 months (the fourth quarter) of your tax year, is more than 40% of the total bases of all property ($10,000) you placed in service during the year. Irs 1040ez forms Therefore, you must use the mid-quarter convention for all three items. Irs 1040ez forms You refer to the MACRS Percentage Table Guide in Appendix A to determine which table you should use under the mid-quarter convention. Irs 1040ez forms The machine is 7-year property placed in service in the first quarter, so you use Table A-2. Irs 1040ez forms The furniture is 7-year property placed in service in the third quarter, so you use Table A-4. Irs 1040ez forms Finally, because the computer is 5-year property placed in service in the fourth quarter, you use Table A-6. Irs 1040ez forms Knowing what table to use for each property, you figure the depreciation for the first 2 years as follows. Irs 1040ez forms Year Property Basis Percentage Deduction 1st Machine $4,000 25. Irs 1040ez forms 00 $1,000   2nd Machine 4,000 21. Irs 1040ez forms 43 857   1st Furniture 1,000 10. Irs 1040ez forms 71 107   2nd Furniture 1,000 25. Irs 1040ez forms 51 255   1st Computer 5,000 5. Irs 1040ez forms 00 250   2nd Computer 5,000 38. Irs 1040ez forms 00 1,900   Sale or Other Disposition Before the Recovery Period Ends If you sell or otherwise dispose of your property before the end of its recovery period, your depreciation deduction for the year of the disposition will be only part of the depreciation amount for the full year. Irs 1040ez forms You have disposed of your property if you have permanently withdrawn it from use in your business or income-producing activity because of its sale, exchange, retirement, abandonment, involuntary conversion, or destruction. Irs 1040ez forms After you figure the full-year depreciation amount, figure the deductible part using the convention that applies to the property. Irs 1040ez forms Half-year convention used. Irs 1040ez forms   For property for which you used a half-year convention, the depreciation deduction for the year of the disposition is half the depreciation determined for the full year. Irs 1040ez forms Mid-quarter convention used. Irs 1040ez forms   For property for which you used the mid-quarter convention, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter in which you disposed of the property. Irs 1040ez forms Quarter Percentage First 12. Irs 1040ez forms 5% Second 37. Irs 1040ez forms 5 Third 62. Irs 1040ez forms 5 Fourth 87. Irs 1040ez forms 5 Example. Irs 1040ez forms On December 2, 2010, you placed in service an item of 5-year property costing $10,000. Irs 1040ez forms You did not claim a section 179 deduction and the property does not qualify for a special depreciation allowance. Irs 1040ez forms Your unadjusted basis for the property was $10,000. Irs 1040ez forms You used the mid-quarter convention because this was the only item of business property you placed in service in 2010 and it was placed in service during the last 3 months of your tax year. Irs 1040ez forms Your property is in the 5-year property class, so you used Table A-5 to figure your depreciation deduction. Irs 1040ez forms Your deductions for 2010, 2011, and 2012 were $500 (5% of $10,000), $3,800 (38% of $10,000), and $2,280 (22. Irs 1040ez forms 80% of $10,000). Irs 1040ez forms You disposed of the property on April 6, 2013. Irs 1040ez forms To determine your depreciation deduction for 2013, first figure the deduction for the full year. Irs 1040ez forms This is $1,368 (13. Irs 1040ez forms 68% of $10,000). Irs 1040ez forms April is in the second quarter of the year, so you multiply $1,368 by 37. Irs 1040ez forms 5% to get your depreciation deduction of $513 for 2013. Irs 1040ez forms Mid-month convention used. Irs 1040ez forms   If you dispose of residential rental or nonresidential real property, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by a fraction. Irs 1040ez forms The numerator of the fraction is the number of months (including partial months) in the year that the property is considered in service. Irs 1040ez forms The denominator is 12. Irs 1040ez forms Example. Irs 1040ez forms On July 2, 2011, you purchased and placed in service residential rental property. Irs 1040ez forms The property cost $100,000, not including the cost of land. Irs 1040ez forms You used Table A-6 to figure your MACRS depreciation for this property. Irs 1040ez forms You sold the property on March 2, 2013. Irs 1040ez forms You file your tax return based on the calendar year. Irs 1040ez forms A full year of depreciation for 2013 is $3,636. Irs 1040ez forms This is $100,000 multiplied by . Irs 1040ez forms 03636 (the percentage for the seventh month of the third recovery year) from Table A-6 . Irs 1040ez forms You then apply the mid-month convention for the 2½ months of use in 2013. Irs 1040ez forms Treat the month of disposition as one-half month of use. Irs 1040ez forms Multiply $3,636 by the fraction, 2. Irs 1040ez forms 5 over 12, to get your 2013 depreciation deduction of $757. Irs 1040ez forms 50. Irs 1040ez forms Figuring the Deduction Without Using the Tables Instead of using the rates in the percentage tables to figure your depreciation deduction, you can figure it yourself. Irs 1040ez forms Before making the computation each year, you must reduce your adjusted basis in the property by the depreciation claimed the previous year. Irs 1040ez forms Figuring MACRS deductions without using the tables generally will result in a slightly different amount than using the tables. Irs 1040ez forms Declining Balance Method When using a declining balance method, you apply the same depreciation rate each year to the adjusted basis of your property. Irs 1040ez forms You must use the applicable convention for the first tax year and you must switch to the straight line method beginning in the first year for which it will give an equal or greater deduction. Irs 1040ez forms The straight line method is explained later. Irs 1040ez forms You figure depreciation for the year you place property in service as follows. Irs 1040ez forms Multiply your adjusted basis in the property by the declining balance rate. Irs 1040ez forms Apply the applicable convention. Irs 1040ez forms You figure depreciation for all other years (before the year you switch to the straight line method) as follows. Irs 1040ez forms Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years. Irs 1040ez forms Multiply this new adjusted basis by the same declining balance rate used in earlier years. Irs 1040ez forms If you dispose of property before the end of its recovery period, see Using the Applicable Convention, later, for information on how to figure depreciation for the year you dispose of it. Irs 1040ez forms Figuring depreciation under the declining balance method and switching to the straight line method is illustrated in Example 1 , later, under Examples. Irs 1040ez forms Declining balance rate. Irs 1040ez forms   You figure your declining balance rate by dividing the specified declining balance percentage (150% or 200% changed to a decimal) by the number of years in the property's recovery period. Irs 1040ez forms For example, for 3-year property depreciated using the 200% declining balance method, divide 2. Irs 1040ez forms 00 (200%) by 3 to get 0. Irs 1040ez forms 6667, or a 66. Irs 1040ez forms 67% declining balance rate. Irs 1040ez forms For 15-year property depreciated using the 150% declining balance method, divide 1. Irs 1040ez forms 50 (150%) by 15 to get 0. Irs 1040ez forms 10, or a 10% declining balance rate. Irs 1040ez forms   The following table shows the declining balance rate for each property class and the first year for which the straight line method gives an equal or greater deduction. Irs 1040ez forms Property Class Method Declining Balance Rate Year 3-year 200% DB 66. Irs 1040ez forms 667% 3rd 5-year 200% DB 40. Irs 1040ez forms 0 4th 7-year 200% DB 28. Irs 1040ez forms 571 5th 10-year 200% DB 20. Irs 1040ez forms 0 7th 15-year 150% DB 10. Irs 1040ez forms 0 7th 20-year 150% DB 7. Irs 1040ez forms 5 9th Straight Line Method When using the straight line method, you apply a different depreciation rate each year to the adjusted basis of your property. Irs 1040ez forms You must use the applicable convention in the year you place the property in service and the year you dispose of the property. Irs 1040ez forms You figure depreciation for the year you place property in service as follows. Irs 1040ez forms Multiply your adjusted basis in the property by the straight line rate. Irs 1040ez forms Apply the applicable convention. Irs 1040ez forms You figure depreciation for all other years (including the year you switch from the declining balance method to the straight line method) as follows. Irs 1040ez forms Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years (under any method). Irs 1040ez forms Determine the depreciation rate for the year. Irs 1040ez forms Multiply the adjusted basis figured in (1) by the depreciation rate figured in (2). Irs 1040ez forms If you dispose of property before the end of its recovery period, see Using the Applicable Convention , later, for information on how to figure depreciation for the year you dispose of it. Irs 1040ez forms Straight line rate. Irs 1040ez forms   You determine the straight line depreciation rate for any tax year by dividing the number 1 by the years remaining in the recovery period at the beginning of that year. Irs 1040ez forms When figuring the number of years remaining, you must take into account the convention used in the year you placed the property in service. Irs 1040ez forms If the number of years remaining is less than 1, the depreciation rate for that tax year is 1. Irs 1040ez forms 0 (100%). Irs 1040ez forms Using the Applicable Convention The applicable convention (discussed earlier under Which Convention Applies ) affects how you figure your depreciation deduction for the year you place your property in service and for the year you dispose of it. Irs 1040ez forms It determines how much of the recovery period remains at the beginning of each year, so it also affects the depreciation rate for property you depreciate under the straight line method. Irs 1040ez forms See Straight line rate in the previous discussion. Irs 1040ez forms Use the applicable convention as explained in the following discussions. Irs 1040ez forms Half-year convention. Irs 1040ez forms   If this convention applies, you deduct a half-year of depreciation for the first year and the last year that you depreciate the property. Irs 1040ez forms You deduct a full year of depreciation for any other year during the recovery period. Irs 1040ez forms   Figure your depreciation deduction for the year you place the property in service by dividing the depreciation for a full year by 2. Irs 1040ez forms If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition the same way. Irs 1040ez forms If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final 6 months of the recovery period is the amount of your unrecovered basis in the property. Irs 1040ez forms Mid-quarter convention. Irs 1040ez forms   If this convention applies, the depreciation you can deduct for the first year you depreciate the property depends on the quarter in which you place the property in service. Irs 1040ez forms   A quarter of a full 12-month tax year is a period of 3 months. Irs 1040ez forms The first quarter in a year begins on the first day of the tax year. Irs 1040ez forms The second quarter begins on the first day of the fourth month of the tax year. Irs 1040ez forms The third quarter begins on the first day of the seventh month of the tax year. Irs 1040ez forms The fourth quarter begins on the first day of the tenth month of the tax year. Irs 1040ez forms A calendar year is divided into the following quarters. Irs 1040ez forms Quarter Months First January, February, March Second April, May, June Third July, August, September Fourth October, November, December   Figure your depreciation deduction for the year you place the property in service by multiplying the depreciation for a full year by the percentage listed below for the quarter you place the property in service. Irs 1040ez forms Quarter Percentage First 87. Irs 1040ez forms 5% Second 62. Irs 1040ez forms 5 Third 37. Irs 1040ez forms 5 Fourth 12. Irs 1040ez forms 5   If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter you dispose of the property. Irs 1040ez forms Quarter Percentage First 12. Irs 1040ez forms 5% Second 37. Irs 1040ez forms 5 Third 62. Irs 1040ez forms 5 Fourth 87. Irs 1040ez forms 5   If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final quarter of the recovery period is the amount of your unrecovered basis in the property. Irs 1040ez forms Mid-month convention. Irs 1040ez forms   If this convention applies, the depreciation you can deduct for the first year that you depreciate the property depends on the month in which you place the property in service. Irs 1040ez forms Figure your depreciation deduction for the year you place the property in service by multiplying the depreciation for a full year by a fraction. Irs 1040ez forms The numerator of the fraction is the number of full months in the year that the property is in service plus ½ (or 0. Irs 1040ez forms 5). Irs 1040ez forms The denominator is 12. Irs 1040ez forms   If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition the same way. Irs 1040ez forms If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final month of the recovery period is the amount of your unrecovered basis in the property. Irs 1040ez forms Example. Irs 1040ez forms You use the calendar year and place nonresidential real property in service in August. Irs 1040ez forms The property is in service 4 full months (September, October, November, and December). Irs 1040ez forms Your numerator is 4. Irs 1040ez forms 5 (4 full months plus 0. Irs 1040ez forms 5). Irs 1040ez forms You multiply the depreciation for a full year by 4. Irs 1040ez forms 5/12, or 0. Irs 1040ez forms 375. Irs 1040ez forms Examples The following examples show how to figure depreciation under MACRS without using the percentage tables. Irs 1040ez forms Figures are rounded for purposes of the examples. Irs 1040ez forms Assume for all the examples that you use a calendar year as your tax year. Irs 1040ez forms Example 1—200% DB method and half-year convention. Irs 1040ez forms In February, you placed in service depreciable property with a 5-year recovery period and a basis of $1,000. Irs 1040ez forms You do not elect to take the section 179 deduction and the property does not qualify for a special depreciation allowance. Irs 1040ez forms You use GDS and the 200% declining balance (DB) method to figure your depreciation. Irs 1040ez forms When the straight line (SL) method results in an equal or larger deduction, you switch to the SL method. Irs 1040ez forms You did not place any property in service in the last 3 months of the year, so you must use the half-year convention. Irs 1040ez forms First year. Irs 1040ez forms You figure the depreciation rate under the 200% DB method by dividing 2 (200%) by 5 (the number of years in the recovery period). Irs 1040ez forms The result is 40%. Irs 1040ez forms You multiply the adjusted basis of the property ($1,000) by the 40% DB rate. Irs 1040ez forms You apply the half-year convention by dividing the result ($400) by 2. Irs 1040ez forms Depreciation for the first year under the 200% DB method is $200. Irs 1040ez forms You figure the depreciation rate under the straight line (SL) method by dividing 1 by 5, the number of years in the recovery period. Irs 1040ez forms The result is 20%. Irs 1040ez forms You multiply the adjusted basis of the property ($1,000) by the 20% SL rate. Irs 1040ez forms You apply the half-year convention by dividing the result ($200) by 2. Irs 1040ez forms Depreciation for the first year under the SL method is $100. Irs 1040ez forms The DB method provides a larger deduction, so you deduct the $200 figured under the 200% DB method. Irs 1040ez forms Second year. Irs 1040ez forms You reduce the adjusted basis ($1,000) by the depreciation claimed in the first year ($200). Irs 1040ez forms You multiply the result ($800) by the DB rate (40%). Irs 1040ez forms Depreciation for the second year under the 200% DB method is $320. Irs 1040ez forms You figure the SL depreciation rate by dividing 1 by 4. Irs 1040ez forms 5, the number of years remaining in the recovery period. Irs 1040ez forms (Based on the half-year convention, you used only half a year of the recovery period in the first year. Irs 1040ez forms ) You multiply the reduced adjusted basis ($800) by the result (22. Irs 1040ez forms 22%). Irs 1040ez forms Depreciation under the SL method for the second year is $178. Irs 1040ez forms The DB method provides a larger deduction, so you deduct the $320 figured under the 200% DB method. Irs 1040ez forms Third year. Irs 1040ez forms You reduce the adjusted basis ($800) by the depreciation claimed in the second year ($320). Irs 1040ez forms You multiply the result ($480) by the DB rate (40%). Irs 1040ez forms Depreciation for the third year under the 200% DB method is $192. Irs 1040ez forms You figure the SL depreciation rate by dividing 1 by 3. Irs 1040ez forms 5. Irs 1040ez forms You multiply the reduced adjusted basis ($480) by the result (28. Irs 1040ez forms 57%). Irs 1040ez forms Depreciation under the SL method for the third year is $137. Irs 1040ez forms The DB method provides a larger deduction, so you deduct the $192 figured under the 200% DB method. Irs 1040ez forms Fourth year. Irs 1040ez forms You reduce the adjusted basis ($480) by the de