MACRS depreciation tables

I scored a 74 on REG in June and am retaking it this week. I just want to summarize a couple topics I’m trying to drill down. This post has depreciation using the MACRS tables. If you would like to read through them and correct me of any mistakes please do. Or use for your own study purpose. If you want another topic from REG summarized like this let me know. It helps me study too.

Depreciation - MACRS convention tables:

Real property: land (not depreciated), buildings, anything fixed to it (I.e. pavement, fences or other qualified improvement property)

Non-residential real property: 39 years Residential real property: 27.5 years

Always use Mid-Month MACRS convention.

In the year real property is disposed of, depreciation is calculated only for the portion (50%) of the month in which the property was disposed. — Use the MACRS table for mid month and then prorate it for half a month. Example: if real property is disposed of on Sept 1, then the MACRS % from the table (mid month 39 year real property in the year of disposal) would be multiplied by (8.5/12), or 8 months plus one half month over 12 months.

Personal property: 7 Year examples: Furniture, fixtures, agricultural machinery & equipment

5 Year examples: Cars, light trucks, computers, appliances, office machinery (e.g. copiers and fax machines)

• Generally uses the Half-Year Convention (which assumes all assets are placed in service or disposed of at the midpoint of the year) unless the 40% Q4 rule applies.

   - 40% Q4 rule: If 40% or more of the personal property placed in service in the year was placed in service in the 4th quarter, the mid-quarter convention is used for all property placed in service in that year.