Modified Accelerated Cost Recovery System (MACRS)
MACRS applies to most tangible depreciable property placed in service after 1986. You must use
MACRS to depreciate all real property you acquired before 1987 that you converted from personal use to a business
or income producing use after 1986.
When can MACRS not be used?
MACRS cannot be used to depreciate the following property:
any films, video tapes or recordings
certain real and personal property placed in service before 1987
Intangible property is generally amortized. You figure the depreciation for the other property
mentioned using the pre 1987 rules.
What is MACRS?
MACRS is actually two systems. The discussion here will refer to the main system which is called
the General Depreciation System or GDS. The second system is called the Alternative Depreciation System (ADS). The
main difference between the two systems is that ADS generally provides for a longer recovery period. Using ADS, it
takes longer to recover the cost of your property. Unless you are specifically required by law to use ADS or you
elect it, you generally use GDS to figure your depreciation deduction.
How to figure out the depreciation deduction using the MACRS method of depreciation?
To figure your depreciation deduction using MACRS you multiply the basis of your property by a
percentage taken from the applicable percentage rate table. The tables you use are determined by the depreciation
methods. You can use a separate depreciation method for each piece of real property you own. You must use the same
depreciation method for all personal property of the same class that is placed in service in the same year. You
must choose the depreciation method in the first year the property is placed in service.