Publication 946
How To
Depreciate
Property
• Section 179 Deduction
• Special Depreciation
Allowance
• MACRS
• Listed Property
For use in preparing
2024 Returns
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Contents
Future Developments . . . . . . . . . . . . . . . . . . . . . . . 2
What’s New for 2024 . . . . . . . . . . . . . . . . . . . . . . . . 2
What's New for 2025 . . . . . . . . . . . . . . . . . . . . . . . . 2
Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Chapter 1. Overview of Depreciation . . . . . . . . . . 3
What Property Can Be Depreciated? . . . . . . . . . . 3
What Property Cannot Be Depreciated? . . . . . . . . 6
When Does Depreciation Begin and End? . . . . . . 7
What Method Can You Use To Depreciate
Your Property? . . . . . . . . . . . . . . . . . . . . . . . . 8
What Is the Basis of Your Depreciable
Property? . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
How Do You Treat Repairs and
Improvements? . . . . . . . . . . . . . . . . . . . . . . 13
Do You Have To File Form 4562? . . . . . . . . . . . . 13
How Do You Correct Depreciation
Deductions? . . . . . . . . . . . . . . . . . . . . . . . . . 13
Chapter 2. Electing the Section
179 Deduction . . . . . . . . . . . . . . . . . . . . . . . . 15
What Property Qualifies? . . . . . . . . . . . . . . . . . . 15
What Property Does Not Qualify? . . . . . . . . . . . 17
How Much Can You Deduct? . . . . . . . . . . . . . . . 18
How Do You Elect the Deduction? . . . . . . . . . . . 22
When Must You Recapture the Deduction? . . . . . 22
Chapter 3. Claiming the Special
Depreciation Allowance . . . . . . . . . . . . . . . . . 23
What Is Qualified Property? . . . . . . . . . . . . . . . . 23
How Much Can You Deduct? . . . . . . . . . . . . . . . 25
How Can You Elect Not To Claim an
Allowance? . . . . . . . . . . . . . . . . . . . . . . . . . 26
When Must You Recapture an Allowance? . . . . . 26
Chapter 4. Figuring Depreciation
Under MACRS . . . . . . . . . . . . . . . . . . . . . . . . 27
Which Depreciation System (GDS or ADS)
Applies? . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Which Property Class Applies Under GDS? . . . . 28
What Is the Placed in Service Date? . . . . . . . . . . 31
What Is the Basis for Depreciation? . . . . . . . . . . 31
Which Recovery Period Applies? . . . . . . . . . . . . 31
Which Convention Applies? . . . . . . . . . . . . . . . . 33
Which Depreciation Method Applies? . . . . . . . . . 34
How Is the Depreciation Deduction Figured? . . . . 36
How Do You Use General Asset Accounts? . . . . 46
When Do You Recapture MACRS
Depreciation? . . . . . . . . . . . . . . . . . . . . . . . . 50
Chapter 5. Additional Rules for
Listed Property . . . . . . . . . . . . . . . . . . . . . . . . 51
What Is Listed Property? . . . . . . . . . . . . . . . . . . 51
Can Employees Claim a Deduction? . . . . . . . . . 53
Publication 946 (2024) Catalog Number 13081F
Mar 17, 2025 Department of the Treasury Internal Revenue Service www.irs.gov
What Is the Business-Use Requirement? . . . . . . 54
Do the Passenger Automobile Limits Apply? . . . . 58
What Records Must Be Kept? . . . . . . . . . . . . . . 63
How Is Listed Property Information
Reported? . . . . . . . . . . . . . . . . . . . . . . . . . . 64
How To Get Tax Help . . . . . . . . . . . . . . . . . . . . . . . 65
Appendix A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Appendix B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
Future Developments
For the latest information about developments related to
Pub. 946, such as legislation enacted after it was
published, go to IRS.gov/Pub946.
What’s New for 2024
Section 179 deduction dollar limits. For tax years be-
ginning in 2024, the maximum section 179 expense de-
duction is $1,220,000. This limit is reduced by the amount
by which the cost of section 179 property placed in serv-
ice during the tax year exceeds $3,050,000. See Dollar
Limits in chapter 2.
Also, the maximum section 179 expense deduction for
sport utility vehicles placed in service in tax years begin-
ning in 2024 is $30,500.
Phase down of special depreciation allowance. The
special depreciation allowance is 60% for certain qualified
property acquired after September 27, 2017, and placed
in service after December 31, 2023, and before January 1,
2025 (other than certain property with a long production
period and certain aircraft). Property with a long produc-
tion period and certain aircraft placed in service after De-
cember 31, 2023, and before January 1, 2025, is eligible
for a special depreciation allowance of 80% of the depre-
ciable basis of the property. The special depreciation al-
lowance is also 60% for certain specified plants bearing
fruits and nuts planted or grafted after December 31,
2023, and before January 1, 2025. See Certain Qualified
Property Acquired After September 27, 2017 and Certain
Plants Bearing Fruits and Nuts under What Is Qualified
Property? in chapter 3.
What's New for 2025
Section 179 deduction dollar limits. For tax years be-
ginning in 2025, the maximum section 179 expense de-
duction is $1,250,000. This limit is reduced by the amount
by which the cost of section 179 property placed in serv-
ice during the tax year exceeds $3,130,000.
Also, the maximum section 179 expense deduction for
sport utility vehicles placed in service in tax years begin-
ning in 2025 is $31,300.
Phase down of special depreciation allowance. The
special depreciation allowance is 40% for certain qualified
property acquired after September 27, 2017, and placed
in service after December 31, 2024, and before January 1,
2026 (other than certain property with a long production
period and certain aircraft). For property with a long pro-
duction period and certain aircraft placed in service after
December 31, 2024, and before January 1, 2026, the spe-
cial depreciation allowance is 60%. The special deprecia-
tion allowance is also 40% for certain specified plants
bearing fruits and nuts planted or grafted after December
31, 2024, and before January 1, 2026. See Certain Quali-
fied Property Acquired After September 27, 2017 and Cer-
tain Plants Bearing Fruits and Nuts under What Is Quali-
fied Property? in chapter 3.
Additions to 5-year property. Any qualified facility (as
defined in section 45Y(b)(1)(A) of the Internal Revenue
Code), any qualified property (as defined in subsection (b)
(2) of section 48E of the Internal Revenue Code) which is
a qualified investment (as defined in subsection (b)(1) of
such section), or any energy storage technology (as de-
fined in subsection (c)(2) of such section) that is placed in
service after December 31, 2024, is 5-year property.
Reminders
Photographs of missing children. The Internal Reve-
nue Service is a proud partner with the National Center for
Missing & Exploited Children® (NCMEC). Photographs of
missing children selected by the Center may appear in
this publication on pages that would otherwise be blank.
You can help bring these children home by looking at the
photographs and calling 1-800-THE-LOST
(1-800-843-5678) if you recognize a child.
Introduction
This publication explains how you can recover the cost of
business or income-producing property through deduc-
tions for depreciation (for example, the special deprecia-
tion allowance and deductions under the Modified Accel-
erated Cost Recovery System (MACRS)). It also explains
how you can elect to take a section 179 deduction, in-
stead of depreciation deductions, for certain property and
the additional rules for listed property.
The depreciation methods discussed in this publi-
cation generally do not apply to property placed in
service before 1987. For more information, see
Pub. 534, Depreciating Property Placed in Service Before
1987.
Definitions. Many of the terms used in this publication
are defined in the Glossary at the end of this publication.
Glossary terms used in each discussion under the majorCAUTION
!
2 Publication 946 (2024)
headings are listed before the beginning of each discus-
sion throughout this publication.
Do you need a different publication? The following ta-
ble shows where you can get more detailed information
when depreciating certain types of property.
For information
on depreciating: See Publication:
a car 463, Travel, Gift, and Car Expenses.
residential rental
property 527, Residential Rental Property.
office space in
your home 587, Business Use of Your Home.
farm property 225, Farmer's Tax Guide.
Comments and suggestions. We welcome your com-
ments about this publication and suggestions for future
editions.
You can send us comments through IRS.gov/
FormComments. Or, you can write to the Internal Revenue
Service, Tax Forms and Publications, 1111 Constitution
Ave. NW, IR-6526, Washington, DC 20224.
Although we can’t respond individually to each com-
ment received, we do appreciate your feedback and will
consider your comments and suggestions as we revise
our tax forms, instructions, and publications. Don’t send
tax questions, tax returns, or payments to the above ad-
dress.
Getting answers to your tax questions. If you have
a tax question not answered by this publication or the How
To Get Tax Help section at the end of this publication, go
to the IRS Interactive Tax Assistant page at IRS.gov/
Help/ITA where you can find topics by using the search
feature or viewing the categories listed.
Getting tax forms, instructions, and publications.
Go to IRS.gov/Forms to download current and prior-year
forms, instructions, and publications.
Ordering tax forms, instructions, and publications.
Go to IRS.gov/OrderForms to order current forms, instruc-
tions, and publications; call 800-829-3676 to order
prior-year forms and instructions. The IRS will process
your order for forms and publications as soon as possible.
Don’t resubmit requests you’ve already sent us. You can
get forms and publications faster online.
1.
Overview of Depreciation
Introduction
Depreciation is an annual income tax deduction that al-
lows you to recover the cost or other basis of certain prop-
erty over the time you use the property. It is an allowance
for the wear and tear, deterioration, or obsolescence of
the property.
This chapter discusses the general rules for depreciat-
ing property and answers the following questions.
• What property can be depreciated?
• What property cannot be depreciated?
• When does depreciation begin and end?
• What method can you use to depreciate your prop-
erty?
• What is the basis of your depreciable property?
• How do you treat repairs and improvements?
• Do you have to file Form 4562?
• How do you correct depreciation deductions?
Useful Items
You may want to see:
Publication
534 Depreciating Property Placed in Service Before
1987
538 Accounting Periods and Methods
551 Basis of Assets
Form (and Instructions)
Sch C (Form 1040) Profit or Loss From Business
2106 Employee Business Expenses
3115 Application for Change in Accounting Method
4562 Depreciation and Amortization
See How To Get Tax Help at the end of this publication for
information about getting publications and forms.
What Property Can Be
Depreciated?
Terms you may need to know
(see Glossary):
Adjusted basis
Sch C (Form 1040)
2106
3115
4562
Publication 946 (2024) Chapter 1 Overview of Depreciation 3
Basis
Commuting
Disposition
Fair market value (FMV)
Intangible property
Listed property
Placed in service
Tangible property
Term interest
Useful life
You can depreciate most types of tangible property (ex-
cept land), such as buildings, machinery, vehicles, furni-
ture, and equipment. You can also depreciate certain in-
tangible property, such as patents, copyrights, and
computer software.
To be depreciable, the property must meet all the fol-
lowing requirements.
• It must be property you own.
• It must be used in your business or income-producing
activity.
• It must have a determinable useful life.
• It must be expected to last more than 1 year.
The following discussions provide information about these
requirements.
Property You Own
To claim depreciation, you must usually be the owner of
the property. You are considered as owning property even
if it is subject to a debt.
Example 1. You made a down payment to purchase
rental property and assumed the previous owner's mort-
gage. You own the property and you can depreciate it.
Example 2. You bought a new van that you will use
only for your courier business. You will be making pay-
ments on the van over the next 5 years. You own the van
and you can depreciate it.
Leased property. You can depreciate leased property
only if you retain the incidents of ownership in the property
(explained below). This means you bear the burden of ex-
haustion of the capital investment in the property. There-
fore, if you lease property from someone to use in your
trade or business or for the production of income, gener-
ally you cannot depreciate its cost because you do not re-
tain the incidents of ownership. You can, however, depre-
ciate any capital improvements you make to the property.
See How Do You Treat Repairs and Improvements, later in
this chapter, and Additions and Improvements under
Which Recovery Period Applies? in chapter 4.
If you lease property to someone, you can generally de-
preciate its cost even if the lessee (the person leasing
from you) has agreed to preserve, replace, renew, and
maintain the property. However, if the lease provides that
the lessee is to maintain the property and return to you the
same property or its equivalent in value at the expiration of
the lease in as good condition and value as when leased,
you cannot depreciate the cost of the property.
Incidents of ownership. Incidents of ownership in
property include the following.
• The legal title to the property.
• The legal obligation to pay for the property.
• The responsibility to pay maintenance and operating
expenses.
• The duty to pay any taxes on the property.
• The risk of loss if the property is destroyed, con-
demned, or diminished in value through obsolescence
or exhaustion.
Life tenant. Generally, if you hold business or investment
property as a life tenant, you can depreciate it as if you
were the absolute owner of the property. However, see
Certain term interests in property under Excepted Prop-
erty, later.
Cooperative apartments. If you are a tenant-stock-
holder in a cooperative housing corporation and use your
cooperative apartment in your business or for the produc-
tion of income, you can depreciate your stock in the cor-
poration, even though the corporation owns the apart-
ment.
Figure your depreciation deduction as follows.
1. Figure the depreciation for all the depreciable real
property owned by the corporation in which you have
a proprietary lease or right of tenancy. If you bought
your cooperative stock after its first offering, figure the
depreciable basis of this property as follows.
a. Multiply your cost per share by the total number of
outstanding shares, including any shares held by
the corporation.
b. Add to the amount figured in (a) any mortgage
debt on the property on the date you bought the
stock.
c. Subtract from the amount figured in (b) any mort-
gage debt that is not for the depreciable real prop-
erty, such as the part for the land.
2. Subtract from the amount figured in (1) any deprecia-
tion for space owned by the corporation that can be
rented but cannot be lived in by tenant-stockholders.
3. Divide the number of your shares of stock by the total
number of outstanding shares, including any shares
held by the corporation.
4. Multiply the result of (2) by the percentage you figured
in (3). This is your depreciation on the stock.
Your depreciation deduction for the year cannot be
more than the part of your adjusted basis in the stock of
the corporation that is allocable to your business or
4 Chapter 1 Overview of Depreciation Publication 946 (2024)
income-producing property. You must also reduce your
depreciation deduction if only a portion of the property is
used in a business or for the production of income.
Example. You figure your share of the cooperative
housing corporation's depreciation to be $30,000. Your
adjusted basis in the stock of the corporation is $50,000.
You use one-half of your apartment solely for business
purposes. Your depreciation deduction for the stock for the
year cannot be more than $25,000 (1/2 of $50,000).
Change to business use. If you change your cooper-
ative apartment to business use, figure your allowable de-
preciation as explained earlier. The basis of all the depre-
ciable real property owned by the cooperative housing
corporation is the smaller of the following amounts.
• The FMV of the property on the date you change your
apartment to business use. This is considered to be
the same as the corporation's adjusted basis minus
straight line depreciation, unless this value is unrealis-
tic.
• The corporation's adjusted basis in the property on
that date. Do not subtract depreciation when figuring
the corporation's adjusted basis.
If you bought the stock after its first offering, the corpo-
ration's adjusted basis in the property is the amount fig-
ured in (1) under Cooperative apartments, earlier. The
FMV of the property is considered to be the same as the
corporation's adjusted basis figured in this way minus
straight line depreciation, unless the value is unrealistic.
For a discussion of FMV and adjusted basis, see Pub.
551.
Property Used in Your Business or
Income-Producing Activity
To claim depreciation on property, you must use it in your
business or income-producing activity. If you use property
to produce income (investment use), the income must be
taxable. You cannot depreciate property that you use
solely for personal activities.
Partial business or investment use. If you use property
for business or investment purposes and for personal pur-
poses, you can deduct depreciation based only on the
business or investment use. For example, you cannot de-
duct depreciation on a car used only for commuting, per-
sonal shopping trips, family vacations, driving children to
and from school, or similar activities.
You must keep records showing the business, in-
vestment, and personal use of your property. For
more information on the records you must keep
for listed property, such as a car, see What Records Must
Be Kept? in chapter 5.RECORDS
Although you can combine business and invest-
ment use of property when figuring depreciation
deductions, do not treat investment use as quali-
fied business use when determining whether the busi-
ness-use requirement for listed property is met. For infor-
mation about qualified business use of listed property, see
What Is the Business-Use Requirement? in chapter 5.
Office in the home. If you use part of your home as an
office, you may be able to deduct depreciation on that part
based on its business use. For information about depreci-
ating your home office, see Pub. 587.
Inventory. You cannot depreciate inventory because it is
not held for use in your business. Inventory is any property
you hold primarily for sale to customers in the ordinary
course of your business.
If you are a rent-to-own dealer, you may be able to treat
certain property held in your business as depreciable
property rather than as inventory. See Rent-to-own dealer
under Which Property Class Applies Under GDS? in
chapter 4.
In some cases, it is not clear whether property is held
for sale (inventory) or for use in your business. If it is un-
clear, examine carefully all the facts in the operation of the
particular business. The following example shows how a
careful examination of the facts in two similar situations re-
sults in different conclusions.
Example. Maple Corporation is in the business of
leasing cars. At the end of their useful lives, when the cars
are no longer profitable to lease, Maple sells them. Maple
does not have a showroom, used car lot, or individuals to
sell the cars. Instead, it sells them through wholesalers or
by similar arrangements in which a dealer's profit is not in-
tended or considered. Maple can depreciate the leased
cars because the cars are not held primarily for sale to
customers in the ordinary course of business, but are
leased.
If Maple buys cars at wholesale prices, leases them for
a short time, and then sells them at retail prices or in sales
in which a dealer's profit is intended, the cars are treated
as inventory and are not depreciable property. In this sit-
uation, the cars are held primarily for sale to customers in
the ordinary course of business.
Containers. Generally, containers for the products you
sell are part of inventory and you cannot depreciate them.
However, you can depreciate containers used to ship your
products if they have a life longer than 1 year and meet the
following requirements.
• They qualify as property used in your business.
• Title to the containers does not pass to the buyer.
To determine if these requirements are met, consider
the following questions.
• Does your sales contract, sales invoice, or other type
of order acknowledgment indicate whether you have
retained title?
• Does your invoice treat the containers as separate
items?CAUTION
!
Publication 946 (2024) Chapter 1 Overview of Depreciation 5
• Do any of your records state your basis in the contain-
ers?
Property Having a Determinable
Useful Life
To be depreciable, your property must have a determina-
ble useful life. This means that it must be something that
wears out, decays, gets used up, becomes obsolete, or
loses its value from natural causes.
Property Lasting More Than 1 Year
To be depreciable, property must have a useful life that ex-
tends substantially beyond the year you place it in service.
Example. You maintain a library for use in your profes-
sion. You can depreciate it. However, if you buy technical
books, journals, or information services for use in your
business that have a useful life of 1 year or less, you can-
not depreciate them. Instead, you deduct their cost as a
business expense.
What Property Cannot Be
Depreciated?
Terms you may need to know
(see Glossary):
Amortization
Basis
Goodwill
Intangible property
Remainder interest
Term interest
Certain property cannot be depreciated. This includes
land and certain excepted property.
Land
You cannot depreciate the cost of land because land does
not wear out, become obsolete, or get used up. The cost
of land generally includes the cost of clearing, grading,
planting, and landscaping.
Although you cannot depreciate land, you can depreci-
ate certain land preparation costs, such as landscaping
costs, incurred in preparing land for business use. These
costs must be so closely associated with other deprecia-
ble property that you can determine a life for them along
with the life of the associated property.
Example. You constructed a new building for use in
your business and paid for grading, clearing, seeding, and
planting bushes and trees. Some of the bushes and trees
were planted right next to the building, while others were
planted around the outer border of the lot. If you replace
the building, you would have to destroy the bushes and
trees right next to it. These bushes and trees are closely
associated with the building, so they have a determinable
useful life. Therefore, you can depreciate them. Add your
other land preparation costs to the basis of your land be-
cause they have no determinable life and you cannot de-
preciate them.
Excepted Property
Even if the requirements explained in the preceding dis-
cussions are met, you cannot depreciate the following
property.
• Property placed in service and disposed of in the
same year. Determining when property is placed in
service is explained later.
• Equipment used to build capital improvements. You
must add otherwise allowable depreciation on the
equipment during the period of construction to the ba-
sis of your improvements. See Uniform Capitalization
Rules in Pub. 551.
• Section 197 intangibles. You must amortize these
costs. Intangible property, such as certain computer
software, that is not section 197 intangible property,
can be depreciated if it meets certain requirements.
See Intangible Property, later.
• Certain term interests.
Certain term interests in property. You cannot depreci-
ate a term interest in property created or acquired after
July 27, 1989, for any period during which the remainder
interest is held, directly or indirectly, by a person related to
you. A term interest in property means a life interest in
property, an interest in property for a term of years, or an
income interest in a trust.
Related persons. For a description of related per-
sons, see Related persons, later. For this purpose, how-
ever, treat as related persons only the relationships listed
in items (1) through (10) of that discussion and substitute
“50%” for “10%” each place it appears.
Basis adjustments. If you would be allowed a depre-
ciation deduction for a term interest in property except that
the holder of the remainder interest is related to you, you
must generally reduce your basis in the term interest by
any depreciation or amortization not allowed.
If you hold the remainder interest, you must generally
increase your basis in that interest by the depreciation not
allowed to the term interest holder. However, do not in-
crease your basis for depreciation not allowed for periods
during which either of the following situations applies.
• The term interest is held by an organization exempt
from tax.
• The term interest is held by a nonresident alien indi-
vidual or foreign corporation, and the income from the
6 Chapter 1 Overview of Depreciation Publication 946 (2024)
term interest is not effectively connected with the con-
duct of a trade or business in the United States.
Exceptions. The above rules do not apply to the
holder of a term interest in property acquired by gift, be-
quest, or inheritance. They also do not apply to the holder
of dividend rights that were separated from any stripped
preferred stock if the rights were purchased after April 30,
1993, or to a person whose basis in the stock is deter-
mined by reference to the basis in the hands of the pur-
chaser.
When Does Depreciation
Begin and End?
Terms you may need to know
(see Glossary):
Basis
Exchange
Placed in service
You begin to depreciate your property when you place it in
service for use in your trade or business or for the produc-
tion of income. You stop depreciating property either when
you have fully recovered your cost or other basis or when
you retire it from service, whichever happens first.
Placed in Service
You place property in service when it is ready and availa-
ble for a specific use, whether in a business activity, an in-
come-producing activity, a tax-exempt activity, or a per-
sonal activity. Even if you are not using the property, it is in
service when it is ready and available for its specific use.
Example 1. You bought a machine for your business.
The machine was delivered last year. However, it was not
installed and operational until this year. It is considered
placed in service this year. If the machine had been ready
and available for use when it was delivered, it would be
considered placed in service last year even if it was not
actually used until this year.
Example 2. On April 6, Sue Thorn bought a house to
use as residential rental property. Sue made several re-
pairs and had it ready for rent on July 5. At that time, Sue
began to advertise it for rent in the local newspaper. The
house is considered placed in service in July when it was
ready and available for rent. Sue can begin to depreciate it
in July.
Example 3. James Elm is a building contractor who
specializes in constructing office buildings. James bought
a truck last year that had to be modified to lift materials to
second-story levels. The installation of the lifting equip-
ment was completed and James accepted delivery of the
modified truck on January 10 of this year. The truck was
placed in service on January 10, the date it was ready and
available to perform the function for which it was bought.
Conversion to business use. If you place property in
service in a personal activity, you cannot claim deprecia-
tion. However, if you change the property's use to use in a
business or income-producing activity, then you can begin
to depreciate it at the time of the change. You place the
property in service in the business or income-producing
activity on the date of the change.
Example. You bought a home and used it as your per-
sonal home several years before you converted it to rental
property. Although its specific use was personal and no
depreciation was allowable, you placed the home in serv-
ice when you began using it as your home. You can begin
to claim depreciation in the year you converted it to rental
property because its use changed to an income-produc-
ing use at that time.
Idle Property
Continue to claim a deduction for depreciation on property
used in your business or for the production of income even
if it is temporarily idle (not in use). For example, if you stop
using a machine because there is a temporary lack of a
market for a product made with that machine, continue to
deduct depreciation on the machine.
Cost or Other Basis Fully Recovered
You stop depreciating property when you have fully recov-
ered your cost or other basis. You fully recover your basis
when your section 179 deduction, allowed or allowable
depreciation deductions, and salvage value, if applicable,
equal the cost or investment in the property. See What Is
the Basis of Your Depreciable Property, later.
Retired From Service
You stop depreciating property when you retire it from
service, even if you have not fully recovered its cost or
other basis. You retire property from service when you
permanently withdraw it from use in a trade or business or
from use in the production of income because of any of
the following events.
• You sell or exchange the property.
• You convert the property to personal use.
• You abandon the property.
• You transfer the property to a supplies or scrap ac-
count.
• The property is destroyed.
If you included the property in a general asset ac-
count, see How Do You Use General Asset Ac-
counts? in chapter 4 for the rules that apply when
you dispose of that property.CAUTION
!
Publication 946 (2024) Chapter 1 Overview of Depreciation 7
What Method Can You Use To
Depreciate Your Property?
Terms you may need to know
(see Glossary):
Adjusted basis
Basis
Convention
Exchange
Fiduciary
Grantor
Intangible property
Nonresidential real property
Placed in service
Related persons
Residential rental property
Salvage value
Section 1245 property
Section 1250 property
Standard mileage rate
Straight line method
Unit-of-production method
Useful life
You must use the Modified Accelerated Cost Recovery
System (MACRS) to depreciate most property. MACRS is
discussed in chapter 4.
You cannot use MACRS to depreciate the following
property.
• Property you placed in service before 1987.
• Certain property owned or used in 1986.
• Intangible property.
• Films, videotapes, and recordings.
• Certain corporate or partnership property acquired in
a nontaxable transfer.
• Property you elected to exclude from MACRS.
The following discussions describe the property listed
above and explain what depreciation method should be
used.
Property You Placed in Service
Before 1987
You cannot use MACRS for property you placed in service
before 1987 (except property you placed in service after
July 31, 1986, if MACRS was elected). Property placed in
service before 1987 must be depreciated under the meth-
ods discussed in Pub. 534.
For a discussion of when property is placed in service,
see When Does Depreciation Begin and End, earlier.
Use of real property changed. You must generally use
MACRS to depreciate real property that you acquired for
personal use before 1987 and changed to business or in-
come-producing use after 1986.
Improvements made after 1986. You must treat an im-
provement made after 1986 to property you placed in
service before 1987 as separate depreciable property.
Therefore, you can depreciate that improvement as sepa-
rate property under MACRS if it is the type of property that
otherwise qualifies for MACRS depreciation. For more in-
formation about improvements, see How Do You Treat Re-
pairs and Improvements, later, and Additions and Im-
provements under Which Recovery Period Applies? in
chapter 4.
Property Owned or Used in 1986
You may not be able to use MACRS for property you ac-
quired and placed in service after 1986 if any of the situa-
tions described below apply. If you cannot use MACRS,
the property must be depreciated under the methods dis-
cussed in Pub. 534.
For the following discussions, do not treat prop-
erty as owned before you placed it in service. If
you owned property in 1986 but did not place it in
service until 1987, you do not treat it as owned in 1986.
Personal property. You cannot use MACRS for personal
property (section 1245 property) in any of the following sit-
uations.
1. You or someone related to you owned or used the
property in 1986.
2. You acquired the property from a person who owned it
in 1986 and as part of the transaction the user of the
property did not change.
3. You lease the property to a person (or someone rela-
ted to this person) who owned or used the property in
1986.
4. You acquired the property in a transaction in which:
a. The user of the property did not change, and
b. The property was not MACRS property in the
hands of the person from whom you acquired it
because of (2) or (3) above.
Real property. You generally cannot use MACRS for real
property (section 1250 property) in any of the following sit-
uations.
• You or someone related to you owned the property in
1986.CAUTION
!
8 Chapter 1 Overview of Depreciation Publication 946 (2024)
• You lease the property to a person who owned the
property in 1986 (or someone related to that person).
• You acquired the property in a like-kind exchange, an
involuntary conversion, or a repossession of property
you or someone related to you owned in 1986. For
property acquired in a like-kind exchange or an invol-
untary conversion, MACRS applies only to the portion
of the acquired property’s basis that exceeds the ad-
justed basis of property given up at the time of the
like-kind exchange or the time of the involuntary con-
version. This is referred to as “excess basis.” It does
not apply to the adjusted basis of the property at the
time it was given up or involuntarily converted, which
is referred to as the “carryover basis.” See Property
acquired in a nontaxable transaction, later, and Pub.
551.
Exceptions. The rules above do not apply to the follow-
ing.
1. Residential rental property or nonresidential real prop-
erty.
2. Any property if, in the first tax year it is placed in serv-
ice, the deduction under the Accelerated Cost Recov-
ery System (ACRS) is more than the deduction under
MACRS using the half-year convention. For informa-
tion on how to figure depreciation under ACRS, see
Pub. 534.
3. Property that was MACRS property in the hands of
the person from whom you acquired it because of (2)
above.
Related persons. For this purpose, the following are re-
lated persons.
1. An individual and a member of their family, including
only a spouse, child, parent, sibling, half sibling, an-
cestor, and lineal descendant.
2. A corporation and an individual who directly or indi-
rectly owns more than 10% of the value of the out-
standing stock of that corporation.
3. Two corporations that are members of the same con-
trolled group.
4. A trust fiduciary and a corporation if more than 10% of
the value of the outstanding stock is directly or indi-
rectly owned by or for the trust or grantor of the trust.
5. The grantor and fiduciary, and the fiduciary and bene-
ficiary, of any trust.
6. The fiduciaries of two different trusts, and the fiducia-
ries and beneficiaries of two different trusts, if the
same person is the grantor of both trusts.
7. A tax-exempt educational or charitable organization
and any person (or, if that person is an individual, a
member of that person's family) who directly or indi-
rectly controls the organization.
8. Two S corporations, and an S corporation and a regu-
lar corporation, if the same persons own more than
10% of the value of the outstanding stock of each cor-
poration.
9. A corporation and a partnership if the same persons
own both of the following.
a. More than 10% of the value of the outstanding
stock of the corporation.
b. More than 10% of the capital or profits interest in
the partnership.
10. The executor and beneficiary of any estate.
11. A partnership and a person who directly or indirectly
owns more than 10% of the capital or profits interest
in the partnership.
12. Two partnerships, if the same persons directly or indi-
rectly own more than 10% of the capital or profits in-
terest in each.
13. The related person and a person who is engaged in
trades or businesses under common control. See
sections 52(a) and 52(b) of the Internal Revenue
Code.
When to determine relationship. You must deter-
mine whether you are related to another person at the
time you acquire the property.
A partnership acquiring property from a terminating
partnership must determine whether it is related to the ter-
minating partnership immediately before the event caus-
ing the termination.
Constructive ownership of stock or partnership in-
terest. To determine whether a person directly or indi-
rectly owns any of the outstanding stock of a corporation
or an interest in a partnership, apply the following rules.
1. Stock or a partnership interest directly or indirectly
owned by or for a corporation, partnership, estate, or
trust is considered owned proportionately by or for its
shareholders, partners, or beneficiaries. However, for
a partnership interest owned by or for a C corporation,
this applies only to shareholders who directly or indi-
rectly own 5% or more of the value of the stock of the
corporation.
2. An individual is considered to own the stock or part-
nership interest directly or indirectly owned by or for
the individual's family.
3. An individual who owns, except by applying rule (2),
any stock in a corporation is considered to own the
stock directly or indirectly owned by or for the individ-
ual's partner.
4. For purposes of rule (1), (2), or (3), stock or a partner-
ship interest considered to be owned by a person un-
der rule (1) is treated as actually owned by that per-
son. However, stock or a partnership interest
considered to be owned by an individual under rule
(2) or (3) is not treated as owned by that individual for
reapplying either rule (2) or (3) to make another per-
son considered to be the owner of the same stock or
partnership interest.
Publication 946 (2024) Chapter 1 Overview of Depreciation 9
Intangible Property
Generally, if you can depreciate intangible property, you
usually use the straight line method of depreciation. How-
ever, you can choose to depreciate certain intangible
property under the income forecast method (discussed
later).
You cannot depreciate intangible property that is a
section 197 intangible or that does not otherwise
meet all the requirements discussed earlier under
What Property Can Be Depreciated.
Straight Line Method
This method lets you deduct the same amount of depreci-
ation each year over the useful life of the property. To fig-
ure your deduction, first determine the adjusted basis, sal-
vage value, and estimated useful life of your property.
Subtract the salvage value, if any, from the adjusted basis.
The balance is the total depreciation you can take over the
useful life of the property.
Divide the balance by the number of years in the useful
life. This gives you your yearly depreciation deduction. Un-
less there is a big change in adjusted basis or useful life,
this amount will stay the same throughout the time you de-
preciate the property. If, in the first year, you use the prop-
erty for less than a full year, you must prorate your depre-
ciation deduction for the number of months in use.
Example. In April, you bought a patent for $5,100 that
is not a section 197 intangible. You depreciate the patent
under the straight line method, using a 17-year useful life
and no salvage value. You divide the $5,100 basis by 17
years to get your $300 yearly depreciation deduction. You
only used the patent for 9 months during the first year, so
you multiply $300 by 9/12 to get your deduction of $225 for
the first year. Next year, you can deduct $300 for the full
year.
Patents and copyrights. If you can depreciate the cost
of a patent or copyright, use the straight line method over
the useful life. The useful life of a patent or copyright is the
lesser of the life granted to it by the government or the re-
maining life when you acquire it. However, if the patent or
copyright becomes valueless before the end of its useful
life, you can deduct in that year any of its remaining cost or
other basis.
Computer software. Computer software is generally a
section 197 intangible and cannot be depreciated if you
acquired it in connection with the acquisition of assets
constituting a business or a substantial part of a business.
However, computer software is not a section 197 intan-
gible and can be depreciated, even if acquired in connec-
tion with the acquisition of a business, if it meets all of the
following tests.
• It is readily available for purchase by the general pub-
lic.
• It is subject to a nonexclusive license.CAUTION
!
• It has not been substantially modified.
If the software meets the tests above, it may also qualify
for the section 179 deduction and the special depreciation
allowance, discussed later in chapters 2 and 3. If you can
depreciate the cost of computer software, use the straight
line method over a useful life of 36 months.
Tax-exempt use property subject to a lease. The
useful life of computer software leased under a lease
agreement entered into after March 12, 2004, to a tax-ex-
empt organization, governmental unit, or foreign person or
entity (other than a partnership) cannot be less than 125%
of the lease term.
Certain created intangibles. You can amortize certain
intangibles created on or after December 31, 2003, over a
15-year period using the straight line method and no sal-
vage value, even though they have a useful life that cannot
be estimated with reasonable accuracy. For example,
amounts paid to acquire memberships or privileges of in-
definite duration, such as a trade association member-
ship, are eligible costs.
The following are not eligible.
• Any intangible asset acquired from another person.
• Created financial interests.
• Any intangible asset that has a useful life that can be
estimated with reasonable accuracy.
• Any intangible asset that has an amortization period or
limited useful life that is specifically prescribed or pro-
hibited by the Internal Revenue Code, regulations, or
other published IRS guidance.
• Any amount paid to facilitate an acquisition of a trade
or business, a change in the capital structure of a
business entity, and certain other transactions.
You must also increase the 15-year safe harbor amorti-
zation period to a 25-year period for certain intangibles re-
lated to benefits arising from the provision, production, or
improvement of real property. For this purpose, real prop-
erty includes property that will remain attached to the real
property for an indefinite period of time, such as roads,
bridges, tunnels, pavements, and pollution control facili-
ties.
Income Forecast Method
You can choose to use the income forecast method in-
stead of the straight line method to depreciate the follow-
ing depreciable intangibles.
• Motion picture films or videotapes.
• Sound recordings.
• Copyrights.
• Books.
• Patents.
Under the income forecast method, each year's depre-
ciation deduction is equal to the cost of the property, multi-
plied by a fraction. The numerator of the fraction is the
10 Chapter 1 Overview of Depreciation Publication 946 (2024)
current year's net income from the property, and the de-
nominator is the total income anticipated from the property
through the end of the 10th tax year following the tax year
the property is placed in service. For more information,
see section 167(g) of the Internal Revenue Code.
Films, videotapes, and recordings. You cannot use
MACRS for motion picture films, videotapes, and sound
recordings. For this purpose, sound recordings are discs,
tapes, or other phonorecordings resulting from the fixation
of a series of sounds. You can depreciate this property us-
ing either the straight line method or the income forecast
method.
Participations and residuals. You can include participa-
tions and residuals in the adjusted basis of the property
for purposes of computing your depreciation deduction
under the income forecast method. The participations and
residuals must relate to income to be derived from the
property before the end of the 10th tax year after the prop-
erty is placed in service. For this purpose, participations
and residuals are defined as costs, which by contract vary
with the amount of income earned in connection with the
property.
Instead of including these amounts in the adjusted ba-
sis of the property, you can deduct the costs in the tax
year that they are paid.
Videocassettes. If you are in the business of renting
videocassettes, you can depreciate only those videocas-
settes bought for rental. If the videocassette has a useful
life of 1 year or less, you can currently deduct the cost as a
business expense.
Corporate or Partnership Property
Acquired in a Nontaxable Transfer
MACRS does not apply to property used before 1987 and
transferred after 1986 to a corporation or partnership (ex-
cept property the transferor placed in service after July 31,
1986, if MACRS was elected) to the extent its basis is car-
ried over from the property's adjusted basis in the transfer-
or's hands. You must continue to use the same deprecia-
tion method as the transferor and figure depreciation as if
the transfer had not occurred. However, if MACRS would
otherwise apply, you can use it to depreciate the part of
the property's basis that exceeds the carried-over basis.
The nontaxable transfers covered by this rule include
the following.
• A distribution in complete liquidation of a subsidiary.
• A transfer to a corporation controlled by the transferor.
• An exchange of property solely for corporate stock or
securities in a reorganization.
• A contribution of property to a partnership in exchange
for a partnership interest.
• A partnership distribution of property to a partner.
Election To Exclude Property From
MACRS
If you can properly depreciate any property under a
method not based on a term of years, such as the
unit-of-production method, you can elect to exclude that
property from MACRS. You make the election by reporting
your depreciation for the property on line 15 in Part II of
Form 4562 and attaching a statement, as described in the
Instructions for Form 4562. You must make this election by
the return due date (including extensions) for the tax year
you place your property in service. However, if you timely
filed your return for the year without making the election,
you can still make the election by filing an amended return
within 6 months of the due date of the return (excluding
extensions). Attach the election to the amended return
and write “Filed pursuant to section 301.9100-2” on the
election statement. File the amended return at the same
address you filed the original return.
Use of standard mileage rate. If you use the standard
mileage rate to figure your tax deduction for your business
automobile, you are treated as having made an election to
exclude the automobile from MACRS. See Pub. 463 for a
discussion of the standard mileage rate.
What Is the Basis of Your
Depreciable Property?
Terms you may need to know
(see Glossary):
Abstract fees
Adjusted basis
Basis
Exchange
Fair market value (FMV)
To figure your depreciation deduction, you must determine
the basis of your property. To determine basis, you need to
know the cost or other basis of your property.
Cost as Basis
The basis of property you buy is its cost plus amounts you
paid for items such as sales tax (see Exception below),
freight charges, and installation and testing fees. The cost
includes the amount you pay in cash, debt obligations,
other property, or services.
Exception. You can elect to deduct state and local
general sales taxes instead of state and local income
taxes as an itemized deduction on Schedule A (Form
1040). If you make that choice, you cannot include those
sales taxes as part of your cost basis.
Publication 946 (2024) Chapter 1 Overview of Depreciation 11
Assumed debt. If you buy property and assume (or buy
subject to) an existing mortgage or other debt on the prop-
erty, your basis includes the amount you pay for the prop-
erty plus the amount of the assumed debt.
Example. You make a $20,000 down payment on
property and assume the seller's mortgage of $120,000.
Your total cost is $140,000, the cash you paid plus the
mortgage you assumed.
Settlement costs. The basis of real property also in-
cludes certain fees and charges you pay in addition to the
purchase price. These are generally shown on your settle-
ment statement and include the following.
• Legal and recording fees.
• Abstract fees.
• Survey charges.
• Owner's title insurance.
• Amounts the seller owes that you agree to pay, such
as back taxes or interest, recording or mortgage fees,
charges for improvements or repairs, and sales com-
missions.
For fees and charges you cannot include in the basis of
property, see Real Property in Pub. 551.
Property you construct or build. If you construct, build,
or otherwise produce property for use in your business,
you may have to use the uniform capitalization rules to de-
termine the basis of your property. For information about
the uniform capitalization rules, see Pub. 551 and the reg-
ulations under section 263A of the Internal Revenue
Code.
Other Basis
Other basis usually refers to basis that is determined by
the way you received the property. For example, your ba-
sis is other than cost if you acquired the property in ex-
change for other property, as payment for services you
performed, as a gift, or as an inheritance. If you acquired
property in this or some other way, see Pub. 551 to deter-
mine your basis.
Property changed from personal use. If you held prop-
erty for personal use and later use it in your business or in-
come-producing activity, your depreciable basis is the
lesser of the following.
1. The FMV of the property on the date of the change in
use.
2. Your original cost or other basis adjusted as follows.
a. Increased by the cost of any permanent improve-
ments or additions and other costs that must be
added to basis.
b. Decreased by any deductions you claimed for
casualty and theft losses and other items that re-
duced your basis.
Example. Several years ago, Nia paid $160,000 to
have a home built on a lot that cost $25,000. Before
changing the property to rental use last year, Nia paid
$20,000 for permanent improvements to the house and
claimed a $2,000 casualty loss deduction for damage to
the house. Land is not depreciable, so Nia includes only
the cost of the house when figuring the basis for deprecia-
tion.
The adjusted basis in the house when Nia changed its
use was $178,000 ($160,000 + $20,000 − $2,000). On the
same date, the property had an FMV of $180,000, of
which $15,000 was for the land and $165,000 was for the
house. The basis for depreciation on the house is the FMV
on the date of change ($165,000) because it is less than
Nia’s adjusted basis ($178,000).
Property acquired in a nontaxable transaction. Gen-
erally, if you receive property in a nontaxable exchange,
the basis of the property you receive is the same as the
adjusted basis of the property you gave up. This is refer-
red to as the “carryover basis.” Special rules apply in de-
termining the basis and figuring the MACRS depreciation
deduction and special depreciation allowance for property
acquired in a like-kind exchange or an involuntary conver-
sion. See Like-kind exchanges and involuntary conver-
sions under How Much Can You Deduct? in chapter 3,
and Figuring the Deduction for Property Acquired in a
Nontaxable Exchange in chapter 4.
There are also special rules for determining the basis of
MACRS property involved in a like-kind exchange or an in-
voluntary conversion when the property is contained in a
general asset account. See How Do You Use General As-
set Accounts? in chapter 4.
Adjusted Basis
To find your property's basis for depreciation, you may
have to make certain adjustments (increases and decrea-
ses) to the basis of the property for events occurring be-
tween the time you acquired the property and the time you
placed it in service. These events could include the follow-
ing.
• Installing utility lines.
• Paying legal fees for perfecting the title.
• Settling zoning issues.
• Receiving rebates.
• Incurring a casualty or theft loss.
For a discussion of adjustments to the basis of your prop-
erty, see Adjusted Basis in Pub. 551.
If you depreciate your property under MACRS, you may
also have to reduce your basis by certain deductions and
credits with respect to the property. For more information,
see What Is the Basis for Depreciation? in chapter 4.
Basis adjustment for depreciation allowed or allowa-
ble. You must reduce the basis of property by the depre-
ciation allowed or allowable, whichever is greater. Depre-
ciation allowed is depreciation you actually deducted
12 Chapter 1 Overview of Depreciation Publication 946 (2024)
(from which you received a tax benefit). Depreciation al-
lowable is depreciation you are entitled to deduct.
If you do not claim depreciation you are entitled to de-
duct, you must still reduce the basis of the property by the
full amount of depreciation allowable.
If you deduct more depreciation than you should, you
must reduce your basis by any amount deducted from
which you received a tax benefit (the depreciation al-
lowed).
How Do You Treat Repairs and
Improvements?
If you improve depreciable property, you must treat the im-
provement as separate depreciable property. Improve-
ment means an addition to or partial replacement of prop-
erty that is a betterment to the property, restores the
property, or adapts it to a new or different use. See section
1.263(a)-3 of the regulations.
You generally deduct the cost of repairing business
property in the same way as any other business expense.
However, if the cost is for a betterment to the property, to
restore the property, or to adapt the property to a new or
different use, you must treat it as an improvement and de-
preciate it.
Example. You repair a small section on one corner of
the roof of a rental house. You deduct the cost of the repair
as a rental expense. However, if you completely replace
the roof, the new roof is an improvement because it is a re-
storation of the building. You depreciate the cost of the
new roof.
Improvements to rented property. You can depreciate
permanent improvements you make to business property
you rent from someone else.
Do You Have To File Form
4562?
Terms you may need to know
(see Glossary):
Amortization
Listed property
Placed in service
Standard mileage rate
Use Form 4562 to figure your deduction for depreciation
and amortization. Attach Form 4562 to your tax return for
the current tax year if you are claiming any of the following
items.
• A section 179 deduction for the current year or a sec-
tion 179 carryover from a prior year. See chapter 2 for
information on the section 179 deduction.
• Depreciation for property placed in service during the
current year.
• Depreciation on any vehicle or other listed property,
regardless of when it was placed in service. See chap-
ter 5 for information on listed property.
• A deduction for any vehicle if the deduction is reported
on a form other than Schedule C (Form 1040).
• Amortization of costs if the current year is the first year
of the amortization period.
• Depreciation or amortization on any asset on a corpo-
rate income tax return (other than Form 1120-S, U.S.
Income Tax Return for an S Corporation) regardless of
when it was placed in service.
You must submit a separate Form 4562 for each
business or activity on your return for which a
Form 4562 is required.
Table 1-1 presents an overview of the purpose of the
various parts of Form 4562.
Employee. Do not use Form 4562 if you are an employee
and you deduct job-related vehicle expenses using either
actual expenses (including depreciation) or the standard
mileage rate. Instead, use Form 2106.
How Do You Correct
Depreciation Deductions?
If you deducted an incorrect amount of depreciation in any
year, you may be able to make a correction by filing an
amended return for that year. See Filing an Amended Re-
turn next. If you are not allowed to make the correction on
an amended return, you may be able to change your ac-
counting method to claim the correct amount of deprecia-
tion. See Changing Your Accounting Method, later.
Filing an Amended Return
You can file an amended return to correct the amount of
depreciation claimed for any property in any of the follow-
ing situations.
• You claimed the incorrect amount because of a math-
ematical error made in any year.
• You claimed the incorrect amount because of a post-
ing error made in any year.
• You have not adopted a method of accounting for
property placed in service by you in tax years ending
after December 29, 2003.CAUTION
!
Publication 946 (2024) Chapter 1 Overview of Depreciation 13
• You claimed the incorrect amount on property placed
in service by you in tax years ending before December
30, 2003.
Adoption of accounting method defined. Generally,
you adopt a method of accounting for depreciation by us-
ing a permissible method of determining depreciation
when you file your first tax return, or by using the same im-
permissible method of determining depreciation in two or
more consecutively filed tax returns.
For an exception to the 2-year rule, see sections
6.01(1)(b), 6.19(1)(b), and 6.21(3)(b) of Revenue Proce-
dure 2024-23 on page 1334 of Internal Revenue Bulletin
2024-23, available at IRS.gov/irb/2024-23_IRB#REV-
PROC-2024-23; or any successor.
When to file. If an amended return is allowed, you must
file it by the later of the following.
• 3 years from the date you filed your original return for
the year in which you did not deduct the correct
amount. A return filed before an unextended due date
is considered filed on that due date.
• 2 years from the time you paid your tax for that year.
Changing Your Accounting Method
Generally, you must get IRS approval to change your
method of accounting. You must generally file Form 3115
to request a change in your method of accounting for de-
preciation.
The following are examples of a change in method of
accounting for depreciation.
• A change from an impermissible method of determin-
ing depreciation for depreciable property if the imper-
missible method was used in two or more consecu-
tively filed tax returns.
• A change in the treatment of an asset from nondepre-
ciable to depreciable or vice versa.
• A change in the depreciation method, period of recov-
ery, or convention of a depreciable asset.
• A change from not claiming to claiming the special de-
preciation allowance if you did not make the election
to not claim any special allowance.
• A change from claiming a 50% special depreciation al-
lowance to claiming a 100% special depreciation al-
lowance for qualified property acquired and placed in
service by you after September 27, 2017 (if you did
not make the election under section 168(k)(10) to
claim a 50% special depreciation allowance).
Changes in depreciation that are not a change in
method of accounting (and may only be made on an
amended return) include the following.
• An adjustment in the useful life of a depreciable asset
for which depreciation is determined under section
167.
• A change in use of an asset in the hands of the same
taxpayer.
• Making a late depreciation election or revoking a
timely valid depreciation election (including the elec-
tion not to deduct the special depreciation allowance).
If you elected not to claim any special depreciation al-
lowance, a change from not claiming to claiming the
special depreciation allowance is a revocation of the
election and is not an accounting method change.
Generally, you must get IRS approval to make a late
depreciation election or revoke a depreciation elec-
tion. You must submit a request for a letter ruling to
make a late election or revoke an election.
• Any change in the placed in service date of a depreci-
able asset.
See sections 1.446-1(e)(2)(ii)(d) and 1.446-1(e)(2)(iii)
of the regulations for more information and examples.
IRS approval. If your change in method of accounting for
depreciation is described in Revenue Procedure 2019-43,
on page 1107 of Internal Revenue Bulletin 2019-48, as
modified, amplified, and superseded by Revenue Proce-
dure 2022-14, on page 502 of Internal Revenue Bulletin
2022-7, as modified, amplified, and superseded by Reve-
nue Procedure 2023-34, on page 1207 of Internal Reve-
nue Bulletin 2023-28, you may be able to get approval
from the IRS to make that change under the automatic
change request procedures generally covered in Revenue
Procedure 2015-13 on page 419 of Internal Revenue Bul-
letin 2015-5. If you do not qualify to use the automatic pro-
cedures to get approval, you must use the advance con-
sent request procedures generally covered in Revenue
Procedure 2015-13. Also, see the Instructions for Form
3115 for more information on getting approval, including
lists of scope limitations and automatic accounting
method changes.
Additional guidance. For additional guidance and
special procedures for changing your accounting method,
automatic change procedures, amending your return, and
filing Form 3115, see Revenue Procedure 2015-13 on
page 419 of Internal Revenue Bulletin 2015-5, available at
IRS.gov/irb/2015-05_IRB#RP-2015-13; Revenue Proce-
dure 2019-43 on page 1107 of Internal Revenue Bulletin
2019-48, available at IRS.gov/irb/2019-48_IRB#REV-
PROC-2019-43; Revenue Procedure 2022-14 on
page 502 of Internal Revenue Bulletin 2022-7, available at
IRS.gov/irb/2022-7_IRB#REV-PROC-2022-14; and Reve-
nue Procedure 2023-34 on page 1207 of Internal Revenue
Bulletin 2023-28, available at IRS.gov/irb/
2023-28_IRB#REV-PROC-2023-24.
Section 481(a) adjustment. If you file Form 3115 and
change from an impermissible method to a permissible
method of accounting for depreciation, you can make a
section 481(a) adjustment for any unclaimed or excess
amount of allowable depreciation. The adjustment is the
difference between the total depreciation actually deduc-
ted for the property and the total amount allowable prior to
the year of change. If no depreciation was deducted, the
adjustment is the total depreciation allowable prior to the
year of change. A negative section 481(a) adjustment re-
sults in a decrease in taxable income. It is taken into
14 Chapter 1 Overview of Depreciation Publication 946 (2024)
account in the year of change and is reported on your
business tax returns as “other expenses.” A positive sec-
tion 481(a) adjustment results in an increase in taxable in-
come. It is generally taken into account over 4 tax years
and is reported on your business tax returns as “other in-
come.” However, you can elect to use a 1-year adjustment
period and report the adjustment in the year of change if
the total adjustment is less than $50,000. Make the elec-
tion by completing the appropriate line on Form 3115.
If you file a Form 3115 and change from one permissi-
ble method to another permissible method, the section
481(a) adjustment is zero.
2.
Electing the Section 179
Deduction
Introduction
You can elect to recover all or part of the cost of certain
qualifying property, up to a limit, by deducting it in the year
you place the property in service. This is the section 179
deduction. You can elect the section 179 deduction in-
stead of recovering the cost by taking depreciation deduc-
tions.
Estates and trusts cannot elect the section 179
deduction.
This chapter explains what property does and does not
qualify for the section 179 deduction, what limits apply to
the deduction (including special rules for partnerships and
corporations), and how to elect it. It also explains when
and how to recapture the deduction.
Useful Items
You may want to see:
Publication
537 Installment Sales
544 Sales and Other Dispositions of Assets
Form (and Instructions)
4562 Depreciation and Amortization
4797 Sales of Business Property
See How To Get Tax Help at the end of this publication for
information about getting publications and forms.
What Property Qualifies?
Terms you may need to know
(see Glossary):
Adjusted basis
Basis
Class life
Structural componentsCAUTION
!
4562
4797
Purpose of Form 4562
This table describes the purpose of the various parts of Form 4562. For more information, see Form 4562
and its instructions.
Part Purpose
I • Electing the section 179 deduction
• Figuring the maximum section 179 deduction for the current year
• Figuring any section 179 deduction carryover to the next year
II • Reporting the special depreciation allowance for property (other than listed property) placed in
service during the tax year
• Reporting depreciation deductions on property being depreciated under any method other than
MACRS
III • Reporting MACRS depreciation deductions for property placed in service before this year
• Reporting MACRS depreciation deductions for property (other than listed property) placed in
service during the current year
IV • Summarizing other parts
V • Reporting the special depreciation allowance for automobiles and other listed property
• Reporting MACRS depreciation on automobiles and other listed property
• Reporting the section 179 cost elected for automobiles and other listed property
• Reporting information on the use of automobiles and other transportation vehicles
VI • Reporting amortization deductions
Table 1-1.
Publication 946 (2024) Chapter 2 Electing the Section 179 Deduction 15
Tangible property
To qualify for the section 179 deduction, your property
must meet all the following requirements.
• It must be eligible property.
• It must be acquired for business use.
• It must have been acquired by purchase.
• It must not be property described later under What
Property Does Not Qualify.
The following discussions provide information about
these requirements and exceptions.
Eligible Property
To qualify for the section 179 deduction, your property
must be one of the following types of depreciable property.
1. Tangible personal property.
2. Other tangible property (except buildings and their
structural components) used as:
a. An integral part of manufacturing, production, or
extraction, or of furnishing transportation, commu-
nications, electricity, gas, water, or sewage dis-
posal services;
b. A research facility used in connection with any of
the activities in (a) above; or
c. A facility used in connection with any of the activi-
ties in (a) for the bulk storage of fungible commod-
ities.
3. Single-purpose agricultural (livestock) or horticultural
structures. See chapter 7 of Pub. 225 for definitions
and information regarding the use requirements that
apply to these structures.
4. Storage facilities (except buildings and their structural
components) used in connection with distributing pe-
troleum or any primary product of petroleum.
5. Off-the-shelf computer software.
6. Qualified section 179 real property (described below).
Tangible personal property. Tangible personal property
is any tangible property that is not real property. It includes
the following property.
• Machinery and equipment.
• Property contained in or attached to a building (other
than structural components), such as refrigerators,
grocery store counters, office equipment, printing
presses, testing equipment, and signs.
• Gasoline storage tanks and pumps at retail service
stations.
• Livestock, including horses, cattle, hogs, sheep,
goats, and mink and other fur-bearing animals.
• Portable air conditioners or heaters placed in service
by you in tax years beginning after 2015.
• Certain property used predominantly to furnish lodg-
ing or in connection with the furnishing of lodging (ex-
cept as provided in section 50(b)(2)).
The treatment of property as tangible personal property
for the section 179 deduction is not controlled by its treat-
ment under local law. For example, property may not be
tangible personal property for the deduction even if trea-
ted so under local law, and some property (such as fix-
tures) may be tangible personal property for the deduction
even if treated as real property under local law.
Off-the-shelf computer software. Off-the-shelf com-
puter software is qualifying property for purposes of the
section 179 deduction. This is computer software that is
readily available for purchase by the general public, is
subject to a nonexclusive license, and has not been sub-
stantially modified. It includes any program designed to
cause a computer to perform a desired function. However,
a database or similar item is not considered computer
software unless it is in the public domain and is incidental
to the operation of otherwise qualifying software.
Qualified section 179 real property. You can elect to
treat certain qualified real property you placed in service
during the tax year as section 179 property. If this election
is made, the term “section 179 property” will include any
qualified real property that is:
• Qualified improvement property, as described in sec-
tion 168(e)(6) of the Internal Revenue Code; and
• Any of the following improvements to nonresidential
real property placed in service after the date the non-
residential real property was first placed in service.
1. Roofs.
2. Heating, ventilation, and air-conditioning property.
3. Fire protection and alarm systems.
4. Security systems.
For more information, see Special rules for qualified sec-
tion 179 real property, later.
Qualified improvement property. Generally, this is
any improvement to an interior portion of a building that is
nonresidential real property if the improvement is placed
in service after the date the building was first placed in
service.
Also, qualified improvement property does not include
the cost of any improvement attributable to the following.
• The enlargement of the building.
• Any elevator or escalator.
• The internal structural framework of the building.
16 Chapter 2 Electing the Section 179 Deduction Publication 946 (2024)
Property Acquired for Business Use
To qualify for the section 179 deduction, your property
must have been acquired for use in your trade or busi-
ness. Property you acquire only for the production of in-
come, such as investment property, rental property (if rent-
ing property is not your trade or business), and property
that produces royalties, does not qualify.
Partial business use. When you use property for both
business and nonbusiness purposes, you can elect the
section 179 deduction only if you use the property more
than 50% for business in the year you place it in service. If
you use the property more than 50% for business, multiply
the cost of the property by the percentage of business
use. Use the resulting business cost to figure your section
179 deduction.
Example. May Oak bought and placed in service an
item of section 179 property costing $11,000. May used
the property 80% for business and 20% for personal pur-
poses. The business part of the cost of the property is
$8,800 (80% (0.80) × $11,000).
Property Acquired by Purchase
To qualify for the section 179 deduction, your property
must have been acquired by purchase. For example, prop-
erty acquired by gift or inheritance does not qualify.
Property is not considered acquired by purchase in the
following situations.
1. It is acquired by one component member of a control-
led group from another component member of the
same group.
2. Its basis is determined either:
a. In whole or in part by its adjusted basis in the
hands of the person from whom it was acquired, or
b. Under the stepped-up basis rules for property ac-
quired from a decedent.
3. It is acquired from a related person.
Related persons. Related persons are described under
Related persons, earlier. However, to determine whether
property qualifies for the section 179 deduction, treat as
an individual's family only their spouse, ancestors, and lin-
eal descendants and substitute "50%" for "10%" each
place it appears.
Example. You are a tailor. You bought two industrial
sewing machines from your father. You placed both ma-
chines in service in the same year you bought them. They
do not qualify as section 179 property because you and
your father are related persons. You cannot claim a sec-
tion 179 deduction for the cost of these machines.
What Property Does Not
Qualify?
Terms you may need to know
(see Glossary):
Basis
Class life
Certain property does not qualify for the section 179 de-
duction. This includes the following.
Land and Improvements
Land and land improvements do not qualify as section 179
property. Land improvements include swimming pools,
paved parking areas, wharves, docks, bridges, and fen-
ces.
Excepted Property
Even if the requirements explained earlier under What
Property Qualifies? are met, you cannot elect the section
179 deduction for the following property.
• Certain property you lease to others (if you are a non-
corporate lessor).
• Property used predominantly outside the United
States, except property described in section 168(g)(4)
of the Internal Revenue Code.
• Property used by certain tax-exempt organizations,
except property used in connection with the produc-
tion of income subject to the tax on unrelated trade or
business income.
• Property used by governmental units or foreign per-
sons or entities, except property used under a lease
with a term of less than 6 months.
Leased property. Generally, you cannot claim a section
179 deduction based on the cost of property you lease to
someone else. This rule does not apply to corporations.
However, you can claim a section 179 deduction for the
cost of the following property.
1. Property you manufacture or produce and lease to
others.
2. Property you purchase and lease to others if both the
following tests are met.
a. The term of the lease (including options to renew)
is less than 50% of the property's class life.
b. For the first 12 months after the property is trans-
ferred to the lessee, the total business deductions
you are allowed on the property (other than rents
and reimbursed amounts) are more than 15% of
the rental income from the property.
Publication 946 (2024) Chapter 2 Electing the Section 179 Deduction 17
How Much Can You Deduct?
Terms you may need to know
(see Glossary):
Adjusted basis
Basis
Placed in service
Your section 179 deduction is generally the cost of the
qualifying property. However, the total amount you can
elect to deduct under section 179 is subject to a dollar
limit and a business income limit. These limits apply to
each taxpayer, not to each business. However, see Mar-
ried Individuals under Dollar Limits, later. For a passenger
automobile, the total section 179 deduction and deprecia-
tion deduction are limited. See Do the Passenger Automo-
bile Limits Apply? in chapter 5.
If you deduct only part of the cost of qualifying property
as a section 179 deduction, you can generally depreciate
the cost you do not deduct.
Trade-in of other property. If you acquire qualified prop-
erty in a like-kind exchange, only the excess basis of the
acquired property is eligible for the section 179 deduction.
For more information on excess basis, see Pub. 551.
Like-kind exchanges beginning after December
31, 2017, are generally limited to exchanges of
real property not held primarily for sale. Section
1.168(i)-6 of the regulations does not reflect this change in
law.
If you buy qualifying property with cash and a trade-in,
its cost for purposes of the section 179 deduction includes
only the cash you paid.
Example. Silver Leaf, a retail bakery, traded in two
ovens having a total adjusted basis of $680, for a new
oven costing $1,320. They received an $800 trade-in al-
lowance for the old ovens and paid $520 in cash for the
new oven. On the date that Silver Leaf traded in the two
old ovens for the new oven, the old ovens and the new
oven are classified as real property under the law of the
state in which the old and new ovens are located and, as a
result, the old and new ovens are real property for purpo-
ses of section 1031. The new oven is section 179 prop-
erty.
Only the portion of the new oven's basis paid by cash
qualifies for the section 179 deduction. Therefore, Silver
Leaf's qualifying cost for the section 179 deduction is
$520.
Dollar Limits
The total amount you can elect to deduct under section
179 for most property placed in service in tax years begin-
ning in 2024 generally cannot be more than $1,220,000. IfCAUTION
!
you acquire and place in service more than one item of
qualifying property during the year, you can allocate the
section 179 deduction among the items in any way, as
long as the total deduction is not more than $1,220,000.
You do not have to claim the full $1,220,000.
The amount you can elect to deduct is not affec-
ted if you place qualifying property in service in a
short tax year or if you place qualifying property in
service for only a part of a 12-month tax year.
After you apply the dollar limit to determine a ten-
tative deduction, you must apply the business in-
come limit (described later) to determine your ac-
tual section 179 deduction.
Example. In 2024, you bought and placed in service
$1,220,000 in machinery and a $25,000 circular saw for
your business. You elect to deduct $1,195,000 for the ma-
chinery and the entire $25,000 for the saw, a total of
$1,220,000. This is the maximum amount you can deduct.
Your $25,000 deduction for the saw completely recovered
its cost. Your basis for depreciation is zero. The basis for
depreciation of your machinery is $25,000. You figure this
by subtracting your $1,195,000 section 179 deduction for
the machinery from the $1,220,000 cost of the machinery.
Situations affecting dollar limit. Under certain circum-
stances, the general dollar limits on the section 179 de-
duction may be reduced or increased or there may be ad-
ditional dollar limits. The general dollar limit is affected by
any of the following situations.
• The cost of your section 179 property placed in serv-
ice exceeds $3,050,000.
• You placed in service a sport utility or certain other ve-
hicles.
• You are married filing a joint or separate return.
Costs Exceeding $3,050,000
If the cost of your qualifying section 179 property placed in
service in a year is more than $3,050,000, you must gen-
erally reduce the dollar limit (but not below zero) by the
amount of cost over $3,050,000. If the cost of your section
179 property placed in service during 2024 is $4,270,000
or more, you cannot take a section 179 deduction.
Example. In 2024, Jane Ash placed in service machi-
nery costing $3,100,000. This cost is $50,000 more than
$3,050,000, so Jane must reduce the dollar limit to
$1,170,000 ($1,220,000 − $50,000).
Sport Utility and Certain Other Vehicles
You cannot elect to expense more than $30,500 of the
cost of any heavy sport utility vehicle (SUV) and certain
other vehicles placed in service in tax years beginning in
2024. This rule applies to any 4-wheeled vehicle primarily
designed or used to carry passengers over public streets,
roads, or highways that is rated at more than 6,000
pounds gross vehicle weight and not more than 14,000TIPCAUTION
!
18 Chapter 2 Electing the Section 179 Deduction Publication 946 (2024)
pounds gross vehicle weight. However, the $30,500 limit
does not apply to any vehicle:
• Designed to seat more than nine passengers behind
the driver's seat;
• Equipped with a cargo area (either open or enclosed
by a cap) of at least 6 feet in interior length that is not
readily accessible from the passenger compartment;
or
• That has an integral enclosure fully enclosing the
driver compartment and load carrying device, does
not have seating rearward of the driver's seat, and has
no body section protruding more than 30 inches
ahead of the leading edge of the windshield.
Married Individuals
If you are married, how you figure your section 179 deduc-
tion depends on whether you file jointly or separately. If
you file a joint return, you and your spouse are treated as
one taxpayer in determining any reduction to the dollar
limit, regardless of which of you purchased the property or
placed it in service. If you and your spouse file separate
returns, you are treated as one taxpayer for the dollar limit,
including the reduction for costs over $3,050,000. You
must allocate the dollar limit (after any reduction) between
you equally, unless you both elect a different allocation. If
the percentages elected by each of you do not total 100%,
50% will be allocated to each of you.
Example. You are married. You and your spouse file
separate returns. You bought and placed in service
$3,050,000 of qualified farm machinery in 2024. Your
spouse has a separate business, and bought and placed
in service $300,000 of qualified business equipment. Your
combined dollar limit is $860,000. This is because you
and your spouse must figure the limit as if you were one
taxpayer. You reduce the $1,220,000 dollar limit by the
$300,000 excess of your costs over $3,050,000.
You elect to allocate the $860,000 dollar limit as fol-
lows.
• $817,000 ($860,000 x 95% (0.95)) to your machinery.
• $43,000 ($860,000 x 5% (0.05)) to your spouse’s
equipment.
If you did not make an election to allocate your costs in
this way, you and your spouse would have to allocate
$430,000 ($860,000 × 50% (0.50)) to each of you.
Joint return after filing separate returns. If you and
your spouse elect to amend your separate returns by filing
a joint return after the due date for filing your return, the
dollar limit on the joint return is the lesser of the following
amounts.
• The dollar limit (after reduction for any cost of section
179 property over $3,050,000).
• The total cost of section 179 property you and your
spouse elected to expense on your separate returns.
Example. The facts are the same as in the previous
example, except that you elected to deduct $300,000 of
the cost of section 179 property on your separate return
and your spouse elected to deduct $20,000. After the due
date of your returns, you and your spouse file a joint re-
turn. The dollar limit for the section 179 deduction is
$320,000. This is the lesser of the following amounts.
• $860,000—The dollar limit less the cost of section 179
property over $3,050,000.
• $320,000—The total you and your spouse elected to
expense on your separate returns.
Business Income Limit
The total cost you can deduct each year after you apply
the dollar limit is limited to the taxable income from the ac-
tive conduct of any trade or business during the year.
Generally, you are considered to actively conduct a trade
or business if you meaningfully participate in the manage-
ment or operations of the trade or business.
Any cost not deductible in 1 year under section 179 be-
cause of this limit can be carried to the next year. Special
rules apply to a deduction of qualified section 179 real
property that is placed in service by you in tax years be-
ginning before 2016 and disallowed because of the busi-
ness income limit. See Special rules for qualified section
179 real property under Carryover of disallowed deduc-
tion, later.
Taxable income. In general, figure taxable income for
this purpose by totaling the net income and losses from all
trades and businesses you actively conducted during the
year. Net income or loss from a trade or business includes
the following items.
• Section 1231 gains (or losses).
• Interest from working capital of your trade or business.
• Wages, salaries, tips, or other pay earned as an em-
ployee.
For information about section 1231 gains and losses, see
chapter 3 of Pub. 544.
In addition, figure taxable income without regard to any
of the following.
• The section 179 deduction.
• The self-employment tax deduction.
• Any net operating loss carryback or carryforward.
• Any unreimbursed employee business expenses.
Two different taxable income limits. In addition to the
business income limit for your section 179 deduction, you
may have a taxable income limit for some other deduction.
You may have to figure the limit for this other deduction
taking into account the section 179 deduction. If so, com-
plete the following steps.
Step Action
1 Figure taxable income without the section 179
deduction or the other deduction.
Publication 946 (2024) Chapter 2 Electing the Section 179 Deduction 19
2 Figure a hypothetical section 179 deduction
using the taxable income figured in Step 1.
3 Subtract the hypothetical section 179 deduction
figured in Step 2 from the taxable income
figured in Step 1.
4 Figure a hypothetical amount for the other
deduction using the amount figured in Step 3
as taxable income.
5 Subtract the hypothetical other deduction
figured in Step 4 from the taxable income
figured in Step 1.
6 Figure your actual section 179 deduction using
the taxable income figured in Step 5.
7 Subtract your actual section 179 deduction
figured in Step 6 from the taxable income
figured in Step 1.
8 Figure your actual other deduction using the
taxable income figured in Step 7.
Example. On February 1, 2024, the XYZ Corporation
purchased and placed in service qualifying section 179
property that cost $1,220,000. It elects to expense the en-
tire $1,220,000 cost under section 179. In June, the cor-
poration gave a charitable contribution of $10,000. A cor-
poration's limit on charitable contributions is figured after
subtracting any section 179 deduction. The business in-
come limit for the section 179 deduction is figured after
subtracting any allowable charitable contributions. XYZ's
taxable income figured without the section 179 deduction
or the deduction for charitable contributions is $1,240,000.
XYZ figures its section 179 deduction and its deduction for
charitable contributions as follows.
Step 1—Taxable income figured without either deduc-
tion is $1,220,000.
Step 2—Using $1,240,000 as taxable income, XYZ's
hypothetical section 179 deduction is $1,220,000.
Step 3—$20,000 ($1,240,000 − $1,220,000).
Step 4—Using $20,000 (from Step 3) as taxable in-
come, XYZ's hypothetical charitable contribution (limi-
ted to 10% of taxable income) is $2,000.
Step 5—$1,238,000 ($1,240,000 − $2,000).
Step 6—Using $1,238,000 (from Step 5) as taxable
income, XYZ figures the actual section 179 deduction.
Because the taxable income is at least $1,220,000,
XYZ can take a $1,220,000 section 179 deduction.
Step 7—$20,000 ($1,240,000 − $1,220,000).
Step 8—Using $20,000 (from Step 7) as taxable in-
come, XYZ's actual charitable contribution (limited to
10% of taxable income) is $2,000.
Carryover of disallowed deduction. You can carry over
for an unlimited number of years the cost of any qualified
section 179 real property that you placed in service in tax
years beginning after 2015, and that you elected to ex-
pense, but were unable to deduct because of the busi-
ness income limitation. This disallowed deduction amount
is shown on line 13 of Form 4562. You use the amount you
carry over to determine your section 179 deduction in the
next year. Enter that amount on line 10 of your Form 4562
for the next year.
If you place more than one property in service in a year,
you can select the properties for which all or a part of the
costs will be carried forward. Your selections must be
shown in your books and records. For this purpose, treat
section 179 costs allocated from a partnership or an S
corporation as one item of section 179 property. If you do
not make a selection, the total carryover will be allocated
equally among the properties you elected to expense for
the year.
If costs from more than 1 year are carried forward to a
subsequent year in which only part of the total carryover
can be deducted, you must deduct the costs being carried
forward from the earliest year first.
Special rules for qualified section 179 real prop-
erty. You can carry over to 2025 a 2024 deduction attrib-
utable to qualified section 179 real property that you
placed in service during the tax year and that you elected
to expense but were unable to take because of the busi-
ness income limitation. See Carryover of disallowed de-
duction, earlier. Thus, the amount of any 2024 disallowed
section 179 expense deduction attributable to qualified
section 179 real property will be reported on line 13 of
Form 4562.
If there is a sale or other disposition of your prop-
erty (including a transfer at death) before you can
use the full amount of any outstanding carryover
of your disallowed section 179 deduction, neither you nor
the new owner can deduct any of the unused amount. In-
stead, you must add it back to the property's basis.
Partnerships and Partners
The section 179 deduction limits apply both to the partner-
ship and to each partner. The partnership determines its
section 179 deduction subject to the limits. It then allo-
cates the deduction among its partners.
Each partner adds the amount allocated from partner-
ships (shown on Schedule K-1 (Form 1065), Partner's
Share of Income, Deductions, Credits, etc.) to their non-
partnership section 179 costs and then applies the dollar
limit to this total. To determine any reduction in the dollar
limit for costs over $3,050,000, the partner does not in-
clude any of the cost of section 179 property placed in
service by the partnership. After the dollar limit (reduced
for any nonpartnership section 179 costs over
$3,050,000) is applied, any remaining cost of the partner-
ship and nonpartnership section 179 property is subject to
the business income limit.
Partnership's taxable income. For purposes of the
business income limit, figure the partnership's taxable in-
come by adding together the net income and losses from
all trades or businesses actively conducted by the partner-
ship during the year. See the Instructions for Form 1065
for information on how to figure partnership net income (orTIP
20 Chapter 2 Electing the Section 179 Deduction Publication 946 (2024)
loss). However, figure taxable income without regard to
credits, tax-exempt income, the section 179 deduction,
and guaranteed payments under section 707(c) of the In-
ternal Revenue Code.
Partner's share of partnership's taxable income. For
purposes of the business income limit, the taxable income
of a partner engaged in the active conduct of one or more
of a partnership's trades or businesses includes their allo-
cable share of taxable income derived from the partner-
ship's active conduct of any trade or business.
Example. In 2024, Beech Partnership placed in serv-
ice section 179 property with a total cost of $3,100,000.
The partnership must reduce its dollar limit by $50,000
($3,100,000 − $3,050,000). Its maximum section 179 de-
duction is $1,170,000 ($1,220,000 − $50,000), and it
elects to expense that amount. The partnership's taxable
income from the active conduct of all its trades or busi-
nesses for the year was $1,110,000, so it can deduct the
full $1,110,000. It allocates $40,000 of its section 179 de-
duction and $50,000 of its taxable income to Dean, one of
its partners.
In addition to being a partner in Beech Partnership,
Dean is also a partner in Cedar Partnership, which alloca-
ted to Dean a $30,000 section 179 deduction and $35,000
of its taxable income from the active conduct of its busi-
ness. Dean also conducts a business as a sole proprietor
and, in 2024, placed in service in that business qualifying
section 179 property costing $55,000. Dean had a net
loss of $5,000 from that business for the year.
Dean does not have to include section 179 partnership
costs to figure any reduction in the dollar limit, so the total
section 179 costs for the year are not more than
$3,050,000 and the dollar limit is not reduced. Dean’s
maximum section 179 deduction is $1,220,000. Dean
elects to expense all of the $70,000 in section 179 deduc-
tions allocated from the partnerships ($40,000 from Beech
Partnership plus $30,000 from Cedar Partnership), plus
$55,000 of the sole proprietorship's section 179 costs,
and notes that information in the books and records. How-
ever, Dean’s deduction is limited to the business taxable
income of $80,000 ($50,000 from Beech Partnership, plus
$35,000 from Cedar Partnership, minus $5,000 loss from
Dean’s sole proprietorship). Dean carries over $45,000
($125,000 − $80,000) of the elected section 179 costs to
2025. Dean allocates the carryover amount to the cost of
section 179 property placed in service in Dean’s sole pro-
prietorship, and notes that allocation in the books and re-
cords.
Different tax years. For purposes of the business in-
come limit, if the partner's tax year and that of the partner-
ship differ, the partner's share of the partnership's taxable
income for a tax year is generally the partner's distributive
share for the partnership tax year that ends with or within
the partner's tax year.
Example. John and James Oak are equal partners in
Oak Partnership. Oak Partnership uses a tax year ending
January 31. John and James both use a tax year ending
December 31. For its tax year ending January 31, 2024,
Oak Partnership's taxable income from the active conduct
of its business is $80,000, of which $70,000 was earned
during 2023. John and James each include $40,000 (each
partner's entire share) of partnership taxable income in
computing their business income limit for the 2024 tax
year.
Adjustment of partner's basis in partnership. A part-
ner must reduce the basis of their partnership interest by
the total amount of section 179 expenses allocated from
the partnership even if the partner cannot currently deduct
the total amount. If the partner disposes of their partner-
ship interest, the partner's basis for determining gain or
loss is increased by any outstanding carryover of disal-
lowed section 179 expenses allocated from the partner-
ship.
Adjustment of partnership's basis in section 179
property. The basis of a partnership's section 179 prop-
erty must be reduced by the section 179 deduction elec-
ted by the partnership. This reduction of basis must be
made even if a partner cannot deduct all or part of the
section 179 deduction allocated to that partner by the
partnership because of the limits.
S Corporations
Generally, the rules that apply to a partnership and its
partners also apply to an S corporation and its sharehold-
ers. The deduction limits apply to an S corporation and to
each shareholder. The S corporation allocates its deduc-
tion to the shareholders who then take their section 179
deduction subject to the limits.
Figuring taxable income for an S corporation. To fig-
ure taxable income (or loss) from the active conduct by an
S corporation of any trade or business, you total the net in-
come and losses from all trades or businesses actively
conducted by the S corporation during the year.
To figure the net income (or loss) from a trade or busi-
ness actively conducted by an S corporation, you take into
account the items from that trade or business that are
passed through to the shareholders and used in determin-
ing each shareholder's tax liability. However, you do not
take into account any credits, tax-exempt income, the sec-
tion 179 deduction, and deductions for compensation paid
to shareholder-employees. For purposes of determining
the total amount of S corporation items, treat deductions
and losses as negative income. In figuring the taxable in-
come of an S corporation, disregard any limits on the
amount of an S corporation item that must be taken into
account when figuring a shareholder's taxable income.
Other Corporations
A corporation's taxable income from its active conduct of
any trade or business is its taxable income figured with the
following changes.
Publication 946 (2024) Chapter 2 Electing the Section 179 Deduction 21
1. It is figured before deducting the section 179 deduc-
tion, any net operating loss deduction, and special de-
ductions (as reported on the corporation's income tax
return).
2. It is adjusted for items of income or deduction inclu-
ded in the amount figured in (1) not derived from a
trade or business actively conducted by the corpora-
tion during the tax year.
How Do You Elect the
Deduction?
Terms you may need to know
(see Glossary):
Listed property
Placed in service
Election. You elect to take the section 179 deduction by
completing Part I of Form 4562.
If you elect the deduction for listed property (de-
scribed in chapter 5), complete Part V of Form
4562 before completing Part I.
For property placed in service in 2024, file Form 4562
with either of the following.
• Your original 2024 tax return, whether or not you file it
timely.
• An amended return for 2024 filed within the time pre-
scribed by law. An election made on an amended re-
turn must specify the item of section 179 property to
which the election applies and the part of the cost of
each such item to be taken into account. The amen-
ded return must also include any resulting adjust-
ments to taxable income.
You must keep records that show the specific
identification of each piece of qualifying section
179 property. These records must show how you
acquired the property, the person you acquired it from,
and when you placed it in service.
Election for qualified section 179 real property. You
can elect to expense certain qualified real property that
you placed in service as section 179 property for tax years
beginning in 2024. For more information, see Election
above. Also, see Revenue Procedure 2019-8 on page 347
of Internal Revenue Bulletin 2019-3, available at
IRS.gov/irb/2019-03_IRB#RP-2019-08.
Revoking an election. An election (or any specification
made in the election) to take a section 179 deduction for
2024 can be revoked without IRS approval by filing an
amended return. The amended return must be filed within
the time prescribed by law. The amended return must alsoCAUTION
!RECORDS
include any resulting adjustments to taxable income.
Once made, the revocation is irrevocable.
When Must You Recapture the
Deduction?
Terms you may need to know
(see Glossary):
Disposition
Exchange
Recapture
Recovery period
Section 1245 property
You may have to recapture the section 179 deduction if, in
any year during the property's recovery period, the per-
centage of business use drops to 50% or less. In the year
the business use drops to 50% or less, you include the re-
capture amount as ordinary income in Part IV of Form
4797. You also increase the basis of the property by the
recapture amount. Recovery periods for property are dis-
cussed under Which Recovery Period Applies? in chap-
ter 4.
If you sell, exchange, or otherwise dispose of the
property, do not figure the recapture amount un-
der the rules explained in this discussion. Instead,
use the rules for recapturing depreciation explained in
chapter 3 of Pub. 544 under Section 1245 Property. For
qualified real property, see Notice 2013-59 for determining
the portion of the gain that is attributable to section 1245
property upon the sale or other disposition of qualified real
property. You can find Notice 2013-59 at IRS.gov/irb/
2013-40_IRB/ar14.html.
If the property is listed property (described in
chapter 5), do not figure the recapture amount un-
der the rules explained in this discussion when
the percentage of business use drops to 50% or less. In-
stead, use the rules for recapturing excess depreciation in
chapter 5 under What Is the Business-Use Requirement.
Figuring the recapture amount. To figure the amount to
recapture, take the following steps.
1. Figure the depreciation that would have been allowa-
ble on the section 179 deduction you claimed. Begin
with the year you placed the property in service and
include the year of recapture.
2. Subtract the depreciation figured in (1) from the sec-
tion 179 deduction you claimed. The result is the
amount you must recapture.
Example. In January 2022, Paul Lamb, a calendar
year taxpayer, bought and placed in service section 179CAUTION
!CAUTION
!
22 Chapter 2 Electing the Section 179 Deduction Publication 946 (2024)
property costing $10,000. The property is not listed prop-
erty. The property is 3-year property. Paul elected a
$5,000 section 179 deduction for the property and also
elected not to claim a special depreciation allowance. Paul
used the property only for business in 2022 and 2023. In
2024, Paul used the property 40% for business and 60%
for personal use. Paul figures the recapture amount as fol-
lows.
Section 179 deduction claimed (2020) . . . . . . . . $5,000.00
Minus: Allowable depreciation using Table A-1
(instead of section 179 deduction):
2022 . . . . . . . . . . . . . . . . . . . . . . . . .$1,666.50
2023 . . . . . . . . . . . . . . . . . . . . . . . . . 2,222.50
2024 ($740.50 × 40% (0.40)
(business)) . . . . . . . . . . . . . . . . . . . . 296.20 4,185.20
2024—Recapture amount. . . . . . . . . . . . . . . . $814.80
Paul must include $814.80 in income for 2024.
If any qualified zone property placed in service
during a particular year ceases to be used in an
empowerment zone by an enterprise zone busi-
ness in a later year, the benefit of the increased section
179 deduction must be reported as other income on your
return.
3.
Claiming the Special
Depreciation Allowance
Introduction
You can take a special depreciation allowance to recover
part of the cost of qualified property (defined next) placed
in service during the tax year. The allowance applies only
for the first year you place the property in service. The al-
lowance is an additional deduction you can take after any
section 179 deduction and before you figure regular de-
preciation under MACRS for the year you place the prop-
erty in service.
This chapter explains what is qualified property. It also
includes rules regarding how to figure an allowance, how
to elect not to claim an allowance, and when you must re-
capture an allowance.
See How To Get Tax Help at the end of this publication
for information about getting publications and forms.CAUTION
!
What Is Qualified Property?
Terms you may need to know
(see Glossary):
Business/investment use
Improvement
Nonresidential real property
Placed in service
Residential rental property
Structural components
Your property is qualified property if it is one of the follow-
ing.
• Qualified reuse and recycling property.
• Certain qualified property acquired after September
27, 2017.
• Certain plants bearing fruits and nuts.
The following discussions provide information about the
types of qualified property listed above for which you can
take the special depreciation allowance.
Qualified Reuse and Recycling
Property
You can take a 50% special depreciation allowance for
qualified reuse and recycling property. Qualified reuse and
recycling property is any machinery or equipment (not in-
cluding buildings or real estate), along with any appurte-
nance, that is used exclusively to collect, distribute, or re-
cycle qualified reuse and recyclable materials (as defined
in section 168(m)(3)(B) of the Internal Revenue Code).
Qualified reuse and recycling property also includes soft-
ware necessary to operate such equipment. The property
must meet the following requirements.
• The property must be depreciated under MACRS.
• The property must have a useful life of at least 5 years.
• The original use of the property must begin with you
after August 31, 2008.
• You must have acquired the property by purchase (as
discussed under Property Acquired by Purchase in
chapter 2) after August 31, 2008, with no binding writ-
ten contract for the acquisition in effect before Sep-
tember 1, 2008.
• The property must be placed in service for use in your
trade or business after August 31, 2008.
Publication 946 (2024) Chapter 3 Claiming the Special Depreciation Allowance 23
Excepted Property
Qualified reuse and recycling property does not include
any of the following.
• Any rolling stock or other equipment used to transport
reuse or recyclable materials.
• Property required to be depreciated using the Alterna-
tive Depreciation System (ADS). For other property re-
quired to be depreciated using ADS, see Required
use of ADS under Which Depreciation System (GDS
or ADS) Applies? in chapter 4.
• Other bonus depreciation property to which section
168(k) of the Internal Revenue Code applies.
• Property for which you elected not to claim any special
depreciation allowance (discussed later).
• Property placed in service and disposed of in the
same tax year.
• Property converted from business use to personal use
in the same tax year acquired. Property converted
from personal use to business use in the same or later
tax year may be qualified reuse and recycling property.
Certain Qualified Property Acquired
After September 27, 2017
You can elect to take a 60% special depreciation allow-
ance for property acquired after September 27, 2017, and
placed in service after December 31, 2023, and before
January 1, 2025 (other than certain property with a long
production period and certain aircraft). You can elect to
take an 80% special depreciation allowance for certain
property with a long production period and certain aircraft
placed in service after December 31, 2023, and before
January 1, 2025. Your property is qualified property if it
meets the following.
• Tangible property depreciated under MACRS with a
recovery period of 20 years or less.
• Computer software defined in and depreciated under
section 167(f)(1) of the Internal Revenue Code.
• Water utility property.
• Qualified film, television, and live theatrical produc-
tions, as defined in sections 181(d) and (e) of the In-
ternal Revenue Code.
• A specified plant for which you made the election to
apply section 168(k)(5) for the tax year in which the
plant is planted or grafted (explained later under Cer-
tain Plants Bearing Fruits and Nuts).
• It is not excepted property (explained later under Ex-
cepted Property).
Qualified property must also be placed in service be-
fore January 1, 2027 (or before January 1, 2028, for cer-
tain property with a long production period and for certain
aircraft), and can be either new property or certain used
property.
Note. For certain qualified property acquired after Sep-
tember 27, 2017, and placed in service after December
31, 2024, and before January 1, 2026 (other than certain
property with a long production period and certain air-
craft), you can elect to take a 40% special depreciation al-
lowance. For certain property with a long production pe-
riod and certain aircraft placed in service after December
31, 2024, and before January 1, 2026, you can elect to
take a 60% special depreciation allowance.
Long Production Period Property
To be qualified property, long production period property
must meet the following requirements.
• The property has a recovery period of at least 10
years or is transportation property. Transportation
property is tangible personal property used in the
trade or business of transporting persons or property.
• The property is subject to section 263A of the Internal
Revenue Code.
• The property has an estimated production period ex-
ceeding 1 year and an estimated production cost ex-
ceeding $1 million.
• You must have acquired the property, or acquired the
property pursuant to a written contract entered into,
before January 1, 2027.
See section 168(k)(2)(B) of the Internal Revenue Code.
Noncommercial Aircraft
To be qualified property, noncommercial aircraft must
meet the following requirements.
• The aircraft must not be tangible personal property
used in the trade or business of transporting persons
or property (except for agricultural or firefighting pur-
poses).
• The aircraft must be purchased (as discussed under
Property Acquired by Purchase in chapter 2) by a pur-
chaser who at the time of the contract for purchase
makes a nonrefundable deposit of the lesser of 10%
of the cost or $100,000.
• The aircraft must have an estimated production period
exceeding 4 months and a cost exceeding $200,000.
• You must have acquired the aircraft, or acquired the
aircraft pursuant to a written contract entered into, be-
fore January 1, 2027.
See section 168(k)(2)(C) of the Internal Revenue Code.
Special Rules
Syndicated leasing transactions. If qualified property
is originally placed in service by a lessor, the property is
sold within 3 months of the date it was placed in service,
and the user of the property does not change, then the
property is treated as originally placed in service by the
taxpayer no earlier than the date of the last sale.
24 Chapter 3 Claiming the Special Depreciation Allowance Publication 946 (2024)
Multiple units of property subject to the same lease will
be treated as originally placed in service no earlier than
the date of the last sale if the property is sold within 3
months after the final unit is placed in service and the pe-
riod between the time the first and last units are placed in
service does not exceed 12 months.
Excepted Property
Qualified property acquired after September 27, 2017,
does not include any of the following.
• Property placed in service, or planted or grafted, and
disposed of in the same tax year.
• Property converted from business use to personal use
in the same tax year acquired. Property converted
from personal use to business use in the same or later
tax year may be qualified property.
• Property required to be depreciated under the Alterna-
tive Depreciation System (ADS). This includes listed
property used 50% or less in a qualified business use.
For other property required to be depreciated using
ADS, see Required use of ADS under Which Depreci-
ation System (GDS or ADS) Applies? in chapter 4.
• Property for which you elected not to claim any special
depreciation allowance (discussed later).
• Property described in section 168(k)(9)(A) and placed
in service in any tax year beginning after December
31, 2017.
• Property described in section 168(k)(9)(B) and placed
in service in any tax year beginning after December
31, 2017.
Certain Plants Bearing Fruits
and Nuts
You can elect to claim a 60% special depreciation allow-
ance for the adjusted basis of certain specified plants (de-
fined later) bearing fruits and nuts planted or grafted after
December 31, 2023, and before January 1, 2025.
A specified plant is:
• Any tree or vine that bears fruits or nuts, and
• Any other plant that will have more than one yield of
fruits or nuts and generally has a pre-productive pe-
riod of more than 2 years from planting or grafting to
the time it begins bearing fruits or nuts.
Any property planted or grafted outside the United
States does not qualify as a specified plant.
If you elect to claim the special depreciation allowance
for any specified plant, the special depreciation allowance
applies only for the tax year in which the plant is planted or
grafted. The plant will not be treated as qualified property
eligible for the special depreciation allowance in the sub-
sequent tax year in which it is placed in service.
To make the election, attach a statement to your timely
filed return (including extensions) for the tax year in which
you plant or graft the specified plant(s), indicating you are
electing to apply section 168(k)(5) and identifying the
specified plant(s) for which you are making the election.
The election, once made, cannot be revoked without IRS
consent.
Note. For certain specified plants bearing fruits and
nuts planted or grafted after December 31, 2024, and be-
fore January 1, 2026, you can elect to claim a 40% special
depreciation allowance.
See section 168(k)(5) of the Internal Revenue Code.
How Much Can You Deduct?
Terms you may need to know
(see Glossary):
Adjusted basis
Basis
Placed in service
Figure the special depreciation allowance by multiplying
the depreciable basis of qualified reuse and recycling
property, certain qualified property acquired after Septem-
ber 27, 2017, and certain plants bearing fruits and nuts by
the applicable percentage.
For qualified property other than listed property, enter
the special depreciation allowance on Form 4562, Part II,
line 14. For qualified property that is listed property, enter
the special depreciation allowance on Form 4562, Part V,
line 25.
If you place qualified property in service in a short
tax year, you can take the full amount of a special
depreciation allowance.
Depreciable basis. This is the property's cost or other
basis multiplied by the percentage of business/investment
use, reduced by the total amount of any credits and de-
ductions allocable to the property.
The following are examples of some credits and deduc-
tions that reduce depreciable basis.
• Any section 179 deduction.
• Any deduction for removal of barriers to the disabled
and the elderly.
• Any disabled access credit, enhanced oil recovery
credit, and credit for employer-provided childcare fa-
cilities and services.
• Basis adjustment to investment credit property under
section 50(c) of the Internal Revenue Code.
• Section 181 expense deduction.
For additional credits and deductions that affect basis,
see section 1016 of the Internal Revenue Code.TIP
Publication 946 (2024) Chapter 3 Claiming the Special Depreciation Allowance 25
For information about how to determine the cost or
other basis of property, see What Is the Basis of Your De-
preciable Property? in chapter 1. For a discussion of busi-
ness/investment use, see Partial business or investment
use under Property Used in Your Business or Income-Pro-
ducing Activity in chapter 1.
Depreciating the remaining cost. After you figure your
special depreciation allowance for your qualified property,
you can use the remaining cost to figure your regular
MACRS depreciation deduction (discussed in chapter 4).
Therefore, you must reduce the depreciable basis of the
property by the special depreciation allowance before fig-
uring your regular MACRS depreciation deduction.
Example. On July 1, 2024, you placed in service in
your business qualified property (that is not long produc-
tion period property or certain aircraft) that cost $450,000
and that you acquired after September 27, 2017. You did
not elect to claim a section 179 deduction. You deduct
60% of the cost ($360,000) as a special depreciation al-
lowance for 2024. You use the remaining cost of the prop-
erty to figure a regular MACRS depreciation deduction for
your property for 2024 and later years.
Like-kind exchanges and involuntary conversions. If
you acquired qualified property in a like-kind exchange or
an involuntary conversion after September 27, 2017, and
the qualified property is new property, the carryover basis
and any excess basis of the acquired property are eligible
for the special depreciation allowance. The excess basis
is the amount of any additional consideration given by the
taxpayer in the exchange, for example, additional cash, li-
abilities, non-like-kind property, or other boot paid for the
new property. See Pub. 551 for more information on carry-
over basis and excess basis.
If you acquired qualified property in a like-kind ex-
change or an involuntary conversion after September 27,
2017, and the qualified property is used property, only the
excess basis of the acquired property is eligible for the
special depreciation allowance. After you figure your spe-
cial depreciation allowance, you can use the remaining
carryover basis to figure your regular MACRS depreciation
deduction. See Figuring the Deduction for Property Ac-
quired in a Nontaxable Exchange in chapter 4 under How
Is the Depreciation Deduction Figured.
How Can You Elect Not To
Claim an Allowance?
You can elect, for any class of property, not to deduct any
special depreciation allowances for all property in such
class placed in service during the tax year.
To make an election, attach a statement to your return
indicating what election you are making and the class of
property for which you are making the election.
The election must be made separately by each person
owning qualified property (for example, by the
partnerships, by the S corporation, or for each member of
a consolidated group by the common parent of the group).
When to make election. Generally, you must make the
election on a timely filed tax return (including extensions)
for the year in which you place the property in service.
However, if you timely filed your return for the year with-
out making the election, you can still make the election by
filing an amended return within 6 months of the due date
of the original return (not including extensions). Attach the
election statement to the amended return. On the amen-
ded return, write “Filed pursuant to section 301.9100-2.”
Revoking an election. Once you elect not to deduct a
special depreciation allowance for a class of property, you
cannot revoke the election without IRS consent. A request
to revoke the election is a request for a letter ruling.
If you elect not to have any special depreciation
allowance apply, the property placed in service af-
ter 2015 will not be subject to an alternative mini-
mum tax adjustment for depreciation.
When Must You Recapture an
Allowance?
When you dispose of property for which you claimed a
special depreciation allowance, any gain on the disposi-
tion is generally recaptured (included in income) as ordi-
nary income up to the amount of the special depreciation
allowance previously allowed or allowable. See When Do
You Recapture MACRS Depreciation? in chapter 4 for
more information.
Recapture of allowance deducted for qualified GO
Zone property. If, in any year after the year you claim the
special depreciation allowance for qualified GO Zone
property (including specified GO Zone extension prop-
erty), the property ceases to be used in the GO Zone, you
may have to recapture as ordinary income the excess
benefit you received from claiming the special deprecia-
tion allowance. For additional guidance, see Notice
2008-25 on page 484 of Internal Revenue Bulletin 2008-9,
available at IRS.gov/irb/2008-09_IRB/index.html.
Qualified cellulosic biomass ethanol plant property,
qualified cellulosic biofuel plant property, and quali-
fied second generation biofuel plant property. If, in
any year after the year you claim the special depreciation
allowance for any qualified cellulosic biomass ethanol
plant property, qualified cellulosic biofuel plant property, or
qualified second generation biofuel plant property, the
property ceases to be qualified cellulosic biomass ethanol
plant property, qualified cellulosic biofuel plant property, or
qualified second generation biofuel plant property, you
may have to recapture as ordinary income the excess
benefit you received from claiming the special deprecia-
tion allowance.CAUTION
!
26 Chapter 3 Claiming the Special Depreciation Allowance Publication 946 (2024)
Recapture of allowance for qualified Recovery Assis-
tance property. If, in any year after the year you claim
the special depreciation allowance for qualified Recovery
Assistance property, the property ceases to be used in the
Kansas disaster area, you may have to recapture as ordi-
nary income the excess benefit you received from claim-
ing the special depreciation allowance. For additional
guidance, see Notice 2008-67 on page 307 of Internal
Revenue Bulletin 2008-32, available at IRS.gov/irb/
2008-32_IRB/index.html.
Recapture of allowance for qualified disaster assis-
tance property. If, in any year after the year you claim
the special depreciation allowance for qualified disaster
assistance property, the property ceases to be used in the
applicable disaster area, you may have to recapture as or-
dinary income the excess benefit you received from claim-
ing the special depreciation allowance.
4.
Figuring Depreciation
Under MACRS
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.
MACRS consists of two depreciation systems, the Gen-
eral Depreciation System (GDS) and the Alternative De-
preciation System (ADS). Generally, these systems pro-
vide different methods and recovery periods to use in
figuring depreciation deductions.
To be sure you can use MACRS to figure depreci-
ation for your property, see What Method Can You
Use To Depreciate Your Property? in chapter 1.
This chapter explains how to determine which MACRS
depreciation system applies to your property. It also dis-
cusses other information you need to know before you can
figure depreciation under MACRS. This information in-
cludes the property's recovery class, placed in service
date, and basis, as well as the applicable recovery period,
convention, and depreciation method. 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. Finally, it explains when and how to
recapture MACRS depreciation.CAUTION
!
Useful Items
You may want to see:
Publication
225 Farmer's Tax Guide
463 Travel, Gift, and Car Expenses
544 Sales and Other Dispositions of Assets
551 Basis of Assets
587 Business Use of Your Home
Form (and Instructions)
2106 Employee Business Expenses
4562 Depreciation and Amortization
See How To Get Tax Help at the end of this publication for
information about getting publications and forms.
Which Depreciation System
(GDS or ADS) Applies?
Terms you may need to know
(see Glossary):
Listed property
Nonresidential real property
Placed in service
Property class
Recovery period
Residential rental property
Tangible property
Tax exempt
Your use of either the General Depreciation System (GDS)
or the Alternative Depreciation System (ADS) to depreci-
ate property under MACRS determines what depreciation
method and recovery period you use. You must generally
use GDS unless you are specifically required by law to
use ADS or you elect to use ADS.
If you placed your property in service in 2024, complete
Part III of Form 4562 to report depreciation using MACRS.
Complete Section B of Part III to report depreciation using
GDS, and complete Section C of Part III to report depreci-
ation using ADS. If you placed your property in service be-
fore 2024 and are required to file Form 4562, report depre-
ciation using either GDS or ADS on line 17 in Part III.
Required use of ADS. You must use ADS for the follow-
ing property.
• Nonresidential real property, residential real property,
and qualified improvement property held by an elect-
ing real property trade or business (as defined in
2106
4562
Publication 946 (2024) Chapter 4 Figuring Depreciation Under MACRS 27
section 163(j)(7)(B) of the Internal Revenue Code).
For more information, see Revenue Procedure 2019-8
on page 347 of Internal Revenue Bulletin 2019-3,
available at IRS.gov/irb/2019-03_IRB#RP-2019-08, as
modified by Revenue Procedure 2021-28 on page 5 of
Internal Revenue Bulletin 2021-27, available at
IRS.gov/irb/2021-27_IRB#RP-2021-28.
• Any property with a recovery period of 10 years or
more under GDS held by an electing farming business
(as defined in section 163(j)(7)(C) of the Internal Rev-
enue Code). For more information, see Revenue Pro-
cedure 2019-8 on page 347 of Internal Revenue Bulle-
tin 2019-3, available at IRS.gov/irb/
2019-03_IRB#RP-2019-08.
• Any tax-exempt use property.
• Any tax-exempt bond-financed property.
• 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.
• 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 dis-
criminatory acts.
• Any tangible property used predominantly outside the
United States during the tax year.
• Any listed property used 50% or less in a qualified
business use during the tax year (discussed later in
chapter 5).
If you are required to use ADS to depreciate your
property, you cannot claim any special deprecia-
tion allowance (discussed in chapter 3) for the
property.
Electing ADS. Although your property may qualify for
GDS, you can elect to use ADS. The election must gener-
ally cover all property in the same property class that you
placed in service during the year. However, the election for
residential rental property and nonresidential real property
can be made on a property-by-property basis. Once you
make this election, you can never revoke it.
You make the election by completing Form 4562, Part
III, line 20.
Which Property Class Applies
Under GDS?
Terms you may need to know
(see Glossary):
Class life
Nonresidential real property
Placed in service
Property classCAUTION
!
Recovery period
Residential rental property
Section 1245 property
Section 1250 property
The following is a list of the nine property classifications
under GDS and examples of the types of property inclu-
ded in each class. These property classes are also listed
under column (a) in Section B of Part III of Form 4562. For
detailed information on property classes, see Appendix B,
Table of Class Lives and Recovery Periods, in this publica-
tion.
1. 3-year property.
a. Tractor units for over-the-road use.
b. Any race horse over 2 years old when placed in
service.
c. Any other horse (other than a race horse) over 12
years old when placed in service.
d. Qualified rent-to-own property (defined later).
2. 5-year property.
a. Automobiles, taxis, buses, helicopters, and trucks.
b. Non-commercial (that is not used in commercial or
contract carrying of passengers or freight).
c. Any qualified technological equipment.
d. Office machinery (such as typewriters, calculators,
and copiers).
e. Any property used in research and experimenta-
tion.
f. Breeding cattle and dairy cattle.
g. Appliances, carpets, furniture, etc., used in a resi-
dential rental real estate activity.
h. Certain geothermal, solar, and wind energy prop-
erty.
i. Any machinery equipment (other than any grain
bin, cotton ginning asset, fence, or other land im-
provement) used in a farming business and placed
in service after 2017, in tax years ending after
2017. The original use of the property must begin
with you after 2017.
j. Any qualified facility (as defined in section 45Y(b)
(1)(A)) of the Internal Revenue Code, any qualified
property (as defined in subsection (b)(2) of section
48E of the Internal Revenue Code) which is a
qualified investment (as defined in subsection (b)
(1) of such section), or any energy storage tech-
nology (as defined in subsection (c)(2) of such
section) and placed in service after 2024.
3. 7-year property.
a. Office furniture and fixtures (such as desks, files,
and safes).
28 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2024)
b. Used agricultural machinery and equipment
placed in service after 2017, grain bins, cotton gin-
ning assets, or fences used in a farming business
(but no other land improvements).
c. Railroad track.
d. Any property that does not have a class life and
has not been designated by law as being in any
other class.
e. Certain motorsports entertainment complex prop-
erty (defined later).
f. Any natural gas gathering line placed in service af-
ter April 11, 2005. See Natural gas gathering line
and electric transmission property, later.
4. 10-year property.
a. Vessels, barges, tugs, and similar water transpor-
tation equipment.
b. Any single-purpose agricultural or horticultural
structure.
c. Any tree or vine bearing fruits or nuts.
d. Qualified small electric meter and qualified smart
electric grid system (defined later) placed in serv-
ice on or after October 3, 2008.
5. 15-year property.
a. Certain improvements made directly to land or
added to it (such as shrubbery, fences, roads,
sidewalks, and bridges).
b. Any retail motor fuels outlet (defined later), such
as a convenience store.
c. Any municipal wastewater treatment plant.
d. Initial clearing and grading land improvements for
gas utility property.
e. 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. See Natural gas gathering line and elec-
tric transmission property, later.
f. Any natural gas distribution line placed in service
after April 11, 2005, and before January 1, 2011.
g. Any telephone distribution plant and comparable
equipment used for 2-way exchange of voice and
data communications.
h. Qualified improvement property (defined later)
placed in service after 2017.
6. 20-year property.
a. Farm buildings (other than single-purpose agricul-
tural or horticultural structures).
b. Municipal sewers not classified as 25-year prop-
erty.
c. Initial clearing and grading land improvements for
electric utility transmission and distribution plants.
7. 25-year property. This class is water utility property,
which is either of the following.
a. 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.
b. Municipal sewers other than property placed in
service under a binding contract in effect at all
times since June 9, 1996.
8. Residential rental property. 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. A dwelling unit is a
house or apartment used to provide living accommo-
dations in a building or structure. 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.
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.
9. Nonresidential real property. This is section 1250
property, such as an office building, store, or ware-
house, that is neither residential rental property nor
property with a class life of less than 27.5 years.
Qualified rent-to-own property. Qualified rent-to-own
property is property held by a rent-to-own dealer for pur-
poses of being subject to a rent-to-own contract. It is tan-
gible personal property generally used in the home for
personal use. It includes computers and peripheral equip-
ment, televisions, videocassette recorders, stereos, cam-
corders, appliances, furniture, washing machines and dry-
ers, refrigerators, and other similar consumer durable
property. Consumer durable property does not include
real property, aircraft, boats, motor vehicles, or trailers.
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
can still treat this property as qualified property as long as
it does not represent a significant portion of your leasing
property. However, if this dual-use property does repre-
sent a significant portion of your leasing property, you
must prove that this property is qualified rent-to-own prop-
erty.
Rent-to-own dealer. You are a rent-to-own dealer if
you meet all the following requirements.
• You regularly enter into rent-to-own contracts (defined
below) in the ordinary course of your business for the
use of consumer property.
• A substantial portion of these contracts ends with the
customer returning the property before making all the
payments required to transfer ownership.
• The property is tangible personal property of a type
generally used within the home for personal use.
Rent-to-own contract. This is any lease for the use of
consumer property between a rent-to-own dealer and a
Publication 946 (2024) Chapter 4 Figuring Depreciation Under MACRS 29
customer who is an individual, which meets all of the fol-
lowing requirements.
• Is titled “Rent-to-Own Agreement,” “Lease Agreement
with Ownership Option,” or other similar language.
• 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).
• Provides for regular periodic (weekly or monthly) pay-
ments that can be either level or decreasing. If the
payments are decreasing, no payment can be less
than 40% of the largest payment.
• Provides for total payments that generally exceed the
normal retail price of the property plus interest.
• Provides for total payments that do not exceed
$10,000 for each item of property.
• 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.
• 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 pay-
ments required under the contract to acquire legal ti-
tle.
• Provides that the customer has no right to sell, sub-
lease, mortgage, pawn, pledge, or otherwise dispose
of the property until all contract payments have been
made.
Motorsports entertainment complex. This is a racing
track facility permanently situated on land that hosts one
or more racing events for automobiles, trucks, or motorcy-
cles during the 36-month period after the first day of the
month in which the facility is placed in service. The events
must be open to the public for the price of admission.
Qualified smart electric grid system. A qualified smart
electric grid system means any smart grid property used
as part of a system for electric distribution grid communi-
cations, 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 serv-
ices. 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 moni-
tor 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 per-
formance.
Retail motor fuels outlet. 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.
• It is not larger than 1,400 square feet.
• 50% or more of the gross revenues generated from
the property are derived from petroleum sales.
• 50% or more of the floor space in the property is devo-
ted to petroleum marketing sales.
A retail motor fuels outlet does not include any facility rela-
ted to petroleum and natural gas trunk pipelines.
Qualified improvement property. Generally, this is any
improvement to an interior part of a building that is nonres-
idential real property, and the improvement is section 1250
property, is made by you, and is placed in service by you
after 2017 and after the date the building was first placed
in service by any person.
However, a qualified improvement does not include any
improvement for which the expenditure is attributable to
any of the following.
• The enlargement of the building.
• Any elevator or escalator.
• The internal structural framework of the building.
Qualified smart electric meter. A qualified smart elec-
tric meter is any time-based meter and related communi-
cation equipment, which is placed in service by a supplier
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 meets all of the following requirements.
• 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 infor-
mation to customers electronically.
• Provides all commercial and residential customers of
such supplier or provider with net metering. Net meter-
ing means allowing a customer a credit, if any, as
complies with applicable federal and state laws and
regulations for providing electricity to the supplier or
provider.
Natural gas gathering line and electric transmission
property. Any natural gas gathering line placed in service
after April 11, 2005, is treated as 7-year property, and
electric transmission property (that is section 1245 prop-
erty) used in the transmission at 69 or more kilovolts of
electricity and any natural gas distribution line placed in
30 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2024)
service after April 11, 2005, are treated as 15-year prop-
erty, if the following requirements are met.
• The original use of the property must have begun with
you after April 11, 2005. Original use means the first
use to which the property is put, whether or not by
you. Therefore, property used by any person before
April 12, 2005, is not original use. Original use in-
cludes additional capital expenditures you incurred to
recondition or rebuild your property. However, original
use does not include the cost of reconditioned or re-
built property you acquired. 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.
• The property must not be placed in service under a
binding contract in effect before April 12, 2005.
• The property must not be self-constructed property
(property you manufacture, construct, or produce for
your own use) if you began the manufacture, construc-
tion, or production of the property before April 12,
2005. Property that is manufactured, constructed, or
produced for your use by another person under a writ-
ten binding contract entered into by you or a related
party before the manufacture, construction, or produc-
tion of the property is considered to be manufactured,
constructed, or produced by you.
What Is the Placed in Service
Date?
Terms you may need to know
(see Glossary):
Placed in service
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. The placed in service date for
your property is the date the property is ready and availa-
ble for a specific use. It is therefore not necessarily the
date it is first used. If you converted property held for per-
sonal use to use in a trade or business or for the produc-
tion of income, treat the property as being placed in serv-
ice on the conversion date. See Placed in Service under
When Does Depreciation Begin and End? in chapter 1 for
examples illustrating when property is placed in service.
What Is the Basis for
Depreciation?
Terms you may need to know
(see Glossary):
Basis
The basis for depreciation of MACRS property is the prop-
erty's cost or other basis multiplied by the percentage of
business/investment use. For a discussion of business/
investment use, see Partial business or investment use
under Property Used in Your Business or Income-Produc-
ing Activity in chapter 1. Reduce that amount by any cred-
its and deductions allocable to the property. The following
are examples of some credits and deductions that reduce
basis.
• Any deduction for section 179 property.
• Any deduction under section 179B of the Internal Rev-
enue Code for capital costs to comply with Environ-
mental Protection Agency sulfur regulations.
• Any deduction under section 179D of the Internal Rev-
enue Code for certain energy efficient commercial
building property.
• Any deduction for removal of barriers to the disabled
and the elderly.
• Any disabled access credit, enhanced oil recovery
credit, and credit for employer-provided childcare fa-
cilities and services.
• Any special depreciation allowance.
• Basis adjustment for investment credit property under
section 50(c) of the Internal Revenue Code.
• Basis adjustment for advanced manufacturing invest-
ment credit property. See section 48D(d)(5) of the In-
ternal Revenue Code.
For additional credits and deductions that affect basis,
see section 1016 of the Internal Revenue Code.
Enter the basis for depreciation under column (c) in
Part III of Form 4562. For information about how to deter-
mine the cost or other basis of property, see What Is the
Basis of Your Depreciable Property? in chapter 1.
Which Recovery Period
Applies?
Terms you may need to know
(see Glossary):
Active conduct of a trade or business
Basis
Publication 946 (2024) Chapter 4 Figuring Depreciation Under MACRS 31
Improvement
Listed property
Nonresidential real property
Placed in service
Property class
Recovery period
Residential rental property
Section 1245 property
The recovery period of property is the number of years
over which you recover its cost or other basis. It is deter-
mined based on the depreciation system (GDS or ADS)
used.
Recovery Periods Under GDS
Under GDS, property is depreciated over one of the fol-
lowing recovery periods.
Property Class Recovery Period
3-year property . . . . . . . . . . . . . . . 3 years1
5-year property . . . . . . . . . . . . . . . 5 years
7-year property . . . . . . . . . . . . . . . 7 years
10-year property . . . . . . . . . . . . . . 10 years
15-year property . . . . . . . . . . . . . . 15 years2
20-year property . . . . . . . . . . . . . . 20 years
25-year property . . . . . . . . . . . . . . 25 years3
Residential rental property . . . . . . 27.5
years
Nonresidential real property . . . . . 39 years4
1 5 years for qualified rent-to-own property placed in service
before August 6, 1997.
2 39 years for property that is a retail motor fuels outlet placed
in service before August 20, 1996 (31.5 years if placed in
service before May 13, 1993), unless you elected to
depreciate it over 15 years.
3 20 years for property placed in service before June 13, 1996,
or under a binding contract in effect before June 10, 1996.
4 31.5 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).
The GDS recovery periods for property not listed above
can be found in Appendix B, Table of Class Lives and Re-
covery Periods. Residential rental property and nonresi-
dential real property are defined earlier under Which Prop-
erty Class Applies Under GDS.
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).
Office in the home. If your home is a personal-use sin-
gle 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 (31.5 years if
you began using it for business before May 13, 1993).
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 Property Class
Applies Under GDS, depreciate the part used as an office
as residential rental property over 27.5 years. See Pub.
587 for a discussion of the tests you must meet to claim
expenses, including depreciation, for the business use of
your home.
Home changed to rental use. If you begin to rent a
home that was your personal home before 1987, you de-
preciate it as residential rental property over 27.5 years.
Recovery Periods Under ADS
The recovery periods for most property are generally lon-
ger under ADS than they are under GDS. The following ta-
ble shows some of the ADS recovery periods.
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
Non-commercial aircraft . . . . . . . . . . . . . . 6 years
Personal property with no class life . . . . . . 12 years
Commercial aircraft . . . . . . . . . . . . . . . . . . 12 years
Natural gas gathering lines . . . . . . . . . . . . 14 years
Single-purpose agricultural and
horticultural structures . . . . . . . . . . . . . . 15 years
Any tree or vine bearing fruits 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
Nonresidential real property . . . . . . . . . . . 40 years
Residential rental property . . . . . . . . . . . . 30 years1
Section 1245 real property not listed in
Appendix B . . . . . . . . . . . . . . . . . . . . . . 40 years
32 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2024)
Railroad grading and tunnel bore . . . . . . . 50 years
1 40 years for property placed in service before January 1,
2018. Note. The ADS recovery period for residential rental
property placed in service before January 1, 2018, is 30 years
if the property is held by an electing real property trade or
business (as defined in section 163(j)(7)(B)) and section
168(g)(1)(A), (B), (C), (D), or (E) did not apply to the property
before January 1, 2018.
The ADS recovery periods for property not listed above
can be found in the tables in Appendix B. Rent-to-own
property, residential rental property, and nonresidential
real property are defined earlier under Which Property
Class Applies Under GDS.
Tax-exempt use property subject to a lease. 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.
Additions and Improvements
An addition or improvement you make to depreciable
property is treated as separate depreciable property. See
How Do You Treat Repairs and Improvements? in chap-
ter 1 for a definition of improvements. Its property class
and recovery period are the same as those that would ap-
ply to the original property if you had placed it in service at
the same time you placed the addition or improvement in
service. The recovery period begins on the later of the fol-
lowing dates.
• The date you place the addition or improvement in
service.
• The date you place in service the property to which
you made the addition or improvement.
Example. You own a rental home that you have been
renting out since 1981. 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 addi-
tion. Under GDS, the property class for the addition is resi-
dential rental property and its recovery period is 27.5
years because the home to which the addition is made
would be residential rental property if you had placed it in
service this year.
Which Convention Applies?
Terms you may need to know
(see Glossary):
Basis
Convention
Disposition
Nonresidential real property
Placed in service
Recovery period
Residential rental property
Under MACRS, averaging conventions establish when the
recovery period begins and ends. The convention you use
determines the number of months for which you can claim
depreciation in the year you place property in service and
in the year you dispose of the property.
The mid-month convention. Use this convention for
nonresidential real property, residential rental property,
and any railroad grading or tunnel bore.
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. This means
that a one-half month of depreciation is allowed for the
month the property is placed in service or disposed of.
Your use of the mid-month convention is indicated by
the “MM” already shown under column (e) in Part III of
Form 4562.
The mid-quarter convention. Use this convention if the
mid-month convention does not apply and the total depre-
ciable bases of MACRS property you placed in service
during the last 3 months of the tax year (excluding nonres-
idential real property, residential rental property, any rail-
road grading or tunnel bore, property placed in service
and disposed of in the same year, and property that is be-
ing 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.
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. This means that, for a 12-month tax year, 11/2
months of depreciation is allowed for the quarter the prop-
erty is placed in service or disposed of.
If you use this convention, enter “MQ” under column (e)
in Part III of Form 4562.
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 ex-
pensed under section 179 and the part of the basis of
property attributable to personal use. However, it does not
reflect any reduction in basis for any special depreciation
allowance.
The half-year convention. Use this convention if neither
the mid-quarter convention nor the mid-month convention
applies.
Under this convention, you treat all property placed in
service or disposed of during a tax year as placed in serv-
ice or disposed of at the midpoint of the year. This means
that for a 12-month tax year, a one-half year of deprecia-
tion is allowed for the year the property is placed in serv-
ice or disposed of.CAUTION
!
Publication 946 (2024) Chapter 4 Figuring Depreciation Under MACRS 33
If you use this convention, enter “HY” under column (e)
in Part III of Form 4562.
See Figuring the Deduction for a Short Tax Year, later,
for information on the short tax year rules.
Which Depreciation Method
Applies?
Terms you may need to know
(see Glossary):
Declining balance method
Listed property
Nonresidential real property
Placed in service
Property class
Recovery period
Residential rental property
Straight line method
Tax exempt
MACRS provides three depreciation methods under GDS
and one depreciation method under ADS.
• The 200% declining balance method over a GDS re-
covery period.
• The 150% declining balance method over a GDS re-
covery period.
• The straight line method over a GDS recovery period.
• The straight line method over an ADS recovery period.
For property placed in service before 1999, you
could have elected the 150% declining balance
method using the ADS recovery periods for cer-
tain property classes. If you made this election, continue
to use the same method and recovery period for that prop-
erty.
Table 4-1 lists the types of property you can depreciate
under each method. It also gives a brief explanation of the
method, including any benefits that may apply.
Depreciation Methods for Farm
Property
If you place personal property in service in a farming busi-
ness after 1988, and before 2018, you must generally de-
preciate 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. You can depreciate real property
using the straight line method under either GDS or ADS.CAUTION
!
Note. For 3-, 5-, 7-, or 10-year property used in a farm-
ing business and placed in service after 2017, in tax years
ending after 2017, the 150% declining balance method is
no longer required. However, the 150% declining balance
method will continue to apply to any 15- or 20-year prop-
erty used in a farming business to which the straight line
method does not apply or to property for which you elect
the use of the 150% declining balance method.
Fruit or nut trees and vines. Depreciate trees and vines
bearing fruits or nuts under GDS using the straight line
method over a recovery period of 10 years.
ADS required for some farmers. If you elect not to ap-
ply the uniform capitalization rules to any plant produced
in your farming business, you must use ADS. You must
use ADS for all property you place in service in any year
the election is in effect. See the regulations under section
263A of the Internal Revenue Code for information on the
uniform capitalization rules that apply to farm property.
Electing a Different Method
As shown in Table 4-1, you can elect a different method
for depreciation for certain types of property. You must
make the election by the due date of the return (including
extensions) for the year you placed the property in serv-
ice. However, if you timely filed your return for the year
without making the election, you can still make the elec-
tion by filing an amended return within 6 months of the due
date of the return (excluding extensions). Attach the elec-
tion to the amended return and write “Filed pursuant to
section 301.9100-2” on the election statement. File the
amended return at the same address you filed the original
return. Once you make the election, you cannot change it.
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 serv-
ice during the year of the election. However, you can make
the election on a property-by-property basis for nonresi-
dential real and residential rental property.
150% election. Instead of using the 200% declining bal-
ance method over the GDS recovery period for property in
the 3-, 5-, 7-, or 10-year property class, you can elect to
use the 150% declining balance method. Make the elec-
tion by entering “150 DB” under column (f) in Part III of
Form 4562.
Straight line election. Instead of using either the 200%
or 150% declining balance method over the GDS recovery
period, you can elect to use the straight line method over
the GDS recovery period. Make the election by entering
“S/L” under column (f) in Part III of Form 4562.
Election of ADS. As explained earlier under Which De-
preciation System (GDS or ADS) Applies, you can elect to
use ADS even though your property may come under
GDS. ADS uses the straight line method of depreciationCAUTION
!
34 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2024)
over fixed ADS recovery periods. Most ADS recovery peri-
ods are listed in Appendix B, or see the table under Re-
covery Periods Under ADS, earlier.
Make the election by completing line 20 in Part III of
Form 4562.
15- or 20-year farm property. Instead of using the 150%
declining balance method over a GDS recovery period for
15- or 20-year property you use in a farming business
(other than real property), you can elect to depreciate it
using either of the following methods.
• The straight line method over a GDS recovery period.
• The straight line method over an ADS recovery period.
Table 4-1. Depreciation Methods
Note. The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL.
Method Type of Property Benefit
GDS using 200%
DB
• Nonfarm 3-, 5-, 7-, and 10-year property
• Farm 3-, 5-, 7-, and 10-year property placed in
service after 2017, in tax years ending after 2017
• 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
• Farm 3-, 5-, 7-, or 10-year property placed in
service before 2018
• All 15- and 20-year property
• Nonfarm 3-, 5-, 7-, or 10-year property2
• Farm 3-, 5-, 7-, or 10-year property placed in
service after 20172
• 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
• Residential rental property
• Trees or vines bearing fruits or nuts
• Water utility property
• All 3-, 5-, 7-, 10-, 15-, and 20-year property2
• Property for which you elected section 168(k)
(4) of the Internal Revenue Code for a tax year
beginning before January 1, 2018
• Qualified improvement property (as defined in
section 168(e)(6) of the Internal Revenue Code)
placed in service after 2017
• 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
United States
• Tax-exempt property
• Tax-exempt bond-financed property
• Farm property used when an election not to
apply the uniform capitalization rules is in effect
• Imported property3
• Any property for which you elect to use this
method4
• Any nonresidential real property, residential
rental property, or qualfied improvement property
held by an electing real property trade or
business (as defined in section 163(j)(7)(B) of
the Internal Revenue Code)
• Any property that has a recovery period of 10
years or more under GDS that is held by an
electing farming business (as defined in section
163(j)(7)(C) of the Internal Revenue Code)
• Provides for equal yearly deductions
(except for the first and last years)
1 The MACRS percentage tables in Appendix A have the switch to the straight line method built into their rates.
2 See section 168(b)(5) of the Internal Revenue Code.
3 See section 168(g)(6) of the Internal Revenue Code.
4 See section 168(g)(7) of the Internal Revenue Code.
Publication 946 (2024) Chapter 4 Figuring Depreciation Under MACRS 35
How Is the Depreciation
Deduction Figured?
Terms you may need to know
(see Glossary):
Adjusted basis
Amortization
Basis
Business/investment use
Convention
Declining balance method
Disposition
Exchange
Nonresidential real property
Placed in service
Property class
Recovery period
Straight line method
Unadjusted basis
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 apply to your
property. Then, you are ready to figure your depreciation
deduction. You can figure it using a percentage table pro-
vided by the IRS, or you can figure it yourself without using
the table.
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. These
percentage tables are in Appendix A near the end of this
publication.
Which table to use. Appendix A contains the MACRS
Percentage Table Guide, which is designed to help you lo-
cate the correct percentage table to use for depreciating
your property. The percentage tables immediately follow
the guide.
Rules Covering the Use of the Tables
The following rules cover the use of the percentage tables.
1. You must apply the rates in the percentage tables to
your property's unadjusted basis.
2. You cannot use the percentage tables for a short tax
year. See Figuring the Deduction for a Short Tax Year,
later, for information on the short tax year rules.
3. Once you start using the percentage tables for any
item of property, you must generally continue to use
them for the entire recovery period of the property.
4. You must stop using the tables if you adjust the basis
of the property for any reason other than:
a. Depreciation allowed or allowable, or
b. An addition or improvement to that property that is
depreciated as a separate item of property.
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.
Basis adjustment due to recapture of clean-fuel vehi-
cle deduction or credit. If you increase the basis of your
property because of the recapture of part or all of a deduc-
tion for clean-fuel vehicles or the credit for clean-fuel vehi-
cle refueling property placed in service before January 1,
2006, you cannot continue to use the percentage tables.
For the year of the adjustment and the remaining recovery
period, you must figure the depreciation deduction your-
self using the property's adjusted basis at the end of the
year. See Figuring the Deduction Without Using the Ta-
bles, later.
Basis adjustment due to casualty loss. If you reduce
the basis of your property because of a casualty, you can-
not continue to use the percentage tables. 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. See Figuring the De-
duction Without Using the Tables, later.
Example. On October 26, 2023, Sandra and Frank
Elm, calendar year taxpayers, bought and placed in serv-
ice in their business a new item of 7-year property. It cost
$39,000 and they elected a section 179 deduction of
$24,000. They also made an election under section 168(k)
(7) not to deduct the special depreciation allowance for
7-year property placed in service in 2023. Their unadjus-
ted basis after the section 179 deduction was $15,000
($39,000 – $24,000). They figured their MACRS deprecia-
tion deduction using the percentage tables. For 2023, their
MACRS depreciation deduction was $536.
In July 2024, the property was vandalized and they had
a deductible casualty loss of $3,000. Sandra and Frank
must adjust the property's basis for the casualty loss, so
they can no longer use the percentage tables. Their adjus-
ted basis at the end of 2024, before figuring their 2024 de-
preciation, is $11,464. They figure that amount by sub-
tracting the 2023 MACRS depreciation of $536 and the
casualty loss of $3,000 from the unadjusted basis of
$15,000. They must now figure their depreciation for 2024
without using the percentage tables.
36 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2024)
Figuring the Unadjusted Basis of Your
Property
You must apply the table rates to your property's unadjus-
ted basis each year of the recovery period. Unadjusted
basis is the same basis amount you would use to figure
gain on a sale, but you figure it without reducing your origi-
nal basis by any MACRS depreciation taken in earlier
years. However, you do reduce your original basis by other
amounts, including the following.
• Any amortization taken on the property.
• Any section 179 deduction claimed.
• Any special depreciation allowance taken on the prop-
erty.
For business property you purchase during the year,
the unadjusted basis is its cost minus these and other ap-
plicable adjustments. If you trade property, your unadjus-
ted basis in the property received is the cash paid plus the
adjusted basis of the property traded minus these adjust-
ments.
MACRS Worksheet
You can use this worksheet to help you figure your depre-
ciation deduction using the percentage tables. Use a sep-
arate worksheet for each item of property. Then, use the
information from this worksheet to prepare Form 4562.
Do not use this worksheet for automobiles. Use
the Depreciation Worksheet for Passenger Auto-
mobiles in chapter 5.
MACRS Worksheet
Keep for Your Records
Part I
1. MACRS system (GDS or
ADS) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Property class . . . . . . . . . . . . . . . . . . .
3. Date placed in service . . . . . . . . . . . .
4. Recovery period . . . . . . . . . . . . . . . . .
5. Method and convention . . . . . . . . . . .
6. Depreciation rate (from
tables) . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II
7. Cost or other basis* . . . . . . . . . . . . . . $
8. Business/investment use . . . . . . . . . %
9. Multiply line 7 by line 8 . . . . . . . . . . . . . . . . $
10. Total claimed for section 179 deduction
and other items . . . . . . . . . . . . . . . . . . . . . . $
11. Subtract line 10 from line 9. This is your
tentative basis for depreciation . . . . . . . . $CAUTION
!
12. Multiply line 11 by the applicable
percentage if the special depreciation
allowance applies. This is your special
depreciation allowance. Enter -0- if this is
not the year you placed the property in
service, the property is not qualified
property, or you elected not to claim a
special allowance . . . . . . . . . . . . . . . . . . . . $
13. Subtract line 12 from line 11. This is your
basis for depreciation . . . . . . . . . . . . . . . . .
14. Depreciation rate (from line 6) . . . . . . . . .
15. Multiply line 13 by line 14. This is your
MACRS depreciation deduction . . . . . . . $
* If real estate, do not include cost (basis) of land.
The following example shows how to figure your
MACRS depreciation deduction using the percentage ta-
bles and the MACRS Worksheet.
Example. You bought office furniture (7-year property)
for $10,000 and placed it in service on August 11, 2024.
You use the furniture only for business. This is the only
property you placed in service this year. 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. You use GDS and the half-year convention to fig-
ure your depreciation. You refer to the MACRS Percentage
Table Guide in Appendix A and find that you should use
Table A-1. Multiply your property's unadjusted basis each
year by the percentage for 7-year property given in Table
A-1. You figure your depreciation deduction using the
MACRS Worksheet as follows.
MACRS Worksheet
Keep for Your Records
Part I
1. MACRS system (GDS or
ADS) . . . . . . . . . . . . . . . . . . . . . . GDS
2. Property class . . . . . . . . . . . . . 7-year
3. Date placed in service . . . . . . 8/11/24
4. Recovery period . . . . . . . . . . . 7-year
5. Method and
convention . . . . . . . . . . . . . . . . 200%DB/Half-Year
6. Depreciation rate (from
tables) . . . . . . . . . . . . . . . . . . . . 0.1429
Part II
7. Cost or other basis* . . . . . . . . $10,000
8. Business/investment
use . . . . . . . . . . . . . . . . . . . . . . . 100 %
9. Multiply line 7 by line 8 . . . . . . . . . . . . . . $10,000
10. Total claimed for section 179
deduction and other items . . . . . . . . . . -0-
Publication 946 (2024) Chapter 4 Figuring Depreciation Under MACRS 37
11. Subtract line 10 from line 9. This is
your tentative basis for
depreciation . . . . . . . . . . . . . . . . . . . . . . . $10,000
12. Multiply line 11 by the applicable
percentage if the special depreciation
allowance applies. This is your special
depreciation allowance. Enter -0- if
this is not the year you placed the
property in service, the property is not
qualified property, or you elected not
to claim a special allowance . . . . . . . . . -0-
13. Subtract line 12 from line 11. This is
your basis for depreciation . . . . . . . . . . $10,000
14. Depreciation rate (from line 6) . . . . . . . 0.1429
15. Multiply line 13 by line 14. This is your
MACRS depreciation deduction . . . . . $1,429
* If real estate, do not include cost (basis) of land.
If there are no adjustments to the basis of the property
other than depreciation, your depreciation deduction for
each subsequent year of the recovery period will be as fol-
lows.
Year Basis Percentage Deduction
2024 . . . . . . . . . . $10,000 24.49% $2,449
2025 . . . . . . . . . . 10,000 17.49 1,749
2026 . . . . . . . . . . 10,000 12.49 1,249
2027 . . . . . . . . . . 10,000 8.93 893
2028 . . . . . . . . . . 10,000 8.92 892
2029 . . . . . . . . . . 10,000 8.93 893
2030 . . . . . . . . . . 10,000 4.46 446
Examples
The following examples are provided to show you how to
use the percentage tables. In both examples, assume the
following.
• You use the property only for business.
• You use the calendar year as your tax year.
• You use GDS for all the properties.
Example 1. You bought a building and land for
$120,000 and placed it in service on March 8. The sales
contract showed that the building cost $100,000 and the
land cost $20,000. It is nonresidential real property. The
building's unadjusted basis is its original cost, $100,000.
You refer to the MACRS Percentage Table Guide in Ap-
pendix A and find that you should use Table A-7a. March
is the third month of your tax year, so multiply the buil-
ding's unadjusted basis, $100,000, by the percentages for
the third month in Table A-7a. Your depreciation deduction
for each of the first 3 years is as follows.
Year Basis Percentage Deduction
1st . . . . . . . . . . . . $ 100,000 2.033% $2,033
2nd . . . . . . . . . . . 100,000 2.564 2,564
3rd . . . . . . . . . . . 100,000 2.564 2,564
Example 2. During the year, you bought a machine
(7-year property) for $4,000, office furniture (7-year prop-
erty) for $1,000, and a computer (5-year property) for
$5,000. You placed the machine in service in January, the
furniture in September, and the computer in October. You
do not elect a section 179 deduction and none of these
items are qualified property for purposes of claiming a
special depreciation allowance.
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. The total bases of all property
you placed in service during the year are $10,000. 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. There-
fore, you must use the mid-quarter convention for all three
items.
You refer to the MACRS Percentage Table Guide in Ap-
pendix A to determine which table you should use under
the mid-quarter convention. The machine is 7-year prop-
erty placed in service in the first quarter, so you use Table
A-2. The furniture is 7-year property placed in service in
the third quarter, so you use Table A-4. Finally, because
the computer is 5-year property placed in service in the
fourth quarter, you use Table A-5. Knowing what table to
use for each property, you figure the depreciation for the
first 2 years as follows.
Year Property Basis Percentage Deduction
1st Machine $4,000 25.00 $1,000
2nd Machine 4,000 21.43 857
1st Furniture 1,000 10.71 107
2nd Furniture 1,000 25.51 255
1st Computer 5,000 5.00 250
2nd Computer 5,000 38.00 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 deprecia-
tion amount for the full year. 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. After you figure the full-year
depreciation amount, figure the deductible part using the
convention that applies to the property.
Half-year convention used. For property for which you
used a half-year convention, the depreciation deduction
for the year of the disposition is half the depreciation de-
termined for the full year.
38 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2024)
Mid-quarter convention used. For property for which
you used the mid-quarter convention, figure your depreci-
ation deduction for the year of the disposition by multiply-
ing a full year of depreciation by the percentage listed be-
low for the quarter in which you disposed of the property.
Quarter Percentage
First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5%
Second . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.5
Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.5
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.5
Example. On December 2, 2021, you placed in serv-
ice an item of 5-year property costing $10,000. You did not
claim a section 179 deduction and the property does not
qualify for a special depreciation allowance. Your unadjus-
ted basis for the property was $10,000. You used the
mid-quarter convention because this was the only item of
business property you placed in service in 2021 and it was
placed in service during the last 3 months of your tax year.
Your property is in the 5-year property class, so you used
Table A-5 to figure your depreciation deduction. Your de-
ductions for 2021, 2022, and 2023 were $500 (5% of
$10,000), $3,800 (38% of $10,000), and $2,280 (22.80%
of $10,000), respectively. You disposed of the property on
April 6, 2024. To determine your depreciation deduction
for 2024, first figure the deduction for the full year. This is
$1,368 (13.68% of $10,000). April is in the second quarter
of the year, so you multiply $1,368 by 37.5% (0.375) to get
your depreciation deduction of $513 for 2024.
Mid-month convention used. If you dispose of residen-
tial rental or nonresidential real property, figure your de-
preciation deduction for the year of the disposition by mul-
tiplying a full year of depreciation by a fraction. The
numerator of the fraction is the number of months (includ-
ing partial months) in the year that the property is consid-
ered in service. The denominator is 12.
Example. On July 2, 2022, you purchased and placed
in service residential rental property. The property cost
$100,000, not including the cost of land. You used Table
A-6 to figure your MACRS depreciation for this property.
You sold the property on March 2, 2024. You file your tax
return based on the calendar year.
A full year of depreciation for 2024 is $3,636. This is
$100,000 multiplied by 0.03636 (the percentage for the
seventh month of the third recovery year) from Table A-6.
You then apply the mid-month convention for the 21/2
months of use in 2024. Treat the month of disposition as
one-half month of use. Multiply $3,636 by the fraction, 2.5
over 12, to get your 2024 depreciation deduction of
$757.50.
Figuring the Deduction Without Using
the Tables
Instead of using the rates in the percentage tables to fig-
ure your depreciation deduction, you can figure it yourself.
Before making the computation each year, you must
reduce your adjusted basis in the property by the depreci-
ation claimed the previous year(s).
Figuring MACRS deductions without using the ta-
bles will generally result in a slightly different
amount than using the tables.
Declining Balance Method
When using a declining balance method, you apply the
same depreciation rate each year to the adjusted basis of
your property. You must use the applicable convention for
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. The straight line method is ex-
plained later.
You figure depreciation for the year you place property
in service as follows.
1. Multiply your adjusted basis in the property by the de-
clining balance rate.
2. Apply the applicable convention.
You figure depreciation for all other years (before the
year you switch to the straight line method) as follows.
1. Reduce your adjusted basis in the property by the de-
preciation allowed or allowable in earlier years.
2. Multiply this new adjusted basis by the same declin-
ing balance rate used in earlier years.
If you dispose of property before the end of its recovery
period, see Using the Applicable Convention, later, for in-
formation on how to figure depreciation for the year you
dispose of it.
Figuring depreciation under the declining balance
method and switching to the straight line method is illus-
trated in Example 1, later, under Examples.
Declining balance rate. You figure your declining bal-
ance rate by dividing the specified declining balance per-
centage (150% or 200% changed to a decimal) by the
number of years in the property's recovery period. For ex-
ample, for 3-year property depreciated using the 200%
declining balance method, divide 2.00 (200%) by 3 to get
0.6667, or a 66.67% declining balance rate. For 15-year
property depreciated using the 150% declining balance
method, divide 1.50 (150%) by 15 to get 0.10, or a 10%
declining balance rate.
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.
Property
Class Method
Declining Balance
Rate Year
3-year 200% DB 66.667% 3rd
5-year 200% DB 40.0 4th
7-year 200% DB 28.571 5th
10-year 200% DB 20.0 7thCAUTION
!
Publication 946 (2024) Chapter 4 Figuring Depreciation Under MACRS 39
Property
Class Method
Declining Balance
Rate Year
15-year 150% DB 10.0 7th
20-year 150% DB 7.5 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. You must use the applicable convention in the
year you place the property in service and the year you
dispose of the property.
You figure depreciation for the year you place property
in service as follows.
1. Multiply your adjusted basis in the property by the
straight line rate.
2. Apply the applicable convention.
You figure depreciation for all other years (including the
year you switch from the declining balance method to the
straight line method) as follows.
1. Reduce your adjusted basis in the property by the de-
preciation allowed or allowable in earlier years (under
any method).
2. Determine the depreciation rate for the year.
3. Multiply the adjusted basis figured in (1) by the depre-
ciation rate figured in (2).
If you dispose of property before the end of its recovery
period, see Using the Applicable Convention, later, for in-
formation on how to figure depreciation for the year you
dispose of it.
Straight line rate. You determine the straight line depre-
ciation rate for any tax year by dividing the number 1 by
the years remaining in the recovery period at the begin-
ning of that year. When figuring the number of years re-
maining, you must take into account the convention used
in the year you placed the property in service. If the num-
ber of years remaining is less than 1, the depreciation rate
for that tax year is 1.0 (100%).
Using the Applicable Convention
The applicable convention (discussed earlier under Which
Convention Applies) affects how you figure your deprecia-
tion deduction for the year you place your property in serv-
ice and for the year you dispose of it. It determines how
much of the recovery period remains at the beginning of
each year, so it also affects the depreciation rate for prop-
erty you depreciate under the straight line method. See
Straight line rate in the previous discussion. Use the appli-
cable convention, as explained in the following discus-
sions.
Half-year convention. If this convention applies, you de-
duct a half-year of depreciation for the first year and the
last year that you depreciate the property. You deduct a
full year of depreciation for any other year during the re-
covery period.
Figure your depreciation deduction for the year you
place the property in service by dividing the depreciation
for a full year by 2. If you dispose of the property before
the end of the recovery period, figure your depreciation
deduction for the year of the disposition the same way. 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 un-
recovered basis in the property.
Mid-quarter convention. If this convention applies, the
depreciation you can deduct for the first year you depreci-
ate the property depends on the quarter in which you
place the property in service.
A quarter of a full 12-month tax year is a period of 3
months. The first quarter in a year begins on the first day
of the tax year. The second quarter begins on the first day
of the fourth month of the tax year. The third quarter be-
gins on the first day of the seventh month of the tax year.
The fourth quarter begins on the first day of the tenth
month of the tax year. A calendar year is divided into the
following quarters.
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 deprecia-
tion for a full year by the percentage listed below for the
quarter you place the property in service.
Quarter Percentage
First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.5%
Second . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.5
Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.5
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5
If you dispose of the property before the end of the re-
covery period, figure your depreciation deduction for the
year of the disposition by multiplying a full year of depreci-
ation by the percentage listed below for the quarter you
dispose of the property.
Quarter Percentage
First . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.5%
Second . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37.5
Third . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62.5
Fourth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87.5
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.
40 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2024)
Mid-month convention. If this convention applies, the
depreciation you can deduct for the first year that you de-
preciate the property depends on the month in which you
place the property in service. Figure your depreciation de-
duction for the year you place the property in service by
multiplying the depreciation for a full year by a fraction.
The numerator of the fraction is the number of full months
in the year that the property is in service plus 1/2 (or 0.5).
The denominator is 12.
If you dispose of the property before the end of the re-
covery period, figure your depreciation deduction for the
year of the disposition the same way. If you hold the prop-
erty for the entire recovery period, your depreciation de-
duction for the year that includes the final month of the re-
covery period is the amount of your unrecovered basis in
the property.
Example. You use the calendar year and place non-
residential real property in service in August. The property
is in service 4 full months (September, October, Novem-
ber, and December). Your numerator is 4.5 (4 full months
plus 0.5). You multiply the depreciation for a full year by
4.5/12, or 0.375.
Examples
The following examples show how to figure depreciation
under MACRS without using the percentage tables. Fig-
ures are rounded for purposes of the examples. Assume
for all the examples that you use a calendar year as your
tax year.
Example 1—200% DB method and half-year con-
vention. In February, you placed in service depreciable
property with a 5-year recovery period and a basis of
$1,000. You do not elect to take the section 179 deduction
and the property does not qualify for a special deprecia-
tion allowance. You use GDS and the 200% DB method to
figure your depreciation. When the SL method results in
an equal or larger deduction, you switch to the SL method.
You did not place any property in service in the last 3
months of the year, so you must use the half-year conven-
tion.
First year. You figure the depreciation rate under the
200% DB method by dividing 2 (200%) by 5 (the number
of years in the recovery period). The result is 40%. You
multiply the adjusted basis of the property ($1,000) by the
40% DB rate. You apply the half-year convention by divid-
ing the result ($400) by 2. Depreciation for the first year
under the 200% DB method is $200.
You figure the depreciation rate under the SL method
by dividing 1 by 5, the number of years in the recovery pe-
riod. The result is 20%.You multiply the adjusted basis of
the property ($1,000) by the 20% SL rate. You apply the
half-year convention by dividing the result ($200) by 2. De-
preciation for the first year under the SL method is $100.
The DB method provides a larger deduction, so you de-
duct the $200 figured under the 200% DB method.
Second year. You reduce the adjusted basis ($1,000)
by the depreciation claimed in the first year ($200). You
multiply the result ($800) by the DB rate (40%). Deprecia-
tion for the second year under the 200% DB method is
$320.
You figure the SL depreciation rate by dividing 1 by 4.5,
the number of years remaining in the recovery period.
(Based on the half-year convention, you used only half a
year of the recovery period in the first year.) You multiply
the reduced adjusted basis ($800) by the result (22.22%).
Depreciation under the SL method for the second year is
$178.
The DB method provides a larger deduction, so you de-
duct the $320 figured under the 200% DB method.
Third year. You reduce the adjusted basis ($800) by
the depreciation claimed in the second year ($320). You
multiply the result ($480) by the DB rate (40%). Deprecia-
tion for the third year under the 200% DB method is $192.
You figure the SL depreciation rate by dividing 1 by 3.5.
You multiply the reduced adjusted basis ($480) by the re-
sult (28.57%). Depreciation under the SL method for the
third year is $137.
The DB method provides a larger deduction, so you de-
duct the $192 figured under the 200% DB method.
Fourth year. You reduce the adjusted basis ($480) by
the depreciation claimed in the third year ($192). You mul-
tiply the result ($288) by the DB rate (40%). Depreciation
for the fourth year under the 200% DB method is $115.
You figure the SL depreciation rate by dividing 1 by 2.5.
You multiply the reduced adjusted basis ($288) by the re-
sult (40%). Depreciation under the SL method for the
fourth year is $115.
The SL method provides an equal deduction, so you
switch to the SL method and deduct the $115.
Fifth year. You reduce the adjusted basis ($288) by the
depreciation claimed in the fourth year ($115) to get the
reduced adjusted basis of $173. You figure the SL depre-
ciation rate by dividing 1 by 1.5. You multiply the reduced
adjusted basis ($173) by the result (66.67%). Depreciation
under the SL method for the fifth year is $115.
Sixth year. You reduce the adjusted basis ($173) by
the depreciation claimed in the fifth year ($115) to get the
reduced adjusted basis of $58. There is less than 1 year
remaining in the recovery period, so the SL depreciation
rate for the sixth year is 100%. You multiply the reduced
adjusted basis ($58) by 100% to arrive at the depreciation
deduction for the sixth year ($58).
Example 2—SL method and mid-month conven-
tion. In January, you bought and placed in service a
building for $100,000 that is nonresidential real property
with a recovery period of 39 years. The adjusted basis of
the building is its cost of $100,000. You use GDS, the SL
method, and the mid-month convention to figure your de-
preciation.
First year. You figure the SL depreciation rate for the
building by dividing 1 by 39 years. The result is 0.02564.
The depreciation for a full year is $2,564 ($100,000 ×
0.02564). Under the mid-month convention, you treat the
property as placed in service in the middle of January. You
get 11.5 months of depreciation for the year. Expressed
as a decimal, the fraction of 11.5 months divided by 12
Publication 946 (2024) Chapter 4 Figuring Depreciation Under MACRS 41
months is 0.958. Your first-year depreciation for the build-
ing is $2,456 ($2,564 × 0.958).
Second year. You subtract $2,456 from $100,000 to
get your adjusted basis of $97,544 for the second year.
The SL rate is 0.02629. This is 1 divided by the remaining
recovery period of 38.042 years (39 years reduced by
11.5 months or 0.958). Your depreciation for the building
for the second year is $2,564 ($97,544 × 0.02629).
Third year. The adjusted basis is $94,980 ($97,544 −
$2,564). The SL rate is 0.027 (1 divided by 37.042 re-
maining years). Your depreciation for the third year is
$2,564 ($94,980 × 0.027).
Example 3—200% DB method and mid-quarter
convention. During the year, you bought and placed in
service in your business the following items.
Item
Month Placed
in Service Cost
Safe January $4,000
Office furniture September 1,000
Computer October 5,000
You do not elect a section 179 deduction and these items
do not qualify for a special depreciation allowance. You
use GDS and the 200% DB method to figure the deprecia-
tion. The total bases of all property you placed in service
this year are $10,000. The basis of the computer ($5,000)
is more than 40% of the total bases of all property placed
in service during the year ($10,000), so you must use the
mid-quarter convention. This convention applies to all
three items of property. The safe and office furniture are
7-year property and the computer is 5-year property.
First- and second-year depreciation for safe. The
200% DB rate for 7-year property is 0.28571. You deter-
mine this by dividing 2.00 (200%) by 7 years. The depreci-
ation for the safe for a full year is $1,143 ($4,000 ×
0.28571). You placed the safe in service in the first quarter
of your tax year, so you multiply $1,143 by 87.5% (the
mid-quarter percentage for the first quarter). The result,
$1,000, is your deduction for depreciation on the safe for
the first year.
For the second year, the adjusted basis of the safe is
$3,000. You figure this by subtracting the first year's de-
preciation ($1,000) from the basis of the safe ($4,000).
Your depreciation deduction for the second year is $857
($3,000 × 0.28571).
First- and second-year depreciation for furniture.
The furniture is also 7-year property, so you use the same
200% DB rate of 0.28571. You multiply the basis of the fur-
niture ($1,000) by 0.28571 to get the depreciation of $286
for the full year. You placed the furniture in service in the
third quarter of your tax year, so you multiply $286 by
37.5% (the mid-quarter percentage for the third quarter).
The result, $107, is your deduction for depreciation on the
furniture for the first year.
For the second year, the adjusted basis of the furniture
is $893. You figure this by subtracting the first year's de-
preciation ($107) from the basis of the furniture ($1,000).
Your depreciation for the second year is $255 ($893 ×
0.28571).
First- and second-year depreciation for computer.
The 200% DB rate for 5-year property is 0.40. You deter-
mine this by dividing 2.00 (200%) by 5 years. The depreci-
ation for the computer for a full year is $2,000 ($5,000 ×
0.40). You placed the computer in service in the fourth
quarter of your tax year, so you multiply the $2,000 by
12.5% (the mid-quarter percentage for the fourth quarter).
The result, $250, is your deduction for depreciation on the
computer for the first year.
For the second year, the adjusted basis of the com-
puter is $4,750. You figure this by subtracting the first
year's depreciation ($250) from the basis of the computer
($5,000). Your depreciation deduction for the second year
is $1,900 ($4,750 × 0.40).
Example 4—200% DB method and half-year con-
vention. Last year, in July, you bought and placed in
service in your business a new item of 7-year property.
This was the only item of property you placed in service
last year. The property cost $39,000 and you elected a
$24,000 section 179 deduction. You also made an elec-
tion under section 168(k)(7) not to deduct the special de-
preciation allowance for 7-year property placed in service
last year. Your unadjusted basis for the property is
$15,000. Because you did not place any property in serv-
ice in the last 3 months of your tax year, you used the
half-year convention. You figured your deduction using the
percentages in Table A-1 for 7-year property. Last year,
your depreciation was $2,144 ($15,000 × 14.29%
(0.1429)).
In July of this year, your property was vandalized. You
had a deductible casualty loss of $3,000. You spent
$3,500 to put the property back in operational order. Your
adjusted basis at the end of this year is $13,356. You fig-
ured this by first subtracting the first year's depreciation
($2,144) and the casualty loss ($3,000) from the unadjus-
ted basis of $15,000. To this amount ($9,856), you then
added the $3,500 repair cost.
You cannot use the table percentages to figure your de-
preciation for this property for this year because of the ad-
justments to basis. You must figure the deduction yourself.
You determine the DB rate by dividing 2.00 (200%) by 7
years. The result is 0.28571 or 28.571%. You multiply the
adjusted basis of your property ($13,356) by the DB rate
of 0.28571 to get your depreciation deduction of $3,816
for this year.
Figuring the Deduction for Property
Acquired in a Nontaxable Exchange
If your property has a carryover basis because you ac-
quired it in a nontaxable transfer such as a like-kind ex-
change or involuntary conversion, you must generally fig-
ure depreciation for the property as if the transfer had not
occurred. However, see Like-kind exchanges and involun-
tary conversions, earlier, in chapter 3 under How Much
Can You Deduct; and Property Acquired in a Like-Kind Ex-
change or Involuntary Conversion next.
42 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2024)
Property Acquired in a Like-Kind Exchange
or Involuntary Conversion
You must generally depreciate the carryover basis of prop-
erty acquired in a like-kind exchange or involuntary con-
version over the remaining recovery period of the property
exchanged or involuntarily converted. You also generally
continue to use the same depreciation method and con-
vention used for the exchanged or involuntarily converted
property. This applies only to acquired property with the
same or a shorter recovery period and the same or more
accelerated depreciation method than the property ex-
changed or involuntarily converted. The excess basis (the
part of the acquired property's basis that exceeds its car-
ryover basis), if any, of the acquired property is treated as
newly placed in service property.
For acquired property that has a longer recovery period
or a less accelerated depreciation method than the ex-
changed or involuntarily converted property, you must
generally depreciate the carryover basis of the acquired
property as if it were placed in service in the same tax
year as the exchanged or involuntarily converted property.
You also generally continue to use the longer recovery pe-
riod and less accelerated depreciation method of the ac-
quired property.
If the MACRS property you acquired in the exchange or
involuntary conversion is a new qualified property, dis-
cussed earlier in chapter 3 under What Is Qualified Prop-
erty, you can claim a special depreciation allowance on
the carryover basis. Special rules apply to vehicles ac-
quired in a trade-in before 2018. For information on how to
figure depreciation for a vehicle acquired in a trade-in that
is subject to the passenger automobile limits, see Deduc-
tions for Passenger Automobiles Acquired in a Trade-In
under Do the Passenger Automobile Limits Apply? in
chapter 5.
Like-kind exchanges completed after December
31, 2017, are generally limited to exchanges of
real property not held primarily for sale.
Election out. Instead of using the above rules, you
can elect, for depreciation purposes, to treat the adjusted
basis of the exchanged or involuntarily converted property
as if disposed of at the time of the exchange or involuntary
conversion. Treat the carryover basis and excess basis, if
any, for the acquired property as if placed in service the
later of the date you acquired it or the time of the disposi-
tion of the exchanged or involuntarily converted property.
The depreciable basis of the property acquired is the car-
ryover basis of the property exchanged or involuntarily
converted plus any excess basis. The election, if made,
applies to both the acquired property and the exchanged
or involuntarily converted property. This election does not
affect the amount of gain or loss recognized on the ex-
change or involuntary conversion or the amount of the
special depreciation allowance.
When to make the election. You must make the elec-
tion on a timely filed return (including extensions) for the
year of replacement. The election must be madeCAUTION
!
separately by each person acquiring replacement prop-
erty. In the case of a partnership, an S corporation, or a
consolidated group, the election is made by the partner-
ship, by the S corporation, or by the common parent of a
consolidated group, respectively. Once made, the election
may not be revoked without IRS consent. Note that by
making this election, it does not change whether the basis
is subject to bonus depreciation, but rather only effects
how the depreciation is calculated. See Like-kind ex-
changes and involuntary conversions under How Much
Can You Deduct? in chapter 3.
For more information and special rules, see the Instruc-
tions for Form 4562.
Property Acquired in a Nontaxable Transfer
You must depreciate MACRS property acquired by a cor-
poration or partnership in certain nontaxable transfers
over the property's remaining recovery period in the trans-
feror's hands, as if the transfer had not occurred. You must
continue to use the same depreciation method and con-
vention as the transferor. You can depreciate the part of
the property's basis that exceeds its carryover basis (the
transferor's adjusted basis in the property) as newly pur-
chased MACRS property.
The nontaxable transfers covered by this rule include
the following.
• A distribution in complete liquidation of a subsidiary.
• A transfer to a corporation controlled by the transferor.
• An exchange of property solely for corporate stock or
securities in a reorganization.
• A contribution of property to a partnership in exchange
for a partnership interest.
• A partnership distribution of property to a partner.
Figuring the Deduction for a Short Tax
Year
You cannot use the MACRS percentage tables to deter-
mine depreciation for a short tax year. A short tax year is
any tax year with less than 12 full months. This section
discusses the rules for determining the depreciation de-
duction for property you place in service or dispose of in a
short tax year. It also discusses the rules for determining
depreciation when you have a short tax year during the re-
covery period (other than the year the property is placed
in service or disposed of).
For more information on figuring depreciation for a
short tax year, see Revenue Procedure 89-15, 1989-1
C.B. 816.
Using the Applicable Convention in a Short
Tax Year
The applicable convention establishes the date property is
treated as placed in service and disposed of. Depreciation
is allowable only for that part of the tax year the property is
Publication 946 (2024) Chapter 4 Figuring Depreciation Under MACRS 43
treated as in service. The recovery period begins on the
placed in service date determined by applying the con-
vention. The remaining recovery period at the beginning of
the next tax year is the full recovery period less the part for
which depreciation was allowable in the first tax year.
The following discussions explain how to use the appli-
cable convention in a short tax year.
Mid-month convention. Under the mid-month conven-
tion, you always treat your property as placed in service or
disposed of on the midpoint of the month it is placed in
service or disposed of. You apply this rule without regard
to your tax year.
Half-year convention. Under the half-year convention,
you treat property as placed in service or disposed of on
the midpoint of the tax year it is placed in service or dis-
posed of.
First or last day of month. For a short tax year begin-
ning on the first day of a month or ending on the last day of
a month, the tax year consists of the number of months in
the tax year. If the short tax year includes part of a month,
you generally include the full month in the number of
months in the tax year. You determine the midpoint of the
tax year by dividing the number of months in the tax year
by 2. For the half-year convention, you treat property as
placed in service or disposed of on either the first day or
the midpoint of a month.
For example, a short tax year that begins on June 20
and ends on December 31 consists of 7 months. You use
only full months for this determination, so you treat the tax
year as beginning on June 1 instead of June 20. The mid-
point of the tax year is the middle of September (31/2
months from the beginning of the tax year). You treat prop-
erty as placed in service or disposed of on this midpoint.
Example. Tara Corporation, a calendar year taxpayer,
was incorporated on March 15. For purposes of the
half-year convention, it has a short tax year of 10 months,
ending on December 31, 2024. During the short tax year,
Tara placed property in service for which it uses the
half-year convention. Tara treats this property as placed in
service on the first day of the sixth month of the short tax
year, or August 1, 2024.
Not on first or last day of month. For a short tax
year not beginning on the first day of a month and not end-
ing on the last day of a month, the tax year consists of the
number of days in the tax year. You determine the mid-
point of the tax year by dividing the number of days in the
tax year by 2. For the half-year convention, you treat prop-
erty as placed in service or disposed of on either the first
day or the midpoint of a month. If the result of dividing the
number of days in the tax year by 2 is not the first day or
the midpoint of a month, you treat the property as placed
in service or disposed of on the nearest preceding first
day or midpoint of a month.
Mid-quarter convention. To determine if you must use
the mid-quarter convention, compare the basis of property
you place in service in the last 3 months of your tax year to
that of property you place in service during the full tax
year. The length of your tax year does not matter. If you
have a short tax year of 3 months or less, use the
mid-quarter convention for all applicable property you
place in service during that tax year.
You treat property under the mid-quarter convention as
placed in service or disposed of on the midpoint of the
quarter of the tax year in which it is placed in service or
disposed of. Divide a short tax year into 4 quarters and
determine the midpoint of each quarter.
For a short tax year of 4 or 8 full calendar months, de-
termine quarters on the basis of whole months. The mid-
point of each quarter is either the first day or the midpoint
of a month. Treat property as placed in service or dis-
posed of on this midpoint.
To determine the midpoint of a quarter for a short tax
year of other than 4 or 8 full calendar months, complete
the following steps.
1. Determine the number of days in your short tax year.
2. Determine the number of days in each quarter by di-
viding the number of days in your short tax year by 4.
3. Determine the midpoint of each quarter by dividing
the number of days in each quarter by 2.
If the result of (3) gives you a midpoint of a quarter that
is on a day other than the first day or midpoint of a month,
treat the property as placed in service or disposed of on
the nearest preceding first day or midpoint of that month.
Example. Tara Corporation, a calendar year taxpayer,
was incorporated and began business on March 15. It has
a short tax year of 91/2 months, ending on December 31.
During December, it placed property in service for which it
must use the mid-quarter convention. This is a short tax
year of other than 4 or 8 full calendar months, so it must
determine the midpoint of each quarter.
1. First, it determines that its short tax year beginning
March 15 and ending December 31 consists of 292
days.
2. Next, it divides 292 by 4 to determine the length of
each quarter, 73 days.
3. Finally, it divides 73 by 2 to determine the midpoint of
each quarter, the 37th day.
The following table shows the quarters of Tara Corpora-
tion's short tax year, the midpoint of each quarter, and the
date in each quarter that Tara must treat its property as
placed in service.
Quarter Midpoint Placed in
Service
3/15 – 5/26 4/20 4/15
5/27 – 8/07 7/02 7/01
8/08 – 10/19 9/13 9/01
10/20 – 12/31 11/25 11/15
44 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2024)
The last quarter of the short tax year begins on October
20, which is 73 days from December 31, the end of the tax
year. The 37th day of the last quarter is November 25,
which is the midpoint of the quarter. November 25 is not
the first day or the midpoint of November, so Tara Corpo-
ration must treat the property as placed in service in the
middle of November (the nearest preceding first day or
midpoint of that month).
Property Placed in Service in a Short
Tax Year
To figure your MACRS depreciation deduction for the
short tax year, you must first determine the depreciation
for a full tax year. You do this by multiplying your basis in
the property by the applicable depreciation rate. Then, de-
termine the depreciation for the short tax year. Do this by
multiplying the depreciation for a full tax year by a fraction.
The numerator (top number) of the fraction is the number
of months (including parts of a month) the property is trea-
ted as in service during the tax year (applying the applica-
ble convention). The denominator (bottom number) is 12.
See Depreciation After a Short Tax Year, later, for informa-
tion on how to figure depreciation in later years.
Example 1—half-year convention. Tara Corporation,
with a short tax year beginning March 15 and ending De-
cember 31, placed in service on March 16 an item of
5-year property with a basis of $1,000. This is the only
property the corporation placed in service during the short
tax year. Tara does not elect to claim a section 179 deduc-
tion and the property does not qualify for a special depre-
ciation allowance. The depreciation method for this prop-
erty is the 200% declining balance method. The
depreciation rate is 40% and Tara applies the half-year
convention.
Tara treats the property as placed in service on August
1. The determination of this August 1 date is explained in
the example illustrating the half-year convention under Us-
ing the Applicable Convention in a Short Tax Year, earlier.
Tara is allowed 5 months of depreciation for the short tax
year that consists of 10 months. The corporation first mul-
tiplies the basis ($1,000) by 40% (the declining balance
rate) to get the depreciation for a full tax year of $400. The
corporation then multiplies $400 by 5/12 to get the short tax
year depreciation of $167.
Example 2—mid-quarter convention. Tara Corpora-
tion, with a short tax year beginning March 15 and ending
December 31, placed in service on October 16 an item of
5-year property with a basis of $1,000. Tara does not elect
to claim a section 179 deduction and the property does
not qualify for a special depreciation allowance. The de-
preciation method for this property is the 200% declining
balance method. The depreciation rate is 40%. The cor-
poration must apply the mid-quarter convention because
the property was the only item placed in service that year
and it was placed in service in the last 3 months of the tax
year.
Tara treats the property as placed in service on Sep-
tember 1. This date is shown in the table provided in the
example illustrating the mid-quarter convention under Us-
ing the Applicable Convention in a Short Tax Year, earlier,
for property that Tara Corporation placed in service during
the quarter that begins on August 8 and ends on October
19. Under MACRS, Tara is allowed 4 months of deprecia-
tion for the short tax year that consists of 10 months. The
corporation first multiplies the basis ($1,000) by 40% to
get the depreciation for a full tax year of $400. The corpo-
ration then multiplies $400 by 4/12 to get the short tax year
depreciation of $133.
Property Placed in Service Before a Short
Tax Year
If you have a short tax year after the tax year in which you
began depreciating property, you must change the way
you figure depreciation for that property. If you were using
the percentage tables, you can no longer use them. You
must figure depreciation for the short tax year and each
later tax year as explained next.
Depreciation After a Short Tax Year
You can use either of the following methods to figure the
depreciation for years after a short tax year.
• The simplified method.
• The allocation method.
You must use the method you choose consistently.
Using the simplified method for a 12-month year. Un-
der the simplified method, you figure the depreciation for a
later 12-month year in the recovery period by multiplying
the adjusted basis of your property at the beginning of the
year by the applicable depreciation rate.
Example. Assume the same facts as in Example 1 un-
der Property Placed in Service in a Short Tax Year, earlier.
Tara Corporation claimed depreciation of $167 for its short
tax year. The adjusted basis on January 1 of the next year
is $833 ($1,000 − $167). Tara's depreciation for that next
year is 40% of $833, or $333.
Using the simplified method for a short tax year. If a
later tax year in the recovery period is a short tax year, you
figure depreciation for that year by multiplying the adjusted
basis of the property at the beginning of the tax year by
the applicable depreciation rate, and then by a fraction.
The fraction's numerator is the number of months (includ-
ing parts of a month) in the tax year. Its denominator is 12.
Using the simplified method for an early disposition.
If you dispose of property in a later tax year before the end
of the recovery period, determine the depreciation for the
year of disposition by multiplying the adjusted basis of the
property at the beginning of the tax year by the applicable
depreciation rate and then multiplying the result by a frac-
tion. The fraction's numerator is the number of months (in-
cluding parts of a month) the property is treated as in
service during the tax year (applying the applicable con-
vention). Its denominator is 12.
Publication 946 (2024) Chapter 4 Figuring Depreciation Under MACRS 45
Using the allocation method for a 12-month or short
tax year. Under the allocation method, you figure the de-
preciation for each later tax year by allocating to that year
the depreciation attributable to the parts of the recovery
years that fall within that year. Whether your tax year is a
12-month or short tax year, you figure the depreciation by
determining which recovery years are included in that
year. For each recovery year included, multiply the depre-
ciation attributable to that recovery year by a fraction. The
fraction's numerator is the number of months (including
parts of a month) that are included in both the tax year and
the recovery year. Its denominator is 12. The allowable de-
preciation for the tax year is the sum of the depreciation
figured for each recovery year.
Example. Assume the same facts as in Example 1 un-
der Property Placed in Service in a Short Tax Year, earlier.
Tara Corporation's first tax year after the short tax year is a
full year of 12 months, beginning January 1 and ending
December 31. The first recovery year for the 5-year prop-
erty placed in service during the short tax year extends
from August 1 to July 31. Tara deducted 5 months of the
first recovery year on its short-year tax return. Seven
months of the first recovery year and 5 months of the sec-
ond recovery year fall within the next tax year. The depre-
ciation for the next tax year is $333, which is the sum of
the following.
• $233—The depreciation for the first recovery year
($400 × 7/12).
• $100—The depreciation for the second recovery year.
This is figured by multiplying the adjusted basis of
$600 ($1,000 − $400) by 40% (0.40), then multiplying
the $240 result by 5/12.
Using the allocation method for an early disposition.
If you dispose of property before the end of the recovery
period in a later tax year, determine the depreciation for
the year of disposition by multiplying the depreciation fig-
ured for each recovery year (or part of a recovery year) in-
cluded in the tax year by a fraction. The numerator of the
fraction is the number of months (including parts of
months) the property is treated as in service in the tax
year (applying the applicable convention). The denomina-
tor is 12. If there is more than one recovery year in the tax
year, you add together the depreciation for each recovery
year.
How Do You Use General Asset
Accounts?
Terms you may need to know
(see Glossary):
Adjusted basis
Amortization
Amount realized
Basis
Convention
Disposition
Exchange
Placed in service
Recovery period
Section 1245 property
Unadjusted basis
To make it easier to figure MACRS depreciation, you can
group separate properties into one or more general asset
accounts (GAAs). You can then depreciate all the proper-
ties in each account as a single item of property.
Property you cannot include. You cannot include prop-
erty in a GAA if you use it in both a personal activity and a
trade or business (or for the production of income) in the
year in which you first place it in service. If property you in-
cluded in a GAA is later used in a personal activity, see
Terminating GAA Treatment, later.
Property generating foreign source income. For infor-
mation on the GAA treatment of property that generates
foreign source income, see sections 1.168(i)-1(c)(1)(ii)
and 1.168(i)-1(f) of the regulations.
Change in use. Special rules apply to figuring deprecia-
tion for property in a GAA for which the use changes dur-
ing the tax year. Examples include a change in use result-
ing in a shorter recovery period and/or a more accelerated
depreciation method or a change in use resulting in a lon-
ger recovery period and/or a less accelerated deprecia-
tion method. See sections 1.168(i)-1(h) and 1.168(i)-4 of
the regulations.
Grouping Property
Each GAA must include only property you placed in serv-
ice in the same tax year and that has the following in com-
mon.
• Recovery period.
• Depreciation method.
• Convention.
The following rules also apply when you establish a
GAA.
• Mid-quarter convention. Property subject to the
mid-quarter convention can only be grouped into a
GAA with property placed in service in the same quar-
ter of the tax year.
• Mid-month convention. Property subject to the
mid-month convention can only be grouped into a
GAA with property placed in service in the same
month of the tax year.
• Passenger automobiles. Passenger automobiles
subject to the limits on passenger automobile depreci-
ation must be grouped into a separate GAA.
46 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2024)
See section 1.168(i)-1(c)(2)(ii) of the regulations for addi-
tional rules that apply when you establish a GAA.
Figuring Depreciation for a GAA
After you have set up a GAA, you generally figure the
MACRS depreciation for it by using the applicable depre-
ciation method, recovery period, and convention for the
property in the GAA. For each GAA, record the deprecia-
tion allowance in a separate depreciation reserve account.
Example. Make & Sell, a calendar year corporation,
set up a GAA for 10 machines. The machines cost a total
of $10,000 and were placed in service in June 2024. One
of the machines cost $8,200 and the rest cost a total of
$1,800. This GAA is depreciated under the 200% declin-
ing balance method with a 5-year recovery period and a
half-year convention. Make & Sell did not claim the section
179 deduction on the machines and the machines did not
qualify for a special depreciation allowance. The deprecia-
tion allowance for 2024 is $2,000 [($10,000 × 40% (0.40))
÷ 2]. As of January 1, 2025, the depreciation reserve ac-
count is $2,000.
Passenger automobiles. To figure depreciation on pas-
senger automobiles in a GAA, apply the deduction limits
discussed in chapter 5 under Do the Passenger Automo-
bile Limits Apply. Multiply the amount determined using
these limits by the number of automobiles originally inclu-
ded in the account, reduced by the total number of auto-
mobiles removed from the GAA, as discussed under Ter-
minating GAA Treatment, later.
Disposing of GAA Property
When you dispose of property included in a GAA, the fol-
lowing rules generally apply.
• Neither the unadjusted depreciable basis (defined
later) nor the depreciation reserve account of the GAA
is affected. You continue to depreciate the account as
if the disposition had not occurred.
• The property is treated as having an adjusted basis of
zero, so you cannot realize a loss on the disposition. If
the property is transferred to a supplies, scrap, or simi-
lar account, its basis in that account is zero.
• Any amount realized on the disposition is treated as
ordinary income, up to the limit discussed later under
Treatment of amount realized.
However, these rules do not apply to any disposition
described later under Terminating GAA Treatment.
Disposition. Property in a GAA is considered disposed
of when you do any of the following.
• Permanently withdraw it from use in your trade or busi-
ness or from the production of income.
• Transfer it to a supplies, scrap, or similar account.
• Sell, exchange, retire, physically abandon, or destroy
it.
The retirement of a structural component of real property
is not a disposition unless it is a partial disposition. See
section 1.168(i)-1(e)(1) of the regulations.
Treatment of amount realized. When you dispose of
property in a GAA, you must recognize any amount real-
ized from the disposition as ordinary income, up to a limit.
The limit is:
1. The unadjusted depreciable basis of the GAA, plus
2. Any expensed costs for property in the GAA that are
subject to recapture as depreciation (not including
any expensed costs for property that you removed
from the GAA under the rules discussed later under
Terminating GAA Treatment), minus
3. Any amount previously recognized as ordinary in-
come upon the disposition of other property from the
GAA.
Unadjusted depreciable basis. The unadjusted de-
preciable basis of a GAA is the total of the unadjusted de-
preciable bases of all the property in the GAA. The unad-
justed depreciable basis of an item of property in a GAA is
the amount you would use to figure gain or loss on its sale,
but figured without reducing your original basis by any de-
preciation allowed or allowable in earlier years. However,
you do reduce your original basis by other amounts, in-
cluding any amortization deduction, section 179 deduc-
tion, special depreciation allowance, and electric vehicle
credit.
Expensed costs. Expensed costs that are subject to
recapture as depreciation include the following.
1. The section 179 deduction.
2. Amortization deductions for the following.
a. Pollution control facilities.
b. Removal of barriers for the elderly and disabled.
c. Tertiary injectants.
d. Reforestation expenses.
Example 1. The facts are the same as in the example
under Figuring Depreciation for a GAA, earlier. In February
2024, Make & Sell sells the machine that cost $8,200 to
an unrelated person for $9,000. The machine is treated as
having an adjusted basis of zero.
On its 2024 tax return, Make & Sell recognizes the
$9,000 amount realized as ordinary income because it is
not more than the GAA's unadjusted depreciable basis
($10,000) plus any expensed cost (for example, the sec-
tion 179 deduction) for property in the GAA ($0), minus
any amounts previously recognized as ordinary income
because of dispositions of other property from the GAA
($0).
The unadjusted depreciable basis and depreciation re-
serve of the GAA are not affected by the sale of the ma-
chine. The depreciation allowance for the GAA in 2024 is
$3,200 [($10,000 − $2,000) × 40% (0.40)].
Publication 946 (2024) Chapter 4 Figuring Depreciation Under MACRS 47
Example 2. Assume the same facts as in Example 1.
In June 2025, Make & Sell sells seven machines to an un-
related person for a total of $1,100. These machines are
treated as having an adjusted basis of zero.
On its 2025 tax return, Make & Sell recognizes $1,000
as ordinary income. This is the GAA's unadjusted depreci-
able basis ($10,000) plus the expensed costs ($0), minus
the amount previously recognized as ordinary income
($9,000). The remaining amount realized of $100 ($1,100
− $1,000) is section 1231 gain (discussed in chapter 3 of
Pub. 544).
The unadjusted depreciable basis and depreciation re-
serve of the GAA are not affected by the disposition of the
machines. The depreciation allowance for the GAA in
2025 is $1,920 [($10,000 − $5,200) × 40% (0.40)].
Terminating GAA Treatment
You must remove the following property from a GAA.
• Property held by a partnership that terminates under
section 708(b)(1).
• Property you dispose of in a nonrecognition transac-
tion or an abusive transaction.
• Property you dispose of in a qualifying disposition or in
a disposition of all the property in the GAA, if you
choose to terminate GAA treatment.
• Property you dispose of in a like-kind exchange or an
involuntary conversion.
• Property you change to personal use.
• Property for which you must recapture any allowable
credit or deduction, such as the investment credit, the
credit for qualified electric vehicles, the credit for alter-
native fuel vehicle refueling property, the section 179
deduction, or the deduction for clean-fuel vehicles and
clean-fuel vehicle refueling property placed in service
before 2006.
If you remove property from a GAA, you must make the
following adjustments.
1. Reduce the unadjusted depreciable basis of the GAA
by the unadjusted depreciable basis of the property
as of the first day of the tax year in which the disposi-
tion, change in use, partnership technical termination,
or recapture event occurs. You can use any reasona-
ble method that is consistently applied to determine
the unadjusted depreciable basis of the property you
remove from a GAA.
2. Reduce the depreciation reserve account by the de-
preciation allowed or allowable for the property (com-
puted in the same way as computed for the GAA) as
of the end of the tax year immediately preceding the
year in which the disposition, change in use, or recap-
ture event occurs.
These adjustments have no effect on the recognition and
character of prior dispositions subject to the rules dis-
cussed earlier under Disposing of GAA Property.
Nonrecognition transactions. If you dispose of GAA
property in a nonrecognition transaction, you must remove
it from the GAA. The following are nonrecognition transac-
tions.
• The receipt by one corporation of property distributed
in complete liquidation of another corporation.
• The transfer of property to a corporation solely in ex-
change for stock in that corporation if the transferor is
in control of the corporation immediately after the ex-
change.
• The transfer of property by a corporation that is a party
to a reorganization in exchange solely for stock and
securities in another corporation that is also a party to
the reorganization.
• The contribution of property to a partnership in ex-
change for an interest in the partnership.
• The distribution of property (including money) from a
partnership to a partner.
• Any transaction between members of the same affili-
ated group during any year for which the group makes
a consolidated return.
Rules for recipient (transferee). The recipient of the
property (the person to whom it is transferred) must in-
clude your (the transferor's) adjusted basis in the property
in a GAA. If you transferred either all of the property, the
last item of property, or the remaining portion of the last
item of property, in a GAA, the recipient’s basis in the
property is the result of the following.
• The adjusted depreciable basis of the GAA as of the
beginning of your tax year in which the transaction
takes place, minus
• The depreciation allowable to you for the year of the
transfer.
For this purpose, the adjusted depreciable basis of a
GAA is the unadjusted depreciable basis of the GAA mi-
nus any depreciation allowed or allowable for the GAA.
Abusive transactions. If you dispose of GAA property in
an abusive transaction, you must remove it from the GAA.
A disposition is an abusive transaction if it is not a nonre-
cognition transaction (described earlier) or a like-kind ex-
change or involuntary conversion and a main purpose for
the disposition is to get a tax benefit or a result that would
not be available without the use of a GAA. Examples of
abusive transactions include the following.
1. A transaction with a main purpose of shifting income
or deductions among taxpayers in a way that would
not be possible without choosing to use a GAA to take
advantage of differing effective tax rates.
2. A choice to use a GAA with a main purpose of dispos-
ing of property from the GAA so that you can use an
expiring net operating loss or credit. For example, if
you have a net operating loss carryover or a credit
carryover, the following transactions will be consid-
ered abusive transactions unless there is strong evi-
dence to the contrary.
48 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2024)
a. A transfer of GAA property to a related person.
b. A transfer of GAA property under an agreement
where the property continues to be used, or is
available for use, by you.
Figuring gain or loss. You must determine the gain,
loss, or other deduction due to an abusive transaction by
taking into account the property's adjusted basis. The ad-
justed basis of the property at the time of the disposition is
the result of the following.
• The unadjusted depreciable basis of the property, mi-
nus
• The depreciation allowed or allowable for the property
figured by using the depreciation method, recovery
period, and convention that applied to the GAA in
which the property was included.
If there is a gain, the amount subject to recapture as or-
dinary income is the smaller of the following.
1. The depreciation allowed or allowable for the property,
including any expensed cost (such as section 179 de-
ductions) or the special depreciation allowance for the
property.
2. The result of the following.
a. The original unadjusted depreciable basis of the
GAA (plus, for section 1245 property originally in-
cluded in the GAA, any expensed cost), minus
b. The total gain previously recognized as ordinary
income on the disposition of property from the
GAA.
Qualifying dispositions. If you dispose of GAA property
in a qualifying disposition, you can choose to remove the
property from the GAA. A qualifying disposition is one that
does not involve all the property, or the last item of prop-
erty, remaining in a GAA and that is described by any of
the following.
1. A disposition that is a direct result of fire, storm, ship-
wreck, other casualty, or theft.
2. A charitable contribution for which a deduction is al-
lowed.
3. A disposition that is a direct result of a cessation, ter-
mination, or disposition of a business, manufacturing
or other income-producing process, operation, facility,
plant, or other unit (other than by transfer to a sup-
plies, scrap, or similar account).
4. A nontaxable transaction other than a nonrecognition
transaction (described earlier), a like-kind exchange
or involuntary conversion, a technical termination of a
partnership, or a transaction that is nontaxable only
because it is a disposition from a GAA.
If you choose to remove the property from the GAA, fig-
ure your gain, loss, or other deduction resulting from the
disposition in the manner described earlier under Abusive
transactions.
Like-kind exchanges and involuntary conversions. If
you dispose of GAA property as a result of a like-kind ex-
change or involuntary conversion, you must remove from
the GAA the property that you transferred. See chapter 1
of Pub. 544 for information on these transactions. Figure
your gain, loss, or other deduction resulting from the dis-
position in the manner described earlier under Abusive
transactions.
Example. Sankofa, a calendar year corporation, main-
tains one GAA for 12 machines. Each machine costs
$15,000 and was placed in service in 2022. Of the 12 ma-
chines, nine cost a total of $135,000 and are used in San-
kofa's New York plant and three machines cost $45,000
and are used in Sankofa's New Jersey plant. Assume this
GAA uses the 200% declining balance method, a 5-year
recovery period, and a half-year convention. Sankofa does
not claim the section 179 deduction and the machines do
not qualify for a special depreciation allowance. As of Jan-
uary 1, 2024, the depreciation reserve account for the
GAA is $93,600.
In May 2024, Sankofa sells its entire manufacturing
plant in New Jersey to an unrelated person. The sales
proceeds allocated to each of the three machines at the
New Jersey plant is $5,000. This transaction is a qualify-
ing disposition, so Sankofa chooses to remove the three
machines from the GAA and figure the gain, loss, or other
deduction by taking into account their adjusted bases.
For Sankofa's 2024 return, the depreciation allowance
for the GAA is figured as follows. As of December 31,
2023, the depreciation allowed or allowable for the three
machines at the New Jersey plant is $23,400. As of Janu-
ary 1, 2024, the unadjusted depreciable basis of the GAA
is reduced from $180,000 to $135,000 ($180,000 minus
the $45,000 unadjusted depreciable bases of the three
machines), and the depreciation reserve account is de-
creased from $93,600 to $70,200 ($93,600 minus
$23,400 depreciation allowed or allowable for the three
machines as of December 31, 2023). The depreciation al-
lowance for the GAA in 2024 is $25,920 [($135,000 −
$70,200) × 40% (0.40)].
For Sankofa's 2024 return, gain or loss for each of the
three machines at the New Jersey plant is determined as
follows. The depreciation allowed or allowable in 2024 for
each machine is $1,440 [(($15,000 − $7,800) × 40%
(0.40)) ÷ 2]. The adjusted basis of each machine is $5,760
(the adjusted depreciable basis of $7,200 removed from
the account less the $1,440 depreciation allowed or allow-
able in 2024). As a result, the loss recognized in 2024 for
each machine is $760 ($5,760 − $5,000). This loss is sub-
ject to section 1231 treatment. See chapter 3 of Pub. 544
for information on section 1231 losses.
Disposition of all property in a GAA. If you dispose of
all the property, or the last item of property, in a GAA, you
can choose to end the GAA. If you make this choice, you
figure the gain or loss by comparing the adjusted depreci-
able basis of the GAA with the amount realized.
Publication 946 (2024) Chapter 4 Figuring Depreciation Under MACRS 49
If there is a gain, the amount subject to recapture as or-
dinary income is limited to the result of the following.
• The depreciation allowed or allowable for the GAA, in-
cluding any expensed cost (such as section 179 de-
ductions or the additional depreciation allowed or al-
lowable for the GAA), minus
• The total gain previously recognized as ordinary in-
come on the disposition of property from the GAA.
Like-kind exchanges and involuntary conversions.
If you dispose of all the property or the last item of prop-
erty in a GAA as a result of a like-kind exchange or invol-
untary conversion, the GAA terminates. You must figure
the gain or loss in the manner described above under Dis-
position of all property in a GAA.
Example. Duforcelf, a calendar year corporation,
maintains a GAA for 1,000 calculators that cost a total of
$60,000 and were placed in service in 2021. Assume this
GAA is depreciated under the 200% declining balance
method, has a recovery period of 5 years, and uses a
half-year convention. Duforcelf does not claim the section
179 deduction and the calculators do not qualify for a spe-
cial depreciation allowance. In 2023, Duforcelf sells 200 of
the calculators to an unrelated person for $10,000. The
$10,000 is recognized as ordinary income.
In March 2024, Duforcelf sells the remaining calculators
in the GAA to an unrelated person for $35,000. Duforcelf
decides to end the GAA.
On the date of the disposition, the adjusted depreciable
basis of the account is $23,040 (unadjusted depreciable
basis of $60,000 minus the depreciation allowed or allow-
able of $36,960). In 2024, Duforcelf recognizes a gain of
$11,960. This is the amount realized of $35,000 minus the
adjusted depreciable basis of $23,040. The gain subject
to recapture as ordinary income is limited to the deprecia-
tion allowed or allowable minus the amounts previously
recognized as ordinary income ($36,960 − $10,000 =
$26,960). Therefore, the entire gain of $11,960 is recap-
tured as ordinary income.
Electing To Use a GAA
An election to include property in a GAA is made sepa-
rately by each owner of the property. This means that an
election to include property in a GAA must be made by
each member of a consolidated group and at the partner-
ship or S corporation level (and not by each partner or
shareholder separately).
How to make the election. Make the election by com-
pleting line 18 of Form 4562.
When to make the election. You must make the election
on a timely filed tax return (including extensions) for the
year in which you place in service the property included in
the GAA. However, if you timely filed your return for the
year without making the election, you can still make the
election by filing an amended return within 6 months of the
due date of the return (excluding extensions). Attach the
election to the amended return and write “Filed pursuant
to section 301.9100-2” on the election statement.
You must maintain records that identify the prop-
erty included in each GAA, that establish the un-
adjusted depreciable basis and depreciation re-
serve of the GAA, and that reflect the amount realized
during the year upon dispositions from each GAA. How-
ever, see chapter 2 for the recordkeeping requirements for
section 179 property.
Revoking an election. You can revoke an election to use
a GAA only in the following situations.
• You include in the GAA property that generates foreign
source income both U.S. and foreign source income,
or combined gross income of a foreign sales corpora-
tion, a domestic international sales corporation, or a
possessions corporation and its related supplier, and
that inclusion results in a substantial distortion of in-
come.
• You remove property from the GAA, as described un-
der Terminating GAA Treatment, earlier.
When Do You Recapture
MACRS Depreciation?
Terms you may need to know
(see Glossary):
Disposition
Nonresidential real property
Recapture
Residential rental property
When you dispose of property that you depreciated using
MACRS, any gain on the disposition is generally recap-
tured (included in income) as ordinary income up to the
amount of the depreciation previously allowed or allowa-
ble for the property. Depreciation, for this purpose, in-
cludes the following.
• Any section 179 deduction claimed on the property.
• Any deduction under section 179B of the Internal Rev-
enue Code for capital costs to comply with Environ-
mental Protection Agency sulfur regulations.
• Any deduction under section 179C of the Internal Rev-
enue Code for certain qualified refinery property
placed in service after August 8, 2005, and before
January 1, 2014.
• Any deduction under section 179D of the Internal Rev-
enue Code for certain energy efficient commercial
building property placed in service after December 31,
2005.RECORDS
50 Chapter 4 Figuring Depreciation Under MACRS Publication 946 (2024)
• Any deduction under section 179E of the Internal Rev-
enue Code for qualified advanced mine safety equip-
ment property placed in service after December 20,
2006, and before January 1, 2018.
• Any deduction under section 190 of the Internal Reve-
nue Code for removal of barriers to the disabled and
the elderly.
• Any deduction under section 193 of the Internal Reve-
nue Code for tertiary injectants.
• Any special depreciation allowance previously allowed
or allowable for the property (unless you elected not to
claim it).
There is no recapture for residential rental and nonresi-
dential real property unless that property is qualified prop-
erty for which you claimed a special depreciation allow-
ance. For more information on depreciation recapture, see
Pub. 544.
5.
Additional Rules for
Listed Property
Introduction
This chapter discusses the deduction limits and other spe-
cial rules that apply to certain listed property. Listed prop-
erty includes cars, business aircraft, and other property
used for transportation, property used for entertainment,
and certain computers.
Deductions for listed property (other than certain
leased property) are subject to the following special rules
and limits.
• Deduction for employees. If your use of the property
is not for your employer's convenience or is not re-
quired as a condition of your employment, you cannot
deduct depreciation or rent expenses for your use of
the property as an employee.
• Business-use requirement. If the property is not
used predominantly (more than 50%) for qualified
business use, you cannot claim the section 179 de-
duction or a special depreciation allowance. For busi-
ness aircraft, there is also a 25% test that must be
met. In addition, you must figure any depreciation de-
duction under MACRS using the straight line method
over the ADS recovery period. You may also have to
recapture (include in income) any excess depreciation
claimed in previous years. A similar inclusion amount
applies to certain leased property.
• Passenger automobile limits and rules. Annual
limits apply to depreciation deductions (including
section 179 deductions and any special depreciation
allowance) for certain passenger automobiles. You
can continue to deduct depreciation for the unrecov-
ered basis resulting from these limits after the end of
the recovery period.
This chapter defines listed property and explains the
special rules and depreciation deduction limits that apply,
including the special inclusion amount rule for leased
property. It also discusses the recordkeeping rules for lis-
ted property and explains how to report information about
the property on your tax return.
Useful Items
You may want to see:
Publication
463 Travel, Gift, and Car Expenses
587 Business Use of Your Home
Form (and Instructions)
2106 Employee Business Expenses
4562 Depreciation and Amortization
4797 Sales of Business Property
See How To Get Tax Help at the end of this publication for
information about getting publications and forms.
What Is Listed Property?
Terms you may need to know
(see Glossary):
Capitalized
Commuting
Improvement
Recovery period
Straight line method
Listed property is any of the following.
• Passenger automobiles (as defined later).
• Business aircraft (discussed later).
• Any other property used for transportation, unless it is
an excepted vehicle.
• Property generally used for entertainment, recreation,
or amusement (including photographic, phonographic,
communication, and video recording equipment).
Improvements to listed property. An improvement
made to listed property that must be capitalized is treated
as a new item of depreciable property. The recovery pe-
riod and method of depreciation that apply to the listed
property as a whole also apply to the improvement. For
example, if you must depreciate the listed property using
2106
4562
4797
Publication 946 (2024) Chapter 5 Additional Rules for Listed Property 51
the straight line method, you must also depreciate the im-
provement using the straight line method.
Passenger Automobiles
A passenger automobile is any four-wheeled vehicle
made primarily for use on public streets, roads, and high-
ways and rated at 6,000 pounds or less of unloaded gross
vehicle weight (6,000 pounds or less of gross vehicle
weight for trucks and vans). It includes any part, compo-
nent, or other item physically attached to the automobile
at the time of purchase or usually included in the purchase
price of an automobile.
The following vehicles are not considered passenger
automobiles for these purposes.
• An ambulance, hearse, or combination ambu-
lance-hearse used directly in a trade or business.
• A vehicle used directly in the trade or business of
transporting persons or property for pay or hire.
• A truck or van that is a qualified nonpersonal use vehi-
cle.
Qualified nonpersonal use vehicles. Qualified nonper-
sonal use vehicles are vehicles that by their nature are not
likely to be used more than a minimal amount for personal
purposes. They include the trucks and vans listed as ex-
cepted vehicles under Other Property Used for Transpor-
tation next. They also include trucks and vans that have
been specially modified so that they are not likely to be
used more than a minimal amount for personal purposes,
such as by installation of permanent shelving and painting
the vehicle to display advertising or the company's name.
For a detailed discussion of passenger automobiles, in-
cluding leased passenger automobiles, see Pub. 463.
Business Aircraft
A business aircraft may be depreciated using straight line
depreciation over its useful life. Business aircraft may also
be eligible for accelerated depreciation including the sec-
tion 179 election deduction, the special depreciation al-
lowance, and MACRS which allows the aircraft owner to
immediately expense a portion of the aircraft if certain
tests are met. These tests are based on the qualified busi-
ness use of the aircraft.
Qualified business-use tests. Qualified business use is
defined as any use in a trade or business. To claim accel-
erated depreciation on business aircraft, you must meet
the 50% test under section 280F(b) of the Internal Reve-
nue Code and the 25% test under section 280F(d)(6)(C)
(ii) of the Internal Revenue Code. Failure to meet either of
these tests disqualifies the aircraft from claiming acceler-
ated depreciation, including the special depreciation al-
lowance. Qualified business use is determined on a
flight-by-flight basis and each passenger on every flight
leg must be classified as qualified business or non-quali-
fied business use. You must also maintain contemporane-
ous records to substantiate the following.
• The amount of the aircraft expense.
• Time and place of travel.
• Business purpose of the travel.
• Business relationship of each individual using the air-
craft.
See sections 280F(b) and 280F(d)(6)(C)(ii) of the Inter-
nal Revenue Code.
Note. If you claimed accelerated depreciation on a
business aircraft and fail to meet either the 25% or 50%
qualified business-use tests at any time during the class
life for the aircraft, then the aircraft is placed on straight
line depreciation. You must also recapture, as ordinary in-
come, the excess depreciation claimed using accelerated
depreciation in prior years over the amount which would
have been allowable for the aircraft using the straight line
method of depreciation under ADS.
Other Property Used for
Transportation
Although vehicles used to transport persons or
property for pay or hire and vehicles rated at more
than the 6,000-pound threshold are not passen-
ger automobiles, they are still “other property used for
transportation” and are subject to the special rules for lis-
ted property.
Other property used for transportation includes trucks,
buses, boats, airplanes, motorcycles, and any other vehi-
cles used to transport persons or goods.
Excepted vehicles. Other property used for transporta-
tion does not include the following qualified nonpersonal
use vehicles (defined earlier under Passenger Automo-
biles).
• Clearly marked police and fire vehicles.
• Unmarked vehicles used by law enforcement officers if
the use is officially authorized.
• Ambulances used as such and hearses used as such.
• Any vehicle with a loaded gross vehicle weight of over
14,000 pounds that is designed to carry cargo.
• Bucket trucks (cherry pickers), cement mixers, dump
trucks (including garbage trucks), flatbed trucks, and
refrigerated trucks.
• Combines, cranes and derricks, and forklifts.
• Delivery trucks with seating only for the driver, or only
for the driver plus a folding jump seat.
• Qualified moving vans.
• Qualified specialized utility repair trucks.
• School buses used in transporting students and em-
ployees of schools.CAUTION
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52 Chapter 5 Additional Rules for Listed Property Publication 946 (2024)
• Other buses with a capacity of at least 20 passengers
that are used as passenger buses.
• Tractors and other special purpose farm vehicles.
Clearly marked police or fire vehicle. A clearly
marked police or fire vehicle is a vehicle that meets all the
following requirements.
• It is owned or leased by a governmental unit or an
agency or instrumentality of a governmental unit.
• It is required to be used for commuting by a police offi-
cer or firefighter who, when not on a regular shift, is on
call at all times.
• It is prohibited from being used for personal use (other
than commuting) outside the limit of the police officer's
arrest powers or the firefighter's obligation to respond
to an emergency.
• It is clearly marked with painted insignia or words that
make it readily apparent that it is a police or fire vehi-
cle. A marking on a license plate is not a clear marking
for these purposes.
Qualified moving van. A qualified moving van is any
truck or van used by a professional moving company for
moving household or business goods if the following re-
quirements are met.
• No personal use of the van is allowed other than for
travel to and from a move site or for minor personal
use, such as a stop for lunch on the way from one
move site to another.
• Personal use for travel to and from a move site hap-
pens no more than five times a month on average.
• Personal use is limited to situations in which it is more
convenient to the employer, because of the location of
the employee's residence in relation to the location of
the move site, for the van not to be returned to the em-
ployer's business location.
Qualified specialized utility repair truck. A truck is
a qualified specialized utility repair truck if it is not a van or
pickup truck and all the following apply.
• The truck was specifically designed for and is used to
carry heavy tools, testing equipment, or parts.
• Shelves, racks, or other permanent interior construc-
tion has been installed to carry and store the tools,
equipment, or parts and would make it unlikely that the
truck would be used, other than minimally, for personal
purposes.
• The employer requires the employee to drive the truck
home in order to be able to respond in emergency sit-
uations for purposes of restoring or maintaining elec-
tricity, gas, telephone, water, sewer, or steam utility
services.
Can Employees Claim a
Deduction?
If you are an employee, you can claim a depreciation de-
duction for the use of your listed property (whether owned
or rented) in performing services as an employee only if
your use is a business use. The use of your property in
performing services as an employee is a business use
only if both the following requirements are met.
• The use is for your employer's convenience.
• The use is required as a condition of your employ-
ment.
If these requirements are not met, you cannot deduct
depreciation (including the section 179 deduction) or rent
expenses for your use of the property as an employee.
Note. Employee expenses for transportation and for
the depreciation of certain listed property (such as com-
puters placed in service before 2018) paid or incurred in a
tax year beginning after December 31, 2017, and before
January 1, 2026, may not be claimed as a miscellaneous
itemized deduction subject to the 2% floor. If you are not
entitled to claim these expenses as an above-the-line de-
duction, you may not claim a deduction for the expense on
your 2024 return.
Employer's convenience. Whether the use of listed
property is for your employer's convenience must be de-
termined from all the facts. The use is for your employer's
convenience if it is for a substantial business reason of the
employer. The use of listed property during your regular
working hours to carry on your employer's business is
generally for the employer's convenience.
Condition of employment. Whether the use of listed
property is a condition of your employment depends on all
the facts and circumstances. The use of property must be
required for you to perform your duties properly. Your em-
ployer does not have to require explicitly that you use the
property. However, a mere statement by the employer that
the use of the property is a condition of your employment
is not sufficient.
Example 1. Virginia Sycamore is employed as a cou-
rier with We Deliver, which provides local courier services.
Virginia owns and uses a motorcycle to deliver packages
to downtown offices. We Deliver explicitly requires all de-
livery persons to own a car or motorcycle for use in their
employment. Virginia's use of the motorcycle is for the
convenience of We Deliver and is required as a condition
of employment.
Example 2. You are an inspector for Uplift, a construc-
tion company with many sites in the local area. You must
travel to these sites on a regular basis. Uplift does not fur-
nish an automobile or explicitly require you to use your
own automobile. However, it pays you for any costs you in-
cur in traveling to the various sites. The use of your own
Publication 946 (2024) Chapter 5 Additional Rules for Listed Property 53
automobile or a rental automobile is for the convenience
of Uplift and is required as a condition of employment.
Example 3. Assume the same facts as in Example 2,
except that Uplift furnishes a car to you, and you choose
to use your own car and receive payment for using it. The
use of your own car is neither for the convenience of Uplift
nor required as a condition of employment.
Example 4. Marilyn Lee is a pilot for Y Company, a
small charter airline. Y requires pilots to obtain 80 hours of
flight time annually in addition to flight time spent with the
airline. Pilots can usually obtain these hours by flying with
the Air Force Reserve or by flying part-time with another
airline. Marilyn owns an airplane. The use of that airplane
to obtain the required flight hours is neither for the conven-
ience of the employer nor required as a condition of em-
ployment.
Example 5. David Rule is employed as an engineer
with Zip, an engineering contracting firm. David occasion-
ally takes work home at night rather than work late in the
office. David owns and uses a home computer, which is
virtually identical to the office model. David’s use of the
computer is neither for the convenience of David’s em-
ployer nor required as a condition of employment.
What Is the Business-Use
Requirement?
Terms you may need to know
(see Glossary):
Adjusted basis
Business/investment use
Capitalized
Commuting
Declining balance method
Fair market value (FMV)
Nonresidential real property
Placed in service
Recapture
Recovery period
Straight line method
You can claim the section 179 deduction and a special de-
preciation allowance for listed property and depreciate lis-
ted property using GDS and a declining balance method if
the property meets the business-use requirement. To
meet this requirement, listed property must be used pre-
dominantly (more than 50% of its total use) for qualified
business use. There is also a 25% test for business air-
craft (discussed earlier). If this requirement is not met, the
following rules apply.
• Property not used predominantly for qualified busi-
ness use during the year it is placed in service does
not qualify for the section 179 deduction.
• Property not used predominantly for qualified busi-
ness use during the year it is placed in service does
not qualify for a special depreciation allowance.
• Any depreciation deduction under MACRS for prop-
erty not used predominantly for qualified business use
during any year must be figured using the straight line
method over the ADS recovery period. This rule ap-
plies each year of the recovery period.
• Excess depreciation on property previously used pre-
dominantly for qualified business use must be recap-
tured (included in income) in the first year in which it is
no longer used predominantly for qualified business
use.
• A lessee must add an inclusion amount to income in
the first year in which the leased property is not used
predominantly for qualified business use.
Being required to use the straight line method for
an item of listed property not used predominantly
for qualified business use is not the same as
electing the straight line method. It does not mean that
you have to use the straight line method for other property
in the same class as the item of listed property.
Exception for leased property. The business-use re-
quirement generally does not apply to any listed property
leased or held for leasing by anyone regularly engaged in
the business of leasing listed property.
You are considered regularly engaged in the business
of leasing listed property only if you enter into contracts for
the leasing of listed property with some frequency over a
continuous period of time. This determination is made on
the basis of the facts and circumstances in each case and
takes into account the nature of your business in its en-
tirety. Occasional or incidental leasing activity is insuffi-
cient. For example, if you lease only one passenger auto-
mobile during a tax year, you are not regularly engaged in
the business of leasing automobiles. An employer who al-
lows an employee to use the employer's property for per-
sonal purposes and charges the employee for the use is
not regularly engaged in the business of leasing the prop-
erty used by the employee.
How To Allocate Use
To determine whether the business-use requirement is
met, you must allocate the use of any item of listed prop-
erty used for more than one purpose during the year
among its various uses.
For passenger automobiles and other means of trans-
portation, allocate the property's use on the basis of mile-
age. You determine the percentage of qualified business
use by dividing the number of miles you drove the vehicleCAUTION
!
54 Chapter 5 Additional Rules for Listed Property Publication 946 (2024)
for business purposes during the year by the total number
of miles you drove the vehicle for all purposes (including
business miles) during the year.
For other listed property, allocate the property's use on
the basis of the most appropriate unit of time the property
is actually used (rather than merely being available for
use). For example, you can determine the percentage of
business use of an item of listed property by dividing the
number of hours you used the item of listed property for
business purposes during the year by the total number of
hours you used the item of listed property for all purposes
(including business use) during the year.
Entertainment use. Treat the use of listed property for
entertainment, recreation, or amusement purposes as a
business use only to the extent you can deduct expenses
(other than interest and property tax expenses) due to its
use as an ordinary and necessary business expense.
Commuting use. The use of an automobile for commut-
ing is not business use, regardless of whether work is per-
formed during the trip. For example, a business telephone
call made on a car telephone while commuting to work
does not change the character of the trip from commuting
to business. This is also true for a business meeting held
in a car while commuting to work. Similarly, a business call
made on an otherwise personal trip does not change the
character of a trip from personal to business. The fact that
an automobile is used to display material that advertises
the owner's or user's trade or business does not convert
an otherwise personal use into business use.
Use of your automobile by another person. If some-
one else uses your automobile, do not treat that use as
business use unless one of the following conditions ap-
plies.
1. That use is directly connected with your business.
2. You properly report the value of the use as income to
the other person and withhold tax on the income
where required.
3. You are paid a fair market rent.
Treat any payment to you for the use of the automobile as
a rent payment for purposes of item (3).
Employee deductions. If you are an employee, do not
treat your use of listed property as business use unless it
is for your employer's convenience and is required as a
condition of your employment. See Can Employees Claim
a Deduction, earlier.
Qualified Business Use
Qualified business use of listed property is any use of the
property in your trade or business. However, it does not in-
clude the following uses.
• The leasing of property to any 5% owner or related
person (to the extent the property is used by a 5%
owner or person related to the owner or lessee of the
property).
• The use of property as pay for the services of a 5%
owner or related person.
• The use of property as pay for services of any person
(other than a 5% owner or related person), unless the
value of the use is included in that person's gross in-
come and income tax is withheld on that amount
where required.
Property does not stop being used predominantly
for qualified business use because of a transfer at
death.
Exception for leasing or compensatory use of air-
craft. Treat the leasing of any aircraft by a 5% owner or
related person, or the compensatory use of any aircraft,
as a qualified business use if at least 25% of the total use
of the aircraft during the year is for a qualified business
use. If the 25% test is not met, you cannot take acceler-
ated depreciation
For business aircraft, allocate the use based on mile-
age or hours on a per-passenger basis for the year. This
can be done using the flight-by-flight method or the occu-
pied-seat method computations.
5% owner. For a business entity that is not a corporation,
a 5% owner is any person who owns more than 5% of the
capital or profits interest in the business.
For a corporation, a 5% owner is any person who owns,
or is considered to own, either of the following.
• More than 5% of the outstanding stock of the corpora-
tion.
• Stock possessing more than 5% of the total combined
voting power of all stock in the corporation.
Related persons. For a description of related persons,
see Related persons in the discussion on property owned
or used in 1986 under What Method Can You Use To De-
preciate Your Property? in chapter 1. For this purpose,
however, treat as related persons only the relationships
listed in items (1) through (10) of that discussion and sub-
stitute “50%” for “10%” each place it appears.
Examples. The following examples illustrate whether the
use of business property is qualified business use.
Example 1. John Maple is the sole proprietor of a
plumbing contracting business. Richard, John’s sibling, is
employed by John in the business. As part of Richard's
pay, Richard is allowed to use one of the company auto-
mobiles for personal use. The company includes the value
of the personal use of the automobile in Richard's gross
income and properly withholds tax on it. The use of the
automobile is pay for the performance of services by a re-
lated person, so it is not a qualified business use.
Example 2. John, in Example 1, allows unrelated em-
ployees to use company automobiles for personal purpo-
ses. John does not include the value of the personal use
of the company automobiles as part of their compensation
and does not withhold tax on the value of the use of theCAUTION
!
Publication 946 (2024) Chapter 5 Additional Rules for Listed Property 55
automobiles. This use of company automobiles by em-
ployees is not a qualified business use.
Example 3. James Company Inc. owns several auto-
mobiles that its employees use for business purposes.
The employees are also allowed to take the automobiles
home at night. The FMV of each employee's use of an au-
tomobile for any personal purpose, such as commuting to
and from work, is reported as income to the employee and
James Company withholds tax on it. This use of company
automobiles by employees, even for personal purposes, is
a qualified business use for the company.
Investment Use
The use of property to produce income in a nonbusiness
activity (investment use) is not a qualified business use.
However, you can treat the investment use as business
use to figure the depreciation deduction for the property in
a given year.
Example 1. You use an item of listed property 50% of
the time to manage your investments. You also use the
item of listed property 40% of the time in your part-time
consumer research business. Your item of listed property
is listed property because it is not used at a regular busi-
ness establishment. You do not use the item of listed
property predominantly for qualified business use. There-
fore, you cannot elect a section 179 deduction or claim a
special depreciation allowance for the item of listed prop-
erty. You must depreciate it using the straight line method
over the ADS recovery period. Your combined business/
investment use for determining your depreciation deduc-
tion is 90%.
Example 2. If you use your item of listed property 30%
of the time to manage your investments and 60% of the
time in your consumer research business, it is used pre-
dominantly for qualified business use. You can elect a
section 179 deduction and, if you do not deduct all the
item of listed property’s cost, you can claim a special de-
preciation allowance and depreciate the item of listed
property using the 200% declining balance method over
the GDS recovery period. Your combined business/invest-
ment use for determining your depreciation deduction is
90%.
Recapture of Excess Depreciation
If you used listed property more than 50% in a qualified
business use in the year you placed it in service, you must
recapture (include in income) excess depreciation in the
first year you use it 50% or less. You also increase the ad-
justed basis of your property by the same amount.
Excess depreciation is:
1. The depreciation allowable for the property (including
any section 179 deduction and special depreciation
allowance claimed) for years before the first year you
do not use the property predominantly for qualified
business use, minus
2. The depreciation that would have been allowable for
those years if you had not used the property predomi-
nantly for qualified business use in the year you
placed it in service.
To determine the amount in (2) above, you must refigure
the depreciation using the straight line method and the
ADS recovery period.
Example. In June 2020, Ellen Rye purchased and
placed in service a pickup truck that cost $18,000. Ellen
used it only for qualified business use for 2020 through
2023. Ellen claimed a section 179 deduction of $10,000
based on the purchase of the truck. Ellen began depreci-
ating it using the 200% DB method over a 5-year GDS re-
covery period. The pickup truck's gross vehicle weight
was over 6,000 pounds, so it was not subject to the pas-
senger automobile limits discussed later under Do the
Passenger Automobile Limits Apply. During 2024, Ellen
used the truck 50% for business and 50% for personal
purposes. Ellen includes $4,018 excess depreciation in
her gross income for 2024. The excess depreciation is de-
termined as follows.
Total section 179 deduction ($10,000) and
depreciation claimed ($6,618) for 2020 through
2023. (Depreciation is from Table A-1.) . . . . . . . $16,618
Minus: Depreciation allowable (Table
A-8):
2020—10% of $18,000 . . . . . . . . . . . $1,800
2021—20% of $18,000 . . . . . . . . . . . 3,600
2022—20% of $18,000 . . . . . . . . . . . 3,600
2023—20% of $18,000 . . . . . . . . . . . 3,600 12,600
Excess depreciation. . . . . . . . . . . . . . . . . . . . . $4,018
If Ellen's use of the truck does not change to 50% for
business and 50% for personal purposes until 2026, there
will be no excess depreciation. The total depreciation al-
lowable using Table A-8 through 2026 will be $18,000,
which equals the total of the section 179 deduction and
depreciation Ellen will have claimed.
Where to figure and report recapture. Use Form 4797,
Part IV, to figure the recapture amount. Report the recap-
ture amount as other income on the same form or sched-
ule on which you took the depreciation deduction. For ex-
ample, report the recapture amount as other income on
Schedule C (Form 1040) if you took the depreciation de-
duction on Schedule C. If you took the depreciation de-
duction on Form 2106, report the recapture amount as
other income on Schedule 1 (Form 1040), line 8z.
Lessee's Inclusion Amount
If you use leased listed property other than a passenger
automobile for business/investment use, you must include
an amount in your income in the first year your qualified
business-use percentage is 50% or less. Your qualified
business-use percentage is the part of the property's total
use that is qualified business use (defined earlier). For the
56 Chapter 5 Additional Rules for Listed Property Publication 946 (2024)
inclusion amount rules for a leased passenger automobile,
see Leasing a Car in chapter 4 of Pub. 463.
The inclusion amount is the sum of Amount A and
Amount B, described next. However, see the special rules
for the inclusion amount, later, if your lease begins in the
last 9 months of your tax year or is for less than 1 year.
Amount A. Amount A is:
1. The FMV of the property, multiplied by
2. The business/investment use for the first tax year the
qualified business-use percentage is 50% or less,
multiplied by
3. The applicable percentage from Table A-19 in Appen-
dix A.
The FMV of the property is the value on the first day of
the lease term. If the capitalized cost of an item of listed
property is specified in the lease agreement, you must
treat that amount as the FMV.
Amount B. Amount B is:
1. The FMV of the property, multiplied by
2. The average of the business/investment use for all tax
years the property was leased that precede the first
tax year the qualified business-use percentage is 50%
or less, multiplied by
3. The applicable percentage from Table A-20 in Appen-
dix A.
Maximum inclusion amount. The inclusion amount
cannot be more than the sum of the deductible amounts of
rent for the tax year in which the lessee must include the
amount in gross income.
Inclusion amount worksheet. The following worksheet
is provided to help you figure the inclusion amount for
leased listed property.
Inclusion Amount Worksheet
for Leased Listed Property
Keep for Your Records
1. Fair market value . . . . . . . . . . . . . . . . . . . . . . .
2. Business/investment use for first year
business use is 50% or less . . . . . . . . . . . . .
3. Multiply line 1 by line 2 . . . . . . . . . . . . . . . . . .
4. Rate (%) from Table A-19 . . . . . . . . . . . . . . .
5. Multiply line 3 by line 4. This is Amount
A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Fair market value . . . . . . . . . . . . . . . . . . . . . . .
7. Average business/investment use for
years property leased before the first year
business use is 50% or less . . . . . . . . . . . . .
8. Multiply line 6 by line 7 . . . . . . . . . . . . . . . . . .
9. Rate (%) from Table A-20 . . . . . . . . . . . . . . .
10. Multiply line 8 by line 9. This is Amount
B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Add line 5 and line 10. This is your
inclusion amount. Enter here and as other
income on the form or schedule on which
you originally took the deduction (for
example, Schedule C or F (Form 1040),
Schedule 1 (Form 1040), Form 1120,
etc.) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Example. On February 1, 2022, Larry House, a calen-
dar year taxpayer, leased and placed in service an item of
listed property with an FMV of $3,000. The lease is for a
period of 5 years. Larry does not use the item of listed
property at a regular business establishment, so it is listed
property. Larry’s business use of the property (all of which
is qualified business use) is 80% in 2022, 60% in 2023,
and 40% in 2024. Larry must add an inclusion amount to
gross income for 2024, the first tax year Larry’s qualified
business-use percentage is 50% or less. The item of listed
property has a 5-year recovery period under both GDS
and ADS. 2024 is the third tax year of the lease, so the ap-
plicable percentage from Table A-19 is −19.8%. The appli-
cable percentage from Table A-20 is 22%. Larry's deducti-
ble rent for the item of listed property for 2024 is $800.
Larry uses the inclusion amount worksheet to figure the
amount that must be included in income for 2024. Larry’s
inclusion amount is $224, which is the sum of −$238
(Amount A) and $462 (Amount B).
Inclusion Amount Worksheet
for Leased Listed Property
Keep for Your Records
1. Fair market value . . . . . . . . . . . . . . . . . . . . . $3,000
2. Business/investment use for first year
business use is 50% or less . . . . . . . . . . . 40%
3. Multiply line 1 by line 2 . . . . . . . . . . . . . . . . 1,200
4. Rate (%) from Table A-19 . . . . . . . . . . . . . −19.8%
5. Multiply line 3 by line 4. This is Amount
A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . −238
6. Fair market value . . . . . . . . . . . . . . . . . . . . . 3,000
7. Average business/investment use for
years property leased before the first
year business use is 50% or less . . . . . . 70%
8. Multiply line 6 by line 7 . . . . . . . . . . . . . . . . 2,100
9. Rate (%) from Table A-20 . . . . . . . . . . . . . 22.0%
10. Multiply line 8 by line 9. This is Amount
B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 462
Publication 946 (2024) Chapter 5 Additional Rules for Listed Property 57
11. Add line 5 and line 10. This is your
inclusion amount. Enter here and as
other income on the form or schedule
on which you originally took the
deduction (for example, Schedule C or F
(Form 1040), Schedule 1 (Form 1040),
Form 1120, etc.) . . . . . . . . . . . . . . . . . . . . . $224
Lease beginning in the last 9 months of your tax
year. The inclusion amount is subject to a special rule if
all the following apply.
• The lease term begins within 9 months before the
close of your tax year.
• You do not use the property predominantly (more than
50%) for qualified business use during that part of the
tax year.
• The lease term continues into your next tax year.
Under this special rule, add the inclusion amount to in-
come in the next tax year. Figure the inclusion amount by
taking into account the average of the business/invest-
ment use for both tax years (line 2 of the Inclusion Amount
Worksheet for Leased Listed Property) and the applicable
percentage for the tax year the lease term begins. Skip
lines 6 through 9 of the worksheet and enter zero on
line 10.
Example 1. On August 1, 2023, Julie Rule, a calendar
year taxpayer, leased and placed in service an item of lis-
ted property. The property is 5-year property with an FMV
of $10,000. Julie’s property has a recovery period of 5
years under ADS. The lease is for 5 years. Julie’s busi-
ness use of the property was 50% in 2023 and 90% in
2024. Julie paid rent of $3,600 for 2023, of which $3,240
is deductible. Julie must include $147 in income in 2024.
The $147 is the sum of Amount A and Amount B. Amount
A is $147 ($10,000 × 70% (0.70) × 2.1% (0.021)), the
product of the FMV, the average business use for 2023
and 2024, and the applicable percentage for year 1 from
Table A-19. Amount B is zero.
Lease for less than 1 year. A special rule for the inclu-
sion amount applies if the lease term is less than 1 year
and you do not use the property predominantly (more than
50%) for qualified business use. The amount included in
income is the inclusion amount (figured as described in
the preceding discussions) multiplied by a fraction. The
numerator of the fraction is the number of days in the
lease term, and the denominator is 365 (or 366 for leap
years).
The lease term for listed property includes options to
renew. If you have two or more successive leases that are
part of the same transaction (or a series of related trans-
actions) for the same or substantially similar property, treat
them as one lease.
Example 2. On October 1, 2023, John Joyce, a calen-
dar year taxpayer, leased and placed in service an item of
listed property that is 3-year property. This property had
an FMV of $15,000 and a recovery period of 5 years un-
der ADS. The lease term was 6 months (ending on March
31, 2024), during which John used the property 45% in
business. John must include $71 in income in 2024. The
$71 is the sum of Amount A and Amount B. Amount A is
$71 ($15,000 × 45% (0.45) × 2.1% (0.021) × 183/365), the
product of the FMV, the average business use for both
years, and the applicable percentage for year 1 from Table
A-19, prorated for the length of the lease. Amount B is
zero.
Where to report the inclusion amount. Report the in-
clusion amount figured (as described in the preceding dis-
cussions) as other income on the same form or schedule
on which you took the deduction for your rental costs. For
example, report the inclusion amount as other income on
Schedule C (Form 1040) if you took the deduction on
Schedule C. If you took the deduction for rental costs on
Form 2106, report the inclusion amount as other income
on Schedule 1 (Form 1040), line 8z.
Do the Passenger Automobile
Limits Apply?
Terms you may need to know
(see Glossary):
Basis
Convention
Placed in service
Recovery period
The depreciation deduction, including the section 179 de-
duction and special depreciation allowance, you can claim
for a passenger automobile (defined earlier) each year is
limited.
This section describes the maximum depreciation de-
duction amounts for 2024 and explains how to deduct, af-
ter the recovery period, the unrecovered basis of your
property that results from applying the passenger automo-
bile limits.
Exception for leased cars. The passenger automobile
limits generally do not apply to passenger automobiles
leased or held for leasing by anyone regularly engaged in
the business of leasing passenger automobiles. For infor-
mation on when you are considered regularly engaged in
the business of leasing listed property, including passen-
ger automobiles, see Exception for leased property, ear-
lier, under What Is the Business-Use Requirement.
58 Chapter 5 Additional Rules for Listed Property Publication 946 (2024)
Maximum Depreciation Deduction
The passenger automobile limits are the maximum depre-
ciation amounts you can deduct for a passenger automo-
bile. They are based on the date you placed the
automobile in service.
Passenger Automobiles
The maximum deduction amounts for most passenger au-
tomobiles are shown in the following table.
Maximum Depreciation Deduction for Passenger Au-
tomobiles (Including Trucks and Vans) Acquired Af-
ter September 27, 2017, and Placed in Service Before
2025
Date 4th &
Placed 1st 2nd 3rd Later
in Service Year Year Year Year
2024 $20,4001 $19,800 $11,900 $7,160
2023 20,200 2 19,500 11,700 6,960
2022 19,2003 18,000 10,800 6,460
2021 18,2004 16,400 9,800 5,860
2020 18,1005 16,100 9,700 5,760
2019 18,1005 16,100 9,700 5,760
2018 18,0006 16,000 9,600 5,760
1 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum depreciation
deduction is $12,400.
2 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum depreciation
deduction is $12,200.
3 If you elected not to claim any special depreciation allowance or
the vehicle is notqualified property, the maximum depreciation
deduction is $11,200.
4 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum depreciation
deduction is $10,200.
5 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum depreciation
deduction is $10,100.
6 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum depreciation
deduction is $10,000.
Maximum Depreciation Deduction for Passenger Au-
tomobiles (Including Trucks and Vans) Acquired Be-
fore September 28, 2017, and Placed in Service Be-
fore 2020
Date 4th &
Placed 1st 2nd 3rd Later
in Service Year Year Year Year
2019 $14,9001 $16,100 $9,700 $5,760
2018 16,4002 16,000 9,600 5,760
1 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum depreciation
deduction is $10,100.
2 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum depreciation
deduction is $10,000.
Maximum Depreciation Deduction for Passenger Au-
tomobiles Placed in Service Before 2018
Date 4th &
Placed 1st 2nd 3rd Later
in Service Year Year Year Years
2017 $11,1601 $5,100 $3,050 $1,875
2016 11,1601 5,100 3,050 1,875
2015 11,1602 5,100 3,050 1,875
2014 11,1603 5,100 3,050 1,875
2013 11,1603 5,100 3,050 1,875
2012 11,1603 5,100 3,050 1,875
2011 11,0604 4,900 2,950 1,775
2010 11,0604 4,900 2,950 1,775
2009 10,9605 4,800 2,850 1,775
2008 10,9605 4,800 2,850 1,775
2007 3,060 4,900 2,850 1,775
2006 2,960 4,800 2,850 1,775
1 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum deduction is
$3,160.
2 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum deduction is
$3,160. Also, if you placed the vehicle in service in a tax year
beginning in 2015 and ending in 2016, and you elected to
accelerate certain credits in lieu of the special depreciation for
that tax year, the maximum deduction is $3,160.
3 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum deduction is
$3,160.
4 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum deduction is
$3,060.
5 If you elected not to claim any special depreciation allowance
for the vehicle or the vehicle is not qualified property, the
maximum deduction is $2,960.
Publication 946 (2024) Chapter 5 Additional Rules for Listed Property 59
If your business/investment use of the automobile
is less than 100%, you must reduce the maximum
deduction amount by multiplying the maximum
amount by the percentage of business/investment use de-
termined on an annual basis during the tax year.
If you have a short tax year, you must reduce the
maximum deduction amount by multiplying the
maximum amount by a fraction. The numerator of
the fraction is the number of months and partial months in
the short tax year, and the denominator is 12.
Example. On April 15, 2024, you bought and placed in
service a new car for $14,500. You used the car only in
your business. You file your tax return based on the calen-
dar year. You do not elect a section 179 deduction and
elected not to claim any special depreciation allowance for
the 5-year property. Under MACRS, a car is 5-year prop-
erty. Because you placed your car in service on April 15
and used it only for business, you use the percentages in
Table A-1 to figure your MACRS depreciation on the car.
You multiply the $14,500 unadjusted basis of your car by
0.20 to get your MACRS depreciation of $2,900 for 2024.
This $2,900 is below the maximum depreciation deduction
of $12,400 for passenger automobiles placed in service in
2024. You can deduct the full $2,900.
Electric Vehicles
The maximum depreciation deductions for passenger au-
tomobiles that are produced to run primarily on electricity
are higher than those for other automobiles. The maxi-
mum deduction amounts for electric vehicles placed in
service after August 5, 1997, and before January 1, 2007,
are shown in the following table. Owners of electric vehi-
cles placed in service after December 31, 2006, should
use the table of maximum deduction amounts in the previ-
ous section titled Passenger Automobiles for electric vehi-
cles classified as passenger automobiles or use the table
of maximum deduction amounts for trucks and vans, later,
for electric vehicles classified as trucks and vans.
Maximum Depreciation Deduction
for Electric Vehicles
Date 4th &
Placed 1st 2nd 3rd Later
in Service Year Year Year Years
2006 $8,980 $14,400 $8,650 $5,225
2005 8,880 14,200 8,450 5,125
2004 31,8301 14,300 8,550 5,125
5/06/2003–
12/31/2003
32,0302 14,600 8,750 5,225
1/01/2003–
5/05/2003
22,8803 14,600 8,750 5,225
1 If you elected not to claim any special depreciation allowance
for the vehicle, or the vehicle is not qualified property, or the
vehicle is qualified Liberty Zone property, the maximum
deduction is $8,880.CAUTION
!CAUTION
!
2 If you acquired the vehicle before 5/06/03, the maximum
deduction is $22,880. If you elected not to claim any special
depreciation allowance for the vehicle, the vehicle is not qualified
property, or the vehicle is qualified Liberty Zone property, the
maximum deduction is $9,080.
3 If you elected not to claim any special depreciation allowance
for the vehicle, the vehicle is not qualified property, or the vehicle
is qualified Liberty Zone property, the maximum deduction is
$9,080.
Trucks and Vans
The maximum depreciation deductions for trucks and
vans placed in service after 2002 are higher than those for
other passenger automobiles. The maximum deduction
amounts for trucks and vans are shown in the following ta-
ble.
Maximum Depreciation Deduction
for Trucks and Vans Placed in Service Before 2018
Date 4th &
Placed 1st 2nd 3rd Later
in Service Year Year Year Years
2017 $11,5601 $5,700 $3,450 $2,075
2016 11,5601 5,700 3,350 2,075
2015 11,4602 5,600 3,350 1,975
2014 11,4603 5,500 3,350 1,975
2013 11,3604 5,400 3,250 1,975
2012 11,3604 5,300 3,150 1,875
2011 11,2605 5,200 3,150 1,875
2010 11,1606 5,100 3,050 1,875
2009 11,0607 4,900 2,950 1,775
2008 11,1608 5,100 3,050 1,875
2007 3,260 5,200 3,050 1,875
2006 3,260 5,200 3,150 1,875
1 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum deduction is
$3,560.
2 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum deduction is
$3,460. Also, if you placed the vehicle in service in a tax year
beginning in 2015 and ending in 2016, and you elected to
accelerate certain credits in lieu of the special depreciation for
that tax year, the maximum deduction is $3,460.
3 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum deduction is
$3,460.
4 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum deduction is
$3,360.
60 Chapter 5 Additional Rules for Listed Property Publication 946 (2024)
5 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum deduction is
$3,260.
6 If you elected not to claim any special depreciation allowance or
the vehicle is not qualified property, the maximum deduction is
$3,160.
7 If you elected not to claim any special depreciation allowance
for the vehicle or the vehicle is not qualified property, the
maximum deduction is $3,060.
8 If you elected not to claim any special depreciation allowance
for the vehicle or the vehicle is not qualified property, the
maximum deduction is $3,160.
Depreciation Worksheet for Passenger
Automobiles
You can use the Depreciation Worksheet for Passenger
Automobiles on the next page to figure your depreciation
deduction using the percentage tables. Then, use the in-
formation from this worksheet to prepare Form 4562.
Deductions After the Recovery Period
If the depreciation deductions for your automobile are re-
duced under the passenger automobile limits, you will
have unrecovered basis in your automobile at the end of
the recovery period. If you continue to use the automobile
for business, you can deduct that unrecovered basis after
the recovery period ends. You can claim a depreciation
deduction in each succeeding tax year until you recover
your full basis in the car. The maximum amount you can
deduct each year is determined by the date you placed
the car in service and your business/investment-use per-
centage. See Maximum Depreciation Deduction, earlier.
Unrecovered basis is the cost or other basis of the pas-
senger automobile reduced by any clean-fuel vehicle de-
duction, electric vehicle credit, depreciation, and section
179 deductions that would have been allowable if you had
used the car 100% for business and investment use and
the passenger automobile limits had not applied.
You cannot claim a depreciation deduction for lis-
ted property other than passenger automobiles
after the recovery period ends. There is no unrec-
overed basis at the end of the recovery period because
you are considered to have used this property 100% for
business and investment purposes during all of the recov-
ery period.
Example. In May 2018, you bought and placed in
service a car costing $31,500. The car was 5-year prop-
erty under GDS (MACRS). You did not elect a section 179
deduction and elected not to claim any special deprecia-
tion allowance for the 5-year property. You used the car
exclusively for business during the recovery period (2018
through 2023). You figured your depreciation as shown
below.CAUTION
!
Year Percentage Amount Limit Allowed
2018 20.0% $6,300 $3,160 $3,160
2019 32.0 10,080 5,100 5,100
2020 19.2 6,048 3,050 3,050
2021 11.52 3,629 1,875 1,875
2022 11.52 3,629 1,875 1,875
2023 5.76 1,814 1,875 1,875
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,935
At the end of 2023, you had an unrecovered basis of
$14,565 ($31,500 − $16,935). If in 2024 and later years
you continue to use the car 100% for business, you can
deduct each year the lesser of $1,875 or your remaining
unrecovered basis.
If your business use of the car had been less than
100% during any year, your depreciation deduction would
have been less than the maximum amount allowable for
that year. However, in figuring your unrecovered basis in
the car, you would still reduce your basis by the maximum
amount allowable as if the business use had been 100%.
For example, if you had used your car 60% for business
instead of 100%, your allowable depreciation deductions
would have been $8,739 ($14,565 × 60% (0.60)), but you
would still have to reduce your basis by $14,565 to deter-
mine your unrecovered basis.
Deductions for Passenger
Automobiles Acquired in a Trade-In
Like-kind exchanges beginning after December
31, 2017, are generally limited to exchanges of
real property not held primarily for sale. Section
1.168(i)-6 of the regulations does not reflect this change in
law.
If you acquire a passenger automobile in a trade-in, de-
preciate the carryover basis separately as if the trade-in
did not occur. Depreciate the part of the new automobile's
basis that exceeds its carryover basis (excess basis) as if
it were newly placed in service property. This excess basis
is the additional cash paid for the new automobile in the
trade-in.
The depreciation figured for the two components of the
basis (carryover basis and excess basis) is subject to a
single passenger automobile limit. Special rules apply in
determining the passenger automobile limits. These rules
and examples are discussed in section 1.168(i)-6(d)(3) of
the regulations.
Instead of figuring depreciation for the carryover basis
and the excess basis separately, you can elect to treat the
old automobile as disposed of and both of the basis com-
ponents for the new automobile as if placed in service at
the time of the trade-in. For more information, including
how to make this election, see Election out under Property
Acquired in a Like-Kind Exchange or Involuntary Conver-
sion in chapter 4, and sections 1.168(i)-6(i) and
1.168(i)-6(j) of the regulations.CAUTION
!
Publication 946 (2024) Chapter 5 Additional Rules for Listed Property 61
Depreciation Worksheet for
Passenger Automobiles Keep for Your Records
Part I
1. MACRS system (GDS or ADS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Property class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Date placed in service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Recovery period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. Method and convention . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Depreciation rate (from tables) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Maximum depreciation deduction for this year from the appropriate
table . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. Business/investment-use percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Multiply line 7 by line 8. This is your adjusted maximum depreciation
deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Section 179 deduction claimed this year (not more than line 9).
Enter -0- if this is not the year you placed the car in service . . . . . . . . .
Note.
1) If line 10 is equal to line 9, stop here. Your combined section 179 and depreciation deduction (including
your special depreciation allowance) is limited to the amount on line 9.
2) If line 10 is less than line 9, complete Part II.
Part II
11. Subtract line 10 from line 9. This is the limit on the amount you can
deduct for depreciation (including any special depreciation
allowance) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. Cost or other basis (reduced by any alternative motor vehicle credit1
or credit for electric vehicles2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Multiply line 12 by line 8. This is your business/investment cost . . . . . .
14. Section 179 deduction claimed in the year you placed the car in
service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15. Subtract line 14 from line 13. This is your tentative basis for
depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16. Multiply line 15 by the applicable percentage if the special
depreciation allowance applies. This is your special depreciation
allowance. Enter -0- if this is not the year you placed the car in service,
the car is not qualified property, or you elected not to claim a special
depreciation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note.
1) If line 16 is equal to line 11, stop here. Your depreciation deduction (including your special depreciation
allowance) is limited to the amount on line 11.
2) If line 16 is less than line 11, complete Part III.
Part III
17. Subtract line 16 from line 11. This is the limit on the amount you can
deduct for MACRS depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18. Subtract line 16 from line 15. This is your basis for depreciation . . . . .
19. Multiply line 18 by line 6. This is your tentative MACRS depreciation
deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20. Enter the lesser of line 17 or line 19. This is your MACRS depreciation
deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 When figuring the amount to enter on line 12, do not reduce your cost or other basis by any section 179 deduction you claimed for
your car.
2 Reduce the basis by the lesser of $4,000 or 10% of the cost of the vehicle even if the credit is less than that amount.
62 Chapter 5 Additional Rules for Listed Property Publication 946 (2024)
What Records Must Be Kept?
Terms you may need to know
(see Glossary):
Business/investment use
Circumstantial evidence
Documentary evidence
You cannot take any depreciation or section 179 deduc-
tion for the use of listed property unless you can prove
your business/investment use with adequate records or
with sufficient evidence to support your own statements.
For listed property, you must keep records for as long as
any recapture can still occur. Recapture can occur in any
tax year of the recovery period.
Adequate Records
To meet the adequate records requirement, you
must maintain an account book, diary, log, state-
ment of expense, trip sheet, or similar record or
other documentary evidence that, together with the re-
ceipt, is sufficient to establish each element of an expen-
diture or use. You do not have to record information in an
account book, diary, or similar record if the information is
already shown on the receipt. However, your records
should back up your receipts in an orderly manner.
Elements of expenditure or use. Your records or other
documentary evidence must support all the following.
• The amount of each separate expenditure, such as
the cost of acquiring the item, maintenance and repair
costs, capital improvement costs, lease payments,
and any other expenses.
• The amount of each business and investment use
(based on an appropriate measure, such as mileage
for vehicles and time for other listed property), and the
total use of the property for the tax year.
• The date of the expenditure or use.
• The business or investment purpose for the expendi-
ture or use.
Written documents of your expenditure or use are gen-
erally better evidence than oral statements alone. You do
not have to keep a daily log. However, some type of record
containing the elements of an expenditure or the business
or investment use of listed property made at or near the
time of the expenditure or use and backed up by other
documents is preferable to a statement you prepare later.
Timeliness. You must record the elements of an expendi-
ture or use at the time you have full knowledge of the ele-
ments. An expense account statement made from an ac-
count book, diary, or similar record prepared or
maintained at or near the time of the expenditure or use isRECORDS
generally considered a timely record if, in the regular
course of business:
• The statement is given by an employee to the em-
ployer, or
• The statement is given by an independent contractor
to the client or customer.
For example, a log maintained on a weekly basis, that
accounts for use during the week, will be considered a re-
cord made at or near the time of use.
Business purpose supported. Generally, an adequate
record of business purpose must be in the form of a writ-
ten statement. However, the amount of detail necessary to
establish a business purpose depends on the facts and
circumstances of each case. A written explanation of the
business purpose will not be required if the purpose can
be determined from the surrounding facts and circumstan-
ces. For example, a salesperson visiting customers on an
established sales route will not normally need a written ex-
planation of the business purpose of their travel.
Business use supported. An adequate record contains
enough information on each element of every business or
investment use. The amount of detail required to support
the use depends on the facts and circumstances. For ex-
ample, a taxpayer who uses a truck for both business and
personal purposes and whose only business use of the
truck is to make customer deliveries on an established
route can satisfy the requirement by recording the length
of the route, including the total number of miles driven dur-
ing the tax year and the date of each trip at or near the
time of the trip.
Although you must generally prepare an adequate writ-
ten record, you can prepare a record of the business use
of listed property in a computer memory device that uses
a logging program.
Separate or combined expenditures or uses. Each
use by you is normally considered a separate use. How-
ever, you can combine repeated uses as a single item.
Record each expenditure as a separate item. Do not
combine it with other expenditures. If you choose, how-
ever, you can combine amounts you spent for the use of
listed property during a tax year, such as for gasoline or
automobile repairs. If you combine these expenses, you
do not need to support the business purpose of each ex-
pense. Instead, you can divide the expenses based on the
total business use of the listed property.
You can account for uses that can be considered part
of a single use, such as a round trip or uninterrupted busi-
ness use, by a single record. For example, you can ac-
count for the use of a truck to make deliveries at several
locations that begin and end at the business premises and
can include a stop at the business in between deliveries
by a single record of miles driven. You can account for the
use of a passenger automobile by a salesperson for a
business trip away from home over a period of time by a
single record of miles traveled. Minimal personal use
(such as a stop for lunch between two business stops) is
not an interruption of business use.
Publication 946 (2024) Chapter 5 Additional Rules for Listed Property 63
Confidential information. If any of the information on
the elements of an expenditure or use is confidential, you
do not need to include it in the account book or similar re-
cord if you record it at or near the time of the expenditure
or use. You must keep it elsewhere and make it available
as support to the IRS director for your area on request.
Substantial compliance. If you have not fully supported
a particular element of an expenditure or use, but have
complied with the adequate records requirement for the
expenditure or use to the satisfaction of the IRS director
for your area, you can establish this element by any evi-
dence the IRS director for your area deems adequate.
If you fail to establish to the satisfaction of the IRS di-
rector for your area that you have substantially complied
with the adequate records requirement for an element of
an expenditure or use, you must establish the element as
follows.
• By your own oral or written statement containing de-
tailed information as to the element.
• By other evidence sufficient to establish the element.
If the element is the cost or amount, time, place, or date
of an expenditure or use, its supporting evidence must be
direct evidence, such as oral testimony by witnesses or a
written statement setting forth detailed information about
the element or the documentary evidence. If the element
is the business purpose of an expenditure, its supporting
evidence can be circumstantial evidence.
Sampling. You can maintain an adequate record for part
of a tax year and use that record to support your business
and investment use of listed property for the entire tax
year if it can be shown by other evidence that the periods
for which you maintain an adequate record are represen-
tative of the use throughout the year.
Example 1. You are a sole proprietor and calendar
year taxpayer who operates an interior decorating busi-
ness out of your home. You use your automobile for local
business visits to the homes or offices of clients, for meet-
ings with suppliers and subcontractors, and to pick up and
deliver items to clients. There is no other business use of
the automobile, but you and family members also use it for
personal purposes. You maintain adequate records for the
first 3 months of the year showing that 75% of the automo-
bile use was for business. Subcontractor invoices and
paid bills show that your business continued at approxi-
mately the same rate for the rest of the year. If there is no
change in circumstances, such as the purchase of a sec-
ond car for exclusive use in your business, the determina-
tion that your combined business/investment use of the
automobile for the tax year is 75% rests on sufficient sup-
porting evidence.
Example 2. Assume the same facts as in Example 1,
except that you maintain adequate records during the first
week of every month showing that 75% of your use of the
automobile is for business. Your business invoices show
that your business continued at the same rate during the
later weeks of each month so that your weekly records are
representative of the automobile's business use
throughout the month. The determination that your busi-
ness/investment use of the automobile for the tax year is
75% rests on sufficient supporting evidence.
Example 3. You are a sole proprietor and calendar
year taxpayer who works as a sales representative in a
large metropolitan area for a company that manufactures
household products. For the first 3 weeks of each month,
you occasionally used your own automobile for business
travel within the metropolitan area. During these weeks,
your business use of the automobile does not follow a
consistent pattern. During the fourth week of each month,
you delivered all business orders taken during the previ-
ous month. The business use of your automobile, as sup-
ported by adequate records, is 70% of its total use during
that fourth week. The determination based on the record
maintained during the fourth week of the month that your
business/investment use of the automobile for the tax year
is 70% does not rest on sufficient supporting evidence be-
cause your use during that week is not representative of
use during other periods.
Loss of records. When you establish that failure to pro-
duce adequate records is due to loss of the records
through circumstances beyond your control, such as
through fire, flood, earthquake, or other casualty, you have
the right to support a deduction by reasonable reconstruc-
tion of your expenditures and use.
How Is Listed Property
Information Reported?
You must provide the information about your listed prop-
erty requested in Section A of Part V of Form 4562, if you
claim either of the following deductions.
• Any deduction for a vehicle.
• A depreciation deduction for any other listed property.
If you claim any deduction for a vehicle, you must also pro-
vide the information requested in Section B. If you provide
the vehicle for your employee's use, the employee must
give you this information. If you provide any vehicle for use
by an employee, you must first answer the questions in
Section C to see if you meet an exception to completing
Section B for that vehicle.
Vehicles used by your employees. You do not have to
complete Section B of Part V, for vehicles used by your
employees who are not more-than-5% owners or related
persons if you meet at least one of the following require-
ments.
1. You maintain a written policy statement that prohibits
one of the following uses of the vehicles.
a. All personal use, including commuting.
b. Personal use, other than commuting, by employ-
ees who are not officers, directors, or 1%-or-more
owners.
64 Chapter 5 Additional Rules for Listed Property Publication 946 (2024)
2. You treat all use of the vehicles by your employees as
personal use.
3. You provide more than five vehicles for use by your
employees, and you keep in your records the informa-
tion on their use given to you by the employees.
4. For demonstrator automobiles provided to full-time
salespersons, you maintain a written policy statement
that limits the total mileage outside the salesperson's
normal working hours and prohibits use of the auto-
mobile by anyone else, for vacation trips, or to store
personal possessions.
Exceptions. If you file Form 2106, and you are not re-
quired to file Form 4562, report information about listed
property on that form and not on Form 4562. Also, if you
file Schedule C (Form 1040) and are claiming the stand-
ard mileage rate or actual vehicle expenses (except de-
preciation) and you are not required to file Form 4562 for
any other reason, report vehicle information in Part IV of
Schedule C and not on Form 4562.
How To Get Tax Help
If you have questions about a tax issue; need help prepar-
ing your tax return; or want to download free publications,
forms, or instructions, go to IRS.gov to find resources that
can help you right away.
Preparing and filing your tax return. After receiving all
your wage and earnings statements (Forms W-2, W-2G,
1099-R, 1099-MISC, 1099-NEC, etc.); unemployment
compensation statements (by mail or in a digital format) or
other government payment statements (Form 1099-G);
and interest, dividend, and retirement statements from
banks and investment firms (Forms 1099), you have sev-
eral options to choose from to prepare and file your tax re-
turn. You can prepare the tax return yourself, see if you
qualify for free tax preparation, or hire a tax professional to
prepare your return.
Free options for tax preparation. Your options for pre-
paring and filing your return online or in your local com-
munity, if you qualify, include the following.
• Direct File. Direct File is a permanent option to file in-
dividual federal tax returns online—for free—directly
and securely with the IRS. Direct File is an option for
taxpayers in participating states who have relatively
simple tax returns reporting certain types of income
and claiming certain credits and deductions. While Di-
rect File doesn't prepare state returns, if you live in a
participating state, Direct File guides you to a
state-supported tool you can use to prepare and file
your state tax return for free. Go to IRS.gov/DirectFile
for more information, program updates, and frequently
asked questions.
• Free File. This program lets you prepare and file your
federal individual income tax return for free using soft-
ware or Free File Fillable Forms. However, state tax
preparation may not be available through Free File. Go
to IRS.gov/FreeFile to see if you qualify for free online
federal tax preparation, e-filing, and direct deposit or
payment options.
• VITA. The Volunteer Income Tax Assistance (VITA)
program offers free tax help to people with
low-to-moderate incomes, persons with disabilities,
and limited-English-speaking taxpayers who need
help preparing their own tax returns. Go to IRS.gov/
VITA, download the free IRS2Go app, or call
800-906-9887 for information on free tax return prepa-
ration.
• TCE. The Tax Counseling for the Elderly (TCE) pro-
gram offers free tax help for all taxpayers, particularly
those who are 60 years of age and older. TCE volun-
teers specialize in answering questions about pen-
sions and retirement-related issues unique to seniors.
Go to IRS.gov/TCE or download the free IRS2Go app
for information on free tax return preparation.
• MilTax. Members of the U.S. Armed Forces and quali-
fied veterans may use MilTax, a free tax service of-
fered by the Department of Defense through Military
OneSource. For more information, go to
MilitaryOneSource (MilitaryOneSource.mil/MilTax).
Also, the IRS offers Free Fillable Forms, which can
be completed online and then e-filed regardless of in-
come.
Using online tools to help prepare your return. Go to
IRS.gov/Tools for the following.
• IRS.gov/DirectFile offers an Eligibility Checker to help
you determine if Direct File is the right choice for your
tax filing needs.
• The Earned Income Tax Credit Assistant (IRS.gov/
EITCAssistant) determines if you’re eligible for the
earned income credit (EIC).
• The Online EIN Application (IRS.gov/EIN) helps you
get an employer identification number (EIN) at no
cost.
• The Tax Withholding Estimator (IRS.gov/W4App)
makes it easier for you to estimate the federal income
tax you want your employer to withhold from your pay-
check. This is tax withholding. See how your withhold-
ing affects your refund, take-home pay, or tax due.
• The First-Time Homebuyer Credit Account Look-up
(IRS.gov/HomeBuyer) tool provides information on
your repayments and account balance.
• The Sales Tax Deduction Calculator (IRS.gov/
SalesTax) figures the amount you can claim if you
itemize deductions on Schedule A (Form 1040).
Getting answers to your tax questions. On
IRS.gov, you can get up-to-date information on
current events and changes in tax law.
• IRS.gov/Help: A variety of tools to help you get an-
swers to some of the most common tax questions.
• IRS.gov/ITA: The Interactive Tax Assistant, a tool that
will ask you questions and, based on your input,
provide answers on a number of tax topics.
• IRS.gov/Forms: Find forms, instructions, and publica-
tions. You will find details on the most recent tax
changes and interactive links to help you find answers
to your questions.
• You may also be able to access tax information in your
e-filing software.
Need someone to prepare your tax return? There are
various types of tax return preparers, including enrolled
agents, certified public accountants (CPAs), accountants,
and many others who don’t have professional credentials.
If you choose to have someone prepare your tax return,
choose that preparer wisely. A paid tax preparer is:
• Primarily responsible for the overall substantive accu-
racy of your return,
• Required to sign the return, and
• Required to include their preparer tax identification
number (PTIN).
Although the tax preparer always signs the return,
you're ultimately responsible for providing all the
information required for the preparer to accurately
prepare your return and for the accuracy of every item re-
ported on the return. Anyone paid to prepare tax returns
for others should have a thorough understanding of tax
matters. For more information on how to choose a tax pre-
parer, go to Tips for Choosing a Tax Preparer on IRS.gov.
Employers can register to use Business Services On-
line. The Social Security Administration (SSA) offers on-
line service at SSA.gov/employer for fast, free, and secure
W-2 filing options to CPAs, accountants, enrolled agents,
and individuals who process Form W-2, Wage and Tax
Statement; and Form W-2c, Corrected Wage and Tax
Statement.
Business tax account. If you are a sole proprietor, a
partnership, or an S corporation, you can view your tax in-
formation on record with the IRS and do more with a busi-
ness tax account. Go to IRS.gov/BusinessAccount for
more information.
IRS social media. Go to IRS.gov/SocialMedia to see the
various social media tools the IRS uses to share the latest
information on tax changes, scam alerts, initiatives, prod-
ucts, and services. At the IRS, privacy and security are our
highest priority. We use these tools to share public infor-
mation with you. Don’t post your social security number
(SSN) or other confidential information on social media
sites. Always protect your identity when using any social
networking site.
The following IRS YouTube channels provide short, in-
formative videos on various tax-related topics in English,
Spanish, and ASL.
• Youtube.com/irsvideos.
• Youtube.com/irsvideosmultilingua.
• Youtube.com/irsvideosASL.CAUTION
!
Online tax information in other languages. You can
find information on IRS.gov/MyLanguage if English isn’t
your native language.
Free Over-the-Phone Interpreter (OPI) Service. The
IRS is committed to serving taxpayers with limited-English
proficiency (LEP) by offering OPI services. The OPI Serv-
ice is a federally funded program and is available at Tax-
payer Assistance Centers (TACs), most IRS offices, and
every VITA/TCE tax return site. The OPI Service is acces-
sible in more than 350 languages.
Accessibility Helpline available for taxpayers with
disabilities. Taxpayers who need information about ac-
cessibility services can call 833-690-0598. The Accessi-
bility Helpline can answer questions related to current and
future accessibility products and services available in al-
ternative media formats (for example, braille, large print,
audio, etc.). The Accessibility Helpline does not have ac-
cess to your IRS account. For help with tax law, refunds, or
account-related issues, go to IRS.gov/LetUsHelp.
Alternative media preference. Form 9000, Alternative
Media Preference, or Form 9000(SP) allows you to elect to
receive certain types of written correspondence in the fol-
lowing formats.
• Standard Print.
• Large Print.
• Braille.
• Audio (MP3).
• Plain Text File (TXT).
• Braille Ready File (BRF).
Disasters. Go to IRS.gov/DisasterRelief to review the
available disaster tax relief.
Getting tax forms and publications. Go to IRS.gov/
Forms to view, download, or print all the forms, instruc-
tions, and publications you may need. Or, you can go to
IRS.gov/OrderForms to place an order.
Mobile-friendly forms. You'll need an IRS Online Ac-
count (OLA) to complete mobile-friendly forms that require
signatures. You'll have the option to submit your form(s)
online or download a copy for mailing. You'll need scans of
your documents to support your submission. Go to
IRS.gov/MobileFriendlyForms for more information.
Getting tax publications and instructions in eBook
format. Download and view most tax publications and in-
structions (including the Instructions for Form 1040) on
mobile devices as eBooks at IRS.gov/eBooks.
IRS eBooks have been tested using Apple's iBooks for
iPad. Our eBooks haven’t been tested on other dedicated
eBook readers, and eBook functionality may not operate
as intended.
66 Publication 946 (2024)
Access your online account (individual taxpayers
only). Go to IRS.gov/Account to securely access infor-
mation about your federal tax account.
• View the amount you owe and a breakdown by tax
year.
• See payment plan details or apply for a new payment
plan.
• Make a payment or view 5 years of payment history
and any pending or scheduled payments.
• Access your tax records, including key data from your
most recent tax return, and transcripts.
• View digital copies of select notices from the IRS.
• Approve or reject authorization requests from tax pro-
fessionals.
• View your address on file or manage your communica-
tion preferences.
Get a transcript of your return. With an online account,
you can access a variety of information to help you during
the filing season. You can get a transcript, review your
most recently filed tax return, and get your adjusted gross
income. Create or access your online account at IRS.gov/
Account.
Tax Pro Account. This tool lets your tax professional
submit an authorization request to access your individual
taxpayer IRS OLA. For more information, go to IRS.gov/
TaxProAccount.
Using direct deposit. The safest and easiest way to re-
ceive a tax refund is to e-file and choose direct deposit,
which securely and electronically transfers your refund di-
rectly into your financial account. Direct deposit also
avoids the possibility that your check could be lost, stolen,
destroyed, or returned undeliverable to the IRS. Eight in
10 taxpayers use direct deposit to receive their refunds. If
you don’t have a bank account, go to IRS.gov/
DirectDeposit for more information on where to find a bank
or credit union that can open an account online.
Reporting and resolving your tax-related identity
theft issues.
• Tax-related identity theft happens when someone
steals your personal information to commit tax fraud.
Your taxes can be affected if your SSN is used to file a
fraudulent return or to claim a refund or credit.
• The IRS doesn’t initiate contact with taxpayers by
email, text messages (including shortened links), tele-
phone calls, or social media channels to request or
verify personal or financial information. This includes
requests for personal identification numbers (PINs),
passwords, or similar information for credit cards,
banks, or other financial accounts.
• Go to IRS.gov/IdentityTheft, the IRS Identity Theft
Central webpage, for information on identity theft and
data security protection for taxpayers, tax professio-
nals, and businesses. If your SSN has been lost or
stolen or you suspect you’re a victim of tax-related
identity theft, you can learn what steps you should
take.
• Get an Identity Protection PIN (IP PIN). IP PINs are
six-digit numbers assigned to taxpayers to help pre-
vent the misuse of their SSNs on fraudulent federal in-
come tax returns. When you have an IP PIN, it pre-
vents someone else from filing a tax return with your
SSN. To learn more, go to IRS.gov/IPPIN.
Ways to check on the status of your refund.
• Go to IRS.gov/Refunds.
• Download the official IRS2Go app to your mobile de-
vice to check your refund status.
• Call the automated refund hotline at 800-829-1954.
The IRS can’t issue refunds before mid-February
for returns that claimed the EIC or the additional
child tax credit (ACTC). This applies to the entire
refund, not just the portion associated with these credits.
Making a tax payment. Payments of U.S. tax must be
remitted to the IRS in U.S. dollars. Digital assets are not
accepted. Go to IRS.gov/Payments for information on how
to make a payment using any of the following options.
• IRS Direct Pay: Pay your individual tax bill or estimated
tax payment directly from your checking or savings ac-
count at no cost to you.
• Debit Card, Credit Card, or Digital Wallet: Choose an
approved payment processor to pay online or by
phone.
• Electronic Funds Withdrawal: Schedule a payment
when filing your federal taxes using tax return prepara-
tion software or through a tax professional.
• Electronic Federal Tax Payment System: This is the
best option for businesses. Enrollment is required.
• Check or Money Order: Mail your payment to the ad-
dress listed on the notice or instructions.
• Cash: You may be able to pay your taxes with cash at
a participating retail store.
• Same-Day Wire: You may be able to do same-day
wire from your financial institution. Contact your finan-
cial institution for availability, cost, and time frames.
Note. The IRS uses the latest encryption technology to
ensure that the electronic payments you make online, by
phone, or from a mobile device using the IRS2Go app are
safe and secure. Paying electronically is quick, easy, and
faster than mailing in a check or money order.
What if I can’t pay now? Go to IRS.gov/Payments for
more information about your options.
• Apply for an online payment agreement (IRS.gov/
OPA) to meet your tax obligation in monthly install-
ments if you can’t pay your taxes in full today. Once
you complete the online process, you will receive im-
mediate notification of whether your agreement has
been approved.CAUTION
!
• Use the Offer in Compromise Pre-Qualifier to see if
you can settle your tax debt for less than the full
amount you owe. For more information on the Offer in
Compromise program, go to IRS.gov/OIC.
Filing an amended return. Go to IRS.gov/Form1040X
for information and updates.
Checking the status of your amended return. Go to
IRS.gov/WMAR to track the status of Form 1040-X amen-
ded returns.
It can take up to 3 weeks from the date you filed
your amended return for it to show up in our sys-
tem, and processing it can take up to 16 weeks.
Understanding an IRS notice or letter you’ve re-
ceived. Go to IRS.gov/Notices to find additional informa-
tion about responding to an IRS notice or letter.
IRS Document Upload Tool. You may be able use the
Document Upload Tool to respond digitally to eligible IRS
notices and letters by securely uploading required docu-
ments online through IRS.gov. For more information, go to
IRS.gov/DUT.
Schedule LEP. You can use Schedule LEP (Form 1040),
Request for Change in Language Preference, to state a
preference to receive notices, letters, or other written com-
munications from the IRS in an alternative language. You
may not immediately receive written communications in
the requested language. The IRS’s commitment to LEP
taxpayers is part of a multi-year timeline that began pro-
viding translations in 2023. You will continue to receive
communications, including notices and letters, in English
until they are translated to your preferred language.
Contacting your local TAC. Keep in mind, many ques-
tions can be answered on IRS.gov without visiting a TAC.
Go to IRS.gov/LetUsHelp for the topics people ask about
most. If you still need help, TACs provide tax help when a
tax issue can’t be handled online or by phone. All TACs
now provide service by appointment, so you’ll know in ad-
vance that you can get the service you need without long
wait times. Before you visit, go to IRS.gov/TACLocator to
find the nearest TAC and to check hours, available serv-
ices, and appointment options. Or, on the IRS2Go app,
under the Stay Connected tab, choose the Contact Us op-
tion and click on “Local Offices.”
————————————————————————
Below is a message to you from the Taxpayer Advocate
Service, an independent organization established by Con-
gress.
The Taxpayer Advocate Service (TAS)
Is Here To Help You
What Is the Taxpayer Advocate Service?
The Taxpayer Advocate Service (TAS) is an independent
organization within the Internal Revenue Service (IRS).CAUTION
!
TAS helps taxpayers resolve problems with the IRS,
makes administrative and legislative recommendations to
prevent or correct the problems, and protects taxpayer
rights. We work to ensure that every taxpayer is treated
fairly and that you know and understand your rights under
the Taxpayer Bill of Rights. We are Your Voice at the IRS.
How Can TAS Help Me?
TAS can help you resolve problems that you haven’t been
able to resolve with the IRS on your own. Always try to re-
solve your problem with the IRS first, but if you can’t, then
come to TAS. Our services are free.
• TAS helps all taxpayers (and their representatives), in-
cluding individuals, businesses, and exempt organiza-
tions. You may be eligible for TAS help if your IRS
problem is causing financial difficulty, if you’ve tried
and been unable to resolve your issue with the IRS, or
if you believe an IRS system, process, or procedure
just isn't working as it should.
• To get help any time with general tax topics, visit
www.TaxpayerAdvocate.IRS.gov. The site can help
you with common tax issues and situations, such as
what to do if you make a mistake on your return or if
you get a notice from the IRS.
• TAS works to resolve large-scale (systemic) problems
that affect many taxpayers. You can report systemic is-
sues at www.IRS.gov/SAMS. (Be sure not to include
any personal identifiable information.)
How Do I Contact TAS?
TAS has offices in every state, the District of Columbia,
and Puerto Rico. To find your local advocate’s number:
• Go to www.TaxpayerAdvocate.IRS.gov/Contact-Us,
• Check your local directory, or
• Call TAS toll free at 877-777-4778.
What Are My Rights as a Taxpayer?
The Taxpayer Bill of Rights describes ten basic rights that
all taxpayers have when dealing with the IRS. Go to
www.TaxpayerAdvocate.IRS.gov/Taxpayer-Rights for
more information about the rights, what they mean to you,
and how they apply to specific situations you may encoun-
ter with the IRS. TAS strives to protect taxpayer rights and
ensure the IRS is administering the tax law in a fair and
equitable way.
68 Publication 946 (2024)
Chart 1. Use this chart to find the correct percentage table to use for any property other than residential rental
and nonresidential real property. Use Chart 2 for residential rental and nonresidential real property.
MACRS
System
Depreciation
Method
Appendix A
MACRS Percentage Table Guide
General Depreciation System (GDS)
Alternative Depreciation System (ADS)
Recovery Period Convention Class
Month or
Quarter
Placed
in Service Table
GDS 200% GDS/3, 5, 7, 10 Half-Year 3, 5, 7, 10 Any A-1
GDS 200% GDS/3, 5, 7, 10 3, 5, 7, 10 1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
A-2
A-3
A-4
A-5
GDS 150% GDS/3, 5, 7, 10 Half-Year 3, 5, 7, 10 Any A-14
GDS 150% GDS/3, 5, 7, 10 Mid-Quarter 3, 5, 7, 10 1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
A-15
A-16
A-17
A-18
GDS 150% GDS/15, 20 Half-Year 15 & 20 Any A-1
GDS 150% GDS/15, 20 Mid-Quarter 15 & 20 1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
A-2
A-3
A-4
A-5
GDS
ADS
SL GDS
ADS
Half-Year Any Any A-8
GDS
ADS
SL GDS
ADS
Mid-Quarter Any 1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
A-9
A-10
A-11
A-12
ADS 150% ADS Half-Year Any Any A-14
ADS 150% ADS Mid-Quarter Any 1st Qtr
2nd Qtr
3rd Qtr
4th Qtr
A-15
A-16
A-17
A-18
Chart 2. Use this chart to find the correct percentage table to use for residential rental and nonresidential real
property. Use Chart 1 for all other property.
MACRS
System
Depreciation
Method Recovery Period Convention Class
Month or
Quarter
Placed
in Service Table
GDS SL GDS/27.5 Mid-Month Residential Rental Any A-6
GDS SL
SL
GDS/31.5
GDS/39
Mid-Month Nonresidential Real Any A-7
A-7a
ADS SL ADS/30 Mid-Month Residential Rental Any A-13
Chart 3. Income Inclusion Amount Rates
for MACRS Leased Listed Property
Table
Amount A Percentages
Amount B Percentages
A-19
A-20
SL ADS/40 Mid-Month Any A-13aResidential Rental and
Nonresidential Real
Mid-QuarterPublication 946 (2024) 69
Table A-1. 3-, 5-, 7-, 10-, 15-, and 20-Year Property
Half-Year Convention
Year
Depreciation rate for recovery period
3-year 5-year 7-year 10-year 15-year 20-year
33.33%
44.45
14.81
7.41
20.00%
32.00
19.20
11.52
11.52
5.76
14.29%
24.49
17.49
12.49
8.93
8.92
8.93
4.46
10.00%
18.00
14.40
11.52
9.22
7.37
6.55
6.55
6.56
6.55
3.28
5.00%
9.50
8.55
7.70
6.93
6.23
5.90
5.90
5.91
5.90
5.91
5.90
5.91
5.90
5.91
2.95
3.750%
7.219
6.677
6.177
5.713
5.285
4.888
4.522
4.462
4.461
4.462
4.461
4.462
4.461
4.462
4.461
4.462
4.461
4.462
4.461
2.231
Table A-2. 3-, 5-, 7-, 10-, 15-, and 20-Year Property
Mid-Quarter Convention
Placed in Service in First Quarter
Year
Depreciation rate for recovery period
3-year 5-year 7-year 10-year 15-year 20-year
58.33%
27.78
12.35
1.54
35.00%
26.00
15.60
11.01
11.01
1.38
25.00%
21.43
15.31
10.93
8.75
8.74
8.75
1.09
17.50%
16.50
13.20
10.56
8.45
6.76
6.55
6.55
6.56
6.55
0.82
8.75%
9.13
8.21
7.39
6.65
5.99
5.90
5.91
5.90
5.91
5.90
5.91
5.90
5.91
5.90
0.74
6.563%
7.000
6.482
5.996
5.546
5.130
4.746
4.459
4.459
4.459
4.459
4.460
4.459
4.460
4.459
4.460
4.459
4.460
4.459
4.460
0.56570 Publication 946 (2024)
Table A-3. 3-, 5-, 7-, 10-, 15-, and 20-Year Property
Mid-Quarter Convention
Placed in Service in Second Quarter
Year
Depreciation rate for recovery period
3-year 5-year 7-year 10-year 15-year 20-year
41.67%
38.89
14.14
5.30
25.00%
30.00
18.00
11.37
11.37
4.26
17.85%
23.47
16.76
11.97
8.87
8.87
8.87
3.34
12.50%
17.50
14.00
11.20
8.96
7.17
6.55
6.55
6.56
6.55
2.46
6.25%
9.38
8.44
7.59
6.83
6.15
5.91
5.90
5.91
5.90
5.91
5.90
5.91
5.90
5.91
2.21
4.688%
7.148
6.612
6.116
5.658
5.233
4.841
4.478
4.463
4.463
4.463
4.463
4.463
4.463
4.462
4.463
4.462
4.463
4.462
4.463
1.673
Table A-4. 3-, 5-, 7-, 10-, 15-, and 20-Year Property
Mid-Quarter Convention
Placed in Service in Third Quarter
Year
Depreciation rate for recovery period
3-year 5-year 7-year 10-year 15-year 20-year
25.00%
50.00
16.67
8.33
15.00%
34.00
20.40
12.24
11.30
7.06
10.71%
25.51
18.22
13.02
9.30
8.85
8.86
5.53
7.50%
18.50
14.80
11.84
9.47
7.58
6.55
6.55
6.56
6.55
4.10
3.75%
9.63
8.66
7.80
7.02
6.31
5.90
5.90
5.91
5.90
5.91
5.90
5.91
5.90
5.91
3.69
2.813%
7.289
6.742
6.237
5.769
5.336
4.936
4.566
4.460
4.460
4.460
4.460
4.461
4.460
4.461
4.460
4.461
4.460
4.461
4.460
2.788Publication 946 (2024) 71
Table A-5. 3-, 5-, 7-, 10-, 15-, and 20-Year Property
Mid-Quarter Convention
Placed in Service in Fourth Quarter
Year
Depreciation rate for recovery period
3-year 5-year 7-year 10-year 15-year 20-year
8.33%
61.11
20.37
10.19
5.00%
38.00
22.80
13.68
10.94
9.58
3.57%
27.55
19.68
14.06
10.04
8.73
8.73
7.64
2.50%
19.50
15.60
12.48
9.98
7.99
6.55
6.55
6.56
6.55
5.74
1.25%
9.88
8.89
8.00
7.20
6.48
5.90
5.90
5.90
5.91
5.90
5.91
5.90
5.91
5.90
5.17
0.938%
7.430
6.872
6.357
5.880
5.439
5.031
4.654
4.458
4.458
4.458
4.458
4.458
4.458
4.458
4.458
4.458
4.459
4.458
4.459
3.901
Table A-6. Residential Rental Property
Mid-Month Convention
Straight Line—27.5 Years
Year
2–9
Month property placed in service
7 8 9 10 11 12
0.152%
654321
0.455%0.758%1.061%1.364%1.667%1.970%2.273%2.576%2.879%3.182%3.485%
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
1.97
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
2.273
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
2.576
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
2.879
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.182
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.485
3.636
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
0.152
3.636
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
0.455
3.636
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
0.758
3.636
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
1.061
3.636
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
1.364
3.636
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
3.637
3.636
1.66772 Publication 946 (2024)
Table A-7. Nonresidential Real Property
Mid-Month Convention
Straight Line—31.5 Years
Year
2–7
Month property placed in service
7 8 9 10 11 12
654321
0.397%0.661%0.926%1.190%1.455%1.720%1.984%2.249%2.513%2.778%3.042%
3.175
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
0.132%
3.174
1.720
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
1.984
3.175
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
2.249
3.175
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
2.778
3.175
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
0.132
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
2.513
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.042
3.175
3.175
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
0.397
3.175
3.175
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
0.926
3.175
3.175
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
1.455
3.175
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
0.661
3.175
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
3.174
3.175
1.190
Table A-7a. Nonresidential Real Property
Mid-Month Convention
Straight Line—39 Years
Year
2–39
Month property placed in service
7 8 9 10 11 12654321
0.321%0.535%0.749%0.963%1.177%1.391%1.605%1.819%2.033%2.247%2.461%
2.564
0.107
0.107%
2.564
0.321
2.564
0.535
2.564
0.963
2.564
1.391
2.564
0.749
2.564
1.177
2.564
1.605
2.564
2.033
2.564
2.461
2.564
1.819
2.564
2.247Publication 946 (2024) 73
Table A-8. Straight Line Method
Half-Year Convention
Year
Recovery periods in years
2.5
20.0%
40.0
40.0
16.67%
33.33
33.33
16.67
3.5
14.29%
28.57
28.57
28.57
12.5%
25.0
25.0
25.0
12.5
10.0%
20.0
20.0
20.0
20.0
10.0
8.33%
16.67
16.67
16.67
16.66
16.67
8.33
6.5
7.69%
15.39
15.38
15.39
15.38
15.39
15.38
7.14%
14.29
14.29
14.28
14.29
14.28
14.29
7.14
7.5
6.67%
13.33
13.33
13.33
13.34
13.33
13.34
13.33
6.25%
12.50
12.50
12.50
12.50
12.50
12.50
12.50
6.25
8.5
5.88%
11.77
11.76
11.77
11.76
11.77
11.76
11.77
11.76
5.56%
11.11
11.11
11.11
11.11
11.11
11.11
11.11
11.11
5.56
9.5
5.26%
10.53
10.53
10.53
10.52
10.53
10.52
10.53
10.52
10.53
Table A-8. ( Continued)
Year
Recovery periods in years
5.0%
10.0
10.0
10.0
10.0
10.5
4.76%
9.52
9.52
9.53
9.52
4.55%
9.09
9.09
9.09
9.09
4.35%
8.70
8.70
8.69
8.70
12.5
4.17%
8.33
8.33
8.33
8.33
4.0%
8.0
8.0
8.0
8.0
13.5
3.85%
7.69
7.69
7.69
7.69
3.70%
7.41
7.41
7.41
7.41
3.57%
7.14
7.14
7.14
7.14
3.33%
6.67
6.67
6.67
6.67
16.5
3.13%
6.25
6.25
6.25
6.25
3.03%
6.06
6.06
6.06
6.06
11.5
2.94%
5.88
5.88
5.88
5.88
10.0
10.0
10.0
10.0
10.0
9.53
9.52
9.53
9.52
9.53
9.09
9.09
9.09
9.09
9.09
8.69
8.70
8.69
8.70
8.69
8.33
8.34
8.33
8.34
8.33
8.0
8.0
8.0
8.0
8.0
7.69
7.69
7.69
7.69
7.70
7.41
7.41
7.41
7.41
7.40
7.14
7.14
7.15
7.14
7.15
6.67
6.67
6.66
6.67
6.66
6.25
6.25
6.25
6.25
6.25
6.06
6.06
6.06
6.06
6.06
5.88
5.88
5.88
5.88
5.88
5.0 9.52 9.09
4.55
8.70
8.69
8.34
8.33
4.17
8.0
8.0
8.0
7.69
7.70
7.69
3.85
7.41
7.40
7.41
7.40
7.14
7.15
7.14
7.15
3.57
6.67
6.66
6.67
6.66
6.67
6.25
6.25
6.25
6.25
6.25
6.06
6.06
6.06
6.06
6.06
5.89
5.88
5.89
5.88
5.89
3.33 6.25
3.12
6.06
6.07
5.88
5.89
2.9474 Publication 946 (2024)
Table A-8. ( Continued)
Year
Recovery periods in years
2.78%
5.56
5.56
5.55
5.56
2.63%
5.26
5.26
5.26
5.26
2.5%
5.0
5.0
5.0
5.0
2.273%
4.545
4.545
4.545
4.546
2.083%
4.167
4.167
4.167
4.167
26.5
2.0%
4.0
4.0
4.0
4.0
1.887%
3.774
3.774
3.774
3.774
1.786%
3.571
3.571
3.571
3.571
1.667%
3.333
3.333
3.333
3.333
1.429%
2.857
2.857
2.857
2.857
1.25%
2.50
2.50
2.50
2.50
1.111%
2.222
2.222
2.222
2.222
1.0%
2.0
2.0
2.0
2.0
47–50
5.55
5.56
5.55
5.56
5.55
5.26
5.26
5.26
5.27
5.26
5.0
5.0
5.0
5.0
5.0
4.545
4.546
4.545
4.546
4.545
4.167
4.167
4.167
4.167
4.167
4.0
4.0
4.0
4.0
4.0
3.774
3.773
3.774
3.773
3.774
3.571
3.572
3.571
3.572
3.571
3.333
3.333
3.333
3.333
3.333
2.857
2.857
2.857
2.857
2.857
2.50
2.50
2.50
2.50
2.50
2.222
2.222
2.222
2.222
2.222
2.0
2.0
2.0
2.0
2.0
5.56
5.55
5.56
5.55
5.56
5.27
5.26
5.27
5.26
5.27
5.0
5.0
5.0
5.0
5.0
4.546
4.545
4.546
4.545
4.546
4.166
4.167
4.166
4.167
4.166
4.0
4.0
4.0
4.0
4.0
3.773
3.774
3.773
3.773
3.774
3.572
3.571
3.572
3.571
3.572
3.333
3.333
3.334
3.333
3.334
2.857
2.857
2.857
2.857
2.857
2.50
2.50
2.50
2.50
2.50
2.222
2.222
2.222
2.222
2.222
2.0
2.0
2.0
2.0
2.0
5.55
5.56
5.55
2.78
5.26
5.27
5.26
5.27
2.63
5.0
5.0
5.0
5.0
5.0
4.545
4.546
4.545
4.546
4.545
4.167
4.166
4.167
4.166
4.167
4.0
4.0
4.0
4.0
4.0
3.773
3.774
3.773
3.774
3.773
3.571
3.572
3.571
3.572
3.571
3.333
3.334
3.333
3.334
3.333
2.857
2.857
2.857
2.857
2.857
2.50
2.50
2.50
2.50
2.50
2.222
2.222
2.222
2.222
2.222
2.0
2.0
2.0
2.0
2.0
2.5 4.546
4.545
2.273
4.166
4.167
4.166
4.167
2.083
4.0
4.0
4.0
4.0
4.0
3.774
3.773
3.774
3.773
3.774
3.572
3.571
3.572
3.571
3.572
3.334
3.333
3.334
3.333
3.334
2.857
2.857
2.857
2.857
2.857
2.50
2.50
2.50
2.50
2.50
2.222
2.222
2.222
2.222
2.222
2.0
2.0
2.0
2.0
2.0
2.0 3.773
3.774
3.571
3.572
3.571
1.786
3.333
3.334
3.333
3.334
3.333
2.857
2.857
2.858
2.857
2.858
2.50
2.50
2.50
2.50
2.50
2.222
2.223
2.222
2.223
2.222
2.0
2.0
2.0
2.0
2.0
1.667 2.857
2.858
2.857
2.858
2.857
2.50
2.50
2.50
2.50
2.50
2.223
2.222
2.223
2.222
2.223
2.0
2.0
2.0
2.0
2.0
1.429 2.50
2.50
2.50
2.50
2.50
2.222
2.223
2.222
2.223
2.222
2.0
2.0
2.0
2.0
2.0
1.25 2.223
2.222
2.223
2.222
2.223
2.0
2.0
2.0
2.0
2.0
1.111 2.0
2.0
1.0Publication 946 (2024) 75
Table A-9. Straight Line Method
Mid-Quarter Convention
Placed in Service in First Quarter
Year
Recovery periods in years
2.5
35.0%
40.0
25.0
29.17%
33.33
33.33
4.17
3.5
25.00%
28.57
28.57
17.86
21.88%
25.00
25.00
25.00
3.12
17.5%
20.0
20.0
20.0
20.0
2.5
14.58%
16.67
16.67
16.67
16.66
16.67
2.08
6.5
13.46%
15.38
15.39
15.38
15.39
15.38
9.62
12.50%
14.29
14.28
14.29
14.28
14.29
14.28
1.79
7.5
11.67%
13.33
13.33
13.33
13.34
13.33
13.34
8.33
10.94%
12.50
12.50
12.50
12.50
12.50
12.50
12.50
1.56
8.5
10.29%
11.77
11.76
11.77
11.76
11.77
11.76
11.77
7.35
9.72%
11.11
11.11
11.11
11.11
11.11
11.11
11.12
11.11
1.39
9.5
9.21%
10.53
10.53
10.53
10.52
10.53
10.52
10.53
10.52
6.58
Table A-9. ( Continued)
Year
Recovery periods in years
8.75%
10.00
10.00
10.00
10.00
10.5
8.33%
9.52
9.52
9.53
9.52
7.95%
9.09
9.09
9.09
9.09
7.61%
8.70
8.70
8.69
8.70
12.5
7.29%
8.33
8.33
8.33
8.33
7.0%
8.0
8.0
8.0
8.0
13.5
6.73%
7.69
7.69
7.69
7.69
6.48%
7.41
7.41
7.41
7.41
6.25%
7.14
7.14
7.14
7.14
5.83%
6.67
6.67
6.67
6.67
16.5
5.47%
6.25
6.25
6.25
6.25
5.30%
6.06
6.06
6.06
6.06
11.5
5.15%
5.88
5.88
5.88
5.88
10.00
10.00
10.00
10.00
10.00
9.53
9.52
9.53
9.52
9.53
9.09
9.09
9.09
9.09
9.10
8.69
8.70
8.69
8.70
8.69
8.34
8.33
8.34
8.33
8.34
8.0
8.0
8.0
8.0
8.0
7.69
7.69
7.69
7.70
7.69
7.41
7.41
7.41
7.40
7.41
7.14
7.14
7.15
7.14
7.15
6.67
6.67
6.66
6.67
6.66
6.25
6.25
6.25
6.25
6.25
6.06
6.06
6.06
6.06
6.06
5.88
5.88
5.88
5.88
5.88
1.25 5.95 9.09
1.14
8.70
5.43
8.33
8.34
1.04
8.0
8.0
5.0
7.70
7.69
7.70
0.96
7.40
7.41
7.40
4.63
7.14
7.15
7.14
7.15
0.89
6.67
6.66
6.67
6.66
6.67
6.25
6.25
6.25
6.25
6.25
6.06
6.06
6.06
6.06
6.06
5.88
5.89
5.88
5.89
5.88
0.83 6.25
0.78
6.07
3.79
5.89
5.88
0.7476 Publication 946 (2024)
Table A-9. ( Continued)
Year
Recovery periods in years
4.86%
5.56
5.56
5.56
5.55
4.61%
5.26
5.26
5.26
5.26
4.375%
5.000
5.000
5.000
5.000
3.977%
4.545
4.545
4.546
4.545
3.646%
4.167
4.167
4.167
4.167
26.5
3.5%
4.0
4.0
4.0
4.0
3.302%
3.774
3.774
3.774
3.774
3.125%
3.571
3.571
3.571
3.571
2.917%
3.333
3.333
3.333
3.333
2.500%
2.857
2.857
2.857
2.857
2.188%
2.500
2.500
2.500
2.500
1.944%
2.222
2.222
2.222
2.222
1.75%
2.00
2.00
2.00
2.00
47–50
5.56
5.55
5.56
5.55
5.56
5.26
5.26
5.26
5.26
5.27
5.000
5.000
5.000
5.000
5.000
4.546
4.545
4.546
4.545
4.546
4.167
4.167
4.167
4.167
4.166
4.0
4.0
4.0
4.0
4.0
3.774
3.773
3.774
3.773
3.774
3.572
3.571
3.572
3.571
3.572
3.333
3.333
3.333
3.333
3.333
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
5.55
5.56
5.55
5.56
5.55
5.26
5.27
5.26
5.27
5.26
5.000
5.000
5.000
5.000
5.000
4.545
4.546
4.545
4.546
4.545
4.167
4.166
4.167
4.166
4.167
4.0
4.0
4.0
4.0
4.0
3.773
3.774
3.773
3.774
3.773
3.571
3.572
3.571
3.572
3.571
3.333
3.333
3.334
3.333
3.334
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
5.56
5.55
5.56
0.69
5.27
5.26
5.27
5.26
0.66
5.000
5.000
5.000
5.000
5.000
4.546
4.545
4.546
4.545
4.546
4.166
4.167
4.166
4.167
4.166
4.0
4.0
4.0
4.0
4.0
3.774
3.773
3.774
3.773
3.774
3.572
3.571
3.572
3.571
3.572
3.333
3.334
3.333
3.334
3.333
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
0.625 4.545
4.546
0.568
4.167
4.166
4.167
4.166
0.521
4.0
4.0
4.0
4.0
4.0
3.773
3.774
3.773
3.774
3.773
3.571
3.572
3.571
3.572
3.571
3.334
3.333
3.334
3.333
3.334
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
0.5 3.774
2.358
3.572
3.571
3.572
0.446
3.333
3.334
3.333
3.334
3.333
2.857
2.858
2.857
2.858
2.857
2.500
2.500
2.500
2.500
2.500
2.223
2.222
2.223
2.222
2.223
2.00
2.00
2.00
2.00
2.00
0.417 2.858
2.857
2.858
2.857
2.858
2.500
2.500
2.500
2.500
2.500
2.222
2.223
2.222
2.223
2.222
2.00
2.00
2.00
2.00
2.00
0.357 2.500
2.500
2.500
2.500
2.500
2.223
2.222
2.223
2.222
2.223
2.00
2.00
2.00
2.00
2.00
0.312 2.222
2.223
2.222
2.223
2.222
2.00
2.00
2.00
2.00
2.00
0.278 2.00
2.00
0.25Publication 946 (2024) 77
Table A-10. Straight Line Method
Mid-Quarter Convention
Placed in Service in Second Quarter
Year
Recovery periods in years
2.5
25.0%
40.0
35.0
20.83%
33.33
33.34
12.50
3.5
17.86%
28.57
28.57
25.00
15.63%
25.00
25.00
25.00
9.37
12.5%
20.0
20.0
20.0
20.0
7.5
10.42%
16.67
16.67
16.66
16.67
16.66
6.25
6.5
9.62%
15.38
15.38
15.39
15.38
15.39
13.46
8.93%
14.29
14.28
14.29
14.28
14.29
14.28
5.36
7.5
8.33%
13.33
13.33
13.34
13.33
13.34
13.33
11.67
7.81%
12.50
12.50
12.50
12.50
12.50
12.50
12.50
4.69
8.5
7.35%
11.77
11.76
11.77
11.76
11.77
11.76
11.77
10.29
6.94%
11.11
11.11
11.11
11.11
11.11
11.11
11.12
11.11
4.17
9.5
6.58%
10.53
10.53
10.53
10.52
10.53
10.52
10.53
10.52
9.21
Table A-10. ( Continued)
Year
Recovery periods in years
6.25%
10.00
10.00
10.00
10.00
10.5
5.95%
9.52
9.52
9.53
9.52
5.68%
9.09
9.09
9.09
9.09
5.43%
8.70
8.70
8.70
8.69
12.5
5.21%
8.33
8.33
8.33
8.33
5.0%
8.0
8.0
8.0
8.0
13.5
4.81%
7.69
7.69
7.69
7.69
4.63%
7.41
7.41
7.41
7.41
4.46%
7.14
7.14
7.14
7.14
4.17%
6.67
6.67
6.67
6.67
16.5
3.91%
6.25
6.25
6.25
6.25
3.79%
6.06
6.06
6.06
6.06
11.5
3.68%
5.88
5.88
5.88
5.88
10.00
10.00
10.00
10.00
10.00
9.53
9.52
9.53
9.52
9.53
9.09
9.09
9.09
9.09
9.09
8.70
8.69
8.70
8.69
8.70
8.33
8.34
8.33
8.34
8.33
8.0
8.0
8.0
8.0
8.0
7.69
7.69
7.69
7.69
7.70
7.41
7.41
7.41
7.40
7.41
7.14
7.15
7.14
7.15
7.14
6.67
6.66
6.67
6.66
6.67
6.25
6.25
6.25
6.25
6.25
6.06
6.06
6.06
6.06
6.06
5.88
5.88
5.88
5.88
5.88
3.75 8.33 9.10
3.41
8.69
7.61
8.34
8.33
3.13
8.0
8.0
7.0
7.69
7.70
7.69
2.89
7.40
7.41
7.40
6.48
7.15
7.14
7.15
7.14
2.68
6.66
6.67
6.66
6.67
6.66
6.25
6.25
6.25
6.25
6.25
6.06
6.06
6.06
6.06
6.06
5.88
5.89
5.88
5.89
5.88
2.50 6.25
2.34
6.06
5.31
5.89
5.88
2.2178 Publication 946 (2024)
Table A-10. ( Continued)
Year
Recovery periods in years
3.47%
5.56
5.56
5.56
5.55
3.29%
5.26
5.26
5.26
5.26
3.125%
5.000
5.000
5.000
5.000
2.841%
4.545
4.545
4.545
4.546
2.604%
4.167
4.167
4.167
4.167
26.5
2.5%
4.0
4.0
4.0
4.0
2.358%
3.774
3.774
3.774
3.774
2.232%
3.571
3.571
3.571
3.571
2.083%
3.333
3.333
3.333
3.333
1.786%
2.857
2.857
2.857
2.857
1.563%
2.500
2.500
2.500
2.500
1.389%
2.222
2.222
2.222
2.222
1.25%
2.00
2.00
2.00
2.00
47–50
5.56
5.55
5.56
5.55
5.56
5.26
5.26
5.26
5.27
5.26
5.000
5.000
5.000
5.000
5.000
4.545
4.546
4.545
4.546
4.545
4.167
4.167
4.167
4.167
4.167
4.0
4.0
4.0
4.0
4.0
3.774
3.774
3.773
3.774
3.773
3.572
3.571
3.572
3.571
3.572
3.333
3.333
3.333
3.333
3.333
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
5.55
5.56
5.55
5.56
5.55
5.27
5.26
5.27
5.26
5.27
5.000
5.000
5.000
5.000
5.000
4.546
4.545
4.546
4.545
4.546
4.166
4.167
4.166
4.167
4.166
4.0
4.0
4.0
4.0
4.0
3.774
3.773
3.774
3.773
3.774
3.571
3.572
3.571
3.572
3.571
3.333
3.334
3.333
3.334
3.333
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
5.56
5.55
5.56
2.08
5.26
5.27
5.26
5.27
1.97
5.000
5.000
5.000
5.000
5.000
4.545
4.546
4.545
4.546
4.545
4.167
4.166
4.167
4.166
4.167
4.0
4.0
4.0
4.0
4.0
3.773
3.774
3.773
3.774
3.773
3.572
3.571
3.572
3.571
3.572
3.334
3.333
3.334
3.333
3.334
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
1.875 4.546
4.545
1.705
4.166
4.167
4.166
4.167
1.562
4.0
4.0
4.0
4.0
4.0
3.774
3.773
3.774
3.773
3.774
3.571
3.572
3.571
3.572
3.571
3.333
3.334
3.333
3.334
3.333
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
1.5 3.773
3.302
3.572
3.571
3.572
1.339
3.334
3.333
3.334
3.333
3.334
2.857
2.857
2.858
2.857
2.858
2.500
2.500
2.500
2.500
2.500
2.222
2.223
2.222
2.223
2.222
2.00
2.00
2.00
2.00
2.00
1.250 2.857
2.858
2.857
2.858
2.857
2.500
2.500
2.500
2.500
2.500
2.223
2.222
2.223
2.222
2.223
2.00
2.00
2.00
2.00
2.00
1.072 2.500
2.500
2.500
2.500
2.500
2.222
2.223
2.222
2.223
2.222
2.00
2.00
2.00
2.00
2.00
0.937 2.223
2.222
2.223
2.222
2.223
2.00
2.00
2.00
2.00
2.00
0.833 2.00
2.00
0.75Publication 946 (2024) 79
Table A-11. Straight Line Method
Mid-Quarter Convention
Placed in Service in Third Quarter
Year
Recovery periods in years
2.5
15.0%
40.0
40.0
5.0
12.50%
33.33
33.34
20.83
3.5
10.71%
28.57
28.57
28.58
3.57
9.38%
25.00
25.00
25.00
15.62
7.5%
20.0
20.0
20.0
20.0
12.5
6.25%
16.67
16.67
16.66
16.67
16.66
10.42
6.5
5.77%
15.38
15.39
15.38
15.39
15.38
15.39
1.92
5.36%
14.29
14.28
14.29
14.28
14.29
14.28
8.93
7.5
5.00%
13.33
13.33
13.33
13.34
13.33
13.34
13.33
1.67
4.69%
12.50
12.50
12.50
12.50
12.50
12.50
12.50
7.81
8.5
4.41%
11.76
11.77
11.76
11.77
11.76
11.77
11.76
11.77
1.47
4.17%
11.11
11.11
11.11
11.11
11.11
11.11
11.11
11.11
6.95
9.5
3.95%
10.53
10.53
10.52
10.53
10.52
10.53
10.52
10.53
10.52
Table A-11. ( Continued)
Year
Recovery periods in years
3.75%
10.00
10.00
10.00
10.00
10.5
3.57%
9.52
9.52
9.52
9.53
3.41%
9.09
9.09
9.09
9.09
3.26%
8.70
8.70
8.69
8.70
12.5
3.13%
8.33
8.33
8.33
8.33
3.0%
8.0
8.0
8.0
8.0
13.5
2.88%
7.69
7.69
7.69
7.69
2.78%
7.41
7.41
7.41
7.41
2.68%
7.14
7.14
7.14
7.14
2.50%
6.67
6.67
6.67
6.67
16.5
2.34%
6.25
6.25
6.25
6.25
2.27%
6.06
6.06
6.06
6.06
11.5
2.21%
5.88
5.88
5.88
5.88
10.00
10.00
10.00
10.00
10.00
9.52
9.53
9.52
9.53
9.52
9.09
9.09
9.09
9.09
9.09
8.69
8.70
8.69
8.70
8.69
8.33
8.34
8.33
8.34
8.33
8.0
8.0
8.0
8.0
8.0
7.69
7.69
7.70
7.69
7.70
7.41
7.41
7.40
7.41
7.40
7.14
7.14
7.14
7.15
7.14
6.67
6.66
6.67
6.66
6.67
6.25
6.25
6.25
6.25
6.25
6.06
6.06
6.06
6.06
6.06
5.88
5.88
5.88
5.88
5.88
6.25 9.53
1.19
9.10
5.68
8.70
8.69
1.09
8.34
8.33
5.21
8.0
8.0
8.0
1.0
7.69
7.70
7.69
4.81
7.41
7.40
7.41
7.40
0.93
7.15
7.14
7.15
7.14
4.47
6.66
6.67
6.66
6.67
6.66
6.25
6.25
6.25
6.25
6.25
6.06
6.06
6.06
6.06
6.06
5.88
5.89
5.88
5.89
5.88
4.17 6.25
3.91
6.07
6.06
0.76
5.89
5.88
3.68
1.3280 Publication 946 (2024)
Table A-11. ( Continued)
Year
Recovery periods in years
2.08%
5.56
5.56
5.56
5.55
1.97%
5.26
5.26
5.26
5.26
1.875%
5.000
5.000
5.000
5.000
1.705%
4.545
4.545
4.545
4.546
1.563%
4.167
4.167
4.167
4.167
26.5
1.5%
4.0
4.0
4.0
4.0
1.415%
3.774
3.774
3.774
3.774
1.339%
3.571
3.571
3.571
3.571
1.250%
3.333
3.333
3.333
3.333
1.071%
2.857
2.857
2.857
2.857
0.938%
2.500
2.500
2.500
2.500
0.833%
2.222
2.222
2.222
2.222
0.75%
2.00
2.00
2.00
2.00
47–50
5.56
5.55
5.56
5.55
5.56
5.26
5.26
5.26
5.27
5.26
5.000
5.000
5.000
5.000
5.000
4.545
4.546
4.545
4.546
4.545
4.167
4.167
4.167
4.166
4.167
4.0
4.0
4.0
4.0
4.0
3.774
3.773
3.774
3.773
3.774
3.572
3.571
3.572
3.571
3.572
3.333
3.333
3.333
3.333
3.333
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
5.55
5.56
5.55
5.56
5.55
5.27
5.26
5.27
5.26
5.27
5.000
5.000
5.000
5.000
5.000
4.546
4.545
4.546
4.545
4.546
4.166
4.167
4.166
4.167
4.166
4.0
4.0
4.0
4.0
4.0
3.773
3.774
3.773
3.774
3.773
3.571
3.572
3.571
3.572
3.571
3.333
3.334
3.333
3.334
3.333
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
5.56
5.55
5.56
3.47
5.26
5.27
5.26
5.27
3.29
5.000
5.000
5.000
5.000
5.000
4.545
4.546
4.545
4.546
4.545
4.167
4.166
4.167
4.166
4.167
4.0
4.0
4.0
4.0
4.0
3.774
3.773
3.774
3.773
3.774
3.572
3.571
3.572
3.571
3.572
3.334
3.333
3.334
3.333
3.334
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
3.125 4.546
4.545
2.841
4.166
4.167
4.166
4.167
2.604
4.0
4.0
4.0
4.0
4.0
3.773
3.774
3.773
3.774
3.773
3.571
3.572
3.571
3.572
3.571
3.333
3.334
3.333
3.334
3.333
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
2.5 3.774
3.773
0.472
3.572
3.571
3.572
2.232
3.334
3.333
3.334
3.333
3.334
2.858
2.857
2.858
2.857
2.858
2.500
2.500
2.500
2.500
2.500
2.222
2.223
2.222
2.223
2.222
2.00
2.00
2.00
2.00
2.00
2.083 2.857
2.858
2.857
2.858
2.857
2.500
2.500
2.500
2.500
2.500
2.223
2.222
2.223
2.222
2.223
2.00
2.00
2.00
2.00
2.00
1.786 2.500
2.500
2.500
2.500
2.500
2.222
2.223
2.222
2.223
2.222
2.00
2.00
2.00
2.00
2.00
1.562 2.223
2.222
2.223
2.222
2.223
2.00
2.00
2.00
2.00
2.00
1.389 2.00
2.00
1.25Publication 946 (2024) 81
Table A-12. Straight Line Method
Mid-Quarter Convention
Placed in Service in Fourth Quarter
Year
Recovery periods in years
2.5
5.0%
40.0
40.0
15.0
4.17%
33.33
33.33
29.17
3.5
3.57%
28.57
28.57
28.57
10.72
3.13%
25.00
25.00
25.00
21.87
2.5%
20.0
20.0
20.0
20.0
17.5
2.08%
16.67
16.67
16.67
16.66
16.67
14.58
6.5
1.92%
15.39
15.38
15.39
15.38
15.39
15.38
5.77
1.79%
14.29
14.28
14.29
14.28
14.29
14.28
12.50
7.5
1.67%
13.33
13.33
13.33
13.33
13.34
13.33
13.34
5.00
1.56%
12.50
12.50
12.50
12.50
12.50
12.50
12.50
10.94
8.5
1.47%
11.76
11.77
11.76
11.77
11.76
11.77
11.76
11.77
4.41
1.39%
11.11
11.11
11.11
11.11
11.11
11.11
11.11
11.11
9.73
9.5
1.32%
10.53
10.53
10.52
10.53
10.52
10.53
10.52
10.53
10.52
Table A-12. ( Continued)
Year
Recovery periods in years
1.25%
10.00
10.00
10.00
10.00
10.5
1.19%
9.52
9.52
9.52
9.53
1.14%
9.09
9.09
9.09
9.09
1.09%
8.70
8.69
8.70
8.69
12.5
1.04%
8.33
8.33
8.33
8.33
1.0%
8.0
8.0
8.0
8.0
13.5
0.96%
7.69
7.69
7.69
7.69
0.93%
7.41
7.41
7.41
7.41
0.89%
7.14
7.14
7.14
7.14
0.83%
6.67
6.67
6.67
6.67
16.5
0.78%
6.25
6.25
6.25
6.25
0.76%
6.06
6.06
6.06
6.06
11.5
0.74%
5.88
5.88
5.88
5.88
10.00
10.00
10.00
10.00
10.00
9.52
9.53
9.52
9.53
9.52
9.09
9.09
9.09
9.09
9.09
8.70
8.69
8.70
8.69
8.70
8.34
8.33
8.34
8.33
8.34
8.0
8.0
8.0
8.0
8.0
7.69
7.69
7.69
7.70
7.69
7.41
7.41
7.40
7.41
7.40
7.14
7.14
7.15
7.14
7.15
6.67
6.67
6.66
6.67
6.66
6.25
6.25
6.25
6.25
6.25
6.06
6.06
6.06
6.06
6.06
5.88
5.88
5.88
5.88
5.88
8.75 9.53
3.57
9.09
7.96
8.69
8.70
3.26
8.33
8.34
7.29
8.0
8.0
8.0
3.0
7.70
7.69
7.70
6.73
7.41
7.40
7.41
7.40
2.78
7.14
7.15
7.14
7.15
6.25
6.67
6.66
6.67
6.66
6.67
6.25
6.25
6.25
6.25
6.25
6.06
6.06
6.06
6.06
6.06
5.88
5.89
5.88
5.89
5.88
5.83 6.25
5.47
6.06
6.07
2.27
5.89
5.88
5.15
11 3.9582 Publication 946 (2024)
Table A-12. ( Continued)
Year
Recovery periods in years
0.69%
5.56
5.56
5.56
5.55
0.66%
5.26
5.26
5.26
5.26
0.625%
5.000
5.000
5.000
5.000
0.568%
4.545
4.545
4.546
4.545
0.521%
4.167
4.167
4.167
4.167
26.5
0.5%
4.0
4.0
4.0
4.0
0.472%
3.774
3.774
3.774
3.774
0.446%
3.571
3.571
3.571
3.571
0.417%
3.333
3.333
3.333
3.333
0.357%
2.857
2.857
2.857
2.857
0.313%
2.500
2.500
2.500
2.500
0.278%
2.222
2.222
2.222
2.222
0.25%
2.00
2.00
2.00
2.00
47–50
5.56
5.55
5.56
5.55
5.56
5.26
5.26
5.26
5.26
5.27
5.000
5.000
5.000
5.000
5.000
4.546
4.545
4.546
4.545
4.546
4.167
4.167
4.167
4.167
4.166
4.0
4.0
4.0
4.0
4.0
3.773
3.774
3.773
3.774
3.773
3.572
3.571
3.572
3.571
3.572
3.333
3.333
3.333
3.333
3.333
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
5.55
5.56
5.55
5.56
5.55
5.26
5.27
5.26
5.27
5.26
5.000
5.000
5.000
5.000
5.000
4.545
4.546
4.545
4.546
4.545
4.167
4.166
4.167
4.166
4.167
4.0
4.0
4.0
4.0
4.0
3.774
3.773
3.774
3.773
3.774
3.571
3.572
3.571
3.572
3.571
3.333
3.333
3.334
3.333
3.334
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
5.56
5.55
5.56
4.86
5.27
5.26
5.27
5.26
4.61
5.000
5.000
5.000
5.000
5.000
4.546
4.545
4.546
4.545
4.546
4.166
4.167
4.166
4.167
4.166
4.0
4.0
4.0
4.0
4.0
3.773
3.774
3.773
3.774
3.773
3.572
3.571
3.572
3.571
3.572
3.333
3.334
3.333
3.334
3.333
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
4.375 4.545
4.546
3.977
4.167
4.166
4.167
4.166
3.646
4.0
4.0
4.0
4.0
4.0
3.774
3.773
3.774
3.773
3.774
3.571
3.572
3.571
3.572
3.571
3.334
3.333
3.334
3.333
3.334
2.857
2.857
2.857
2.857
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.222
2.222
2.222
2.00
2.00
2.00
2.00
2.00
3.5 3.773
3.774
1.415
3.572
3.571
3.572
3.125
3.333
3.334
3.333
3.334
3.333
2.857
2.858
2.857
2.858
2.857
2.500
2.500
2.500
2.500
2.500
2.222
2.222
2.223
2.222
2.223
2.00
2.00
2.00
2.00
2.00
2.917 2.858
2.857
2.858
2.857
2.858
2.500
2.500
2.500
2.500
2.500
2.222
2.223
2.222
2.223
2.222
2.00
2.00
2.00
2.00
2.00
2.500 2.500
2.500
2.500
2.500
2.500
2.223
2.222
2.223
2.222
2.223
2.00
2.00
2.00
2.00
2.00
2.187 2.222
2.223
2.222
2.223
2.222
2.00
2.00
2.00
2.00
2.00
1.945 2.00
2.00
1.75Publication 946 (2024) 83
Table A-13a. Straight Line—40 Years
Mid-Month Convention
Year
2–40
Month property placed in service
2.396%
2.500
0.104
2.188%
2.500
0.312
1.979%
2.500
0.521
1.771%
2.500
0.729
1.563%
2.500
0.937
1.354%
2.500
1.146
1.146%
2.500
1.354
0.938%
2.500
1.562
0.729%
2.500
1.771
0.521%
2.500
1.979
0.313%
2.500
2.187
0.104%
2.500
2.396
Table A-14. 150% Declining Balance Method
Half-Year Convention
Year
Recovery periods in years
2.5
30.0%
42.0
28.0
25.0%
37.5
25.0
12.5
3.5
21.43%
33.67
22.45
22.45
18.75%
30.47
20.31
20.31
10.16
15.00%
25.50
17.85
16.66
16.66
8.33
12.50%
21.88
16.41
14.06
14.06
14.06
7.03
6.5
11.54%
20.41
15.70
13.09
13.09
13.09
13.08
10.71%
19.13
15.03
12.25
12.25
12.25
12.25
6.13
7.5
10.00%
18.00
14.40
11.52
11.52
11.52
11.52
11.52
9.38%
16.99
13.81
11.22
10.80
10.80
10.80
10.80
5.40
8.5
8.82%
16.09
13.25
10.91
10.19
10.19
10.18
10.19
10.18
8.33%
15.28
12.73
10.61
9.65
9.64
9.65
9.64
9.65
4.82
9.5
7.89%
14.54
12.25
10.31
9.17
9.17
9.17
9.17
9.17
9.16
Table A-14. ( Continued)
Year
Recovery periods in years
7.50%
13.88
11.79
10.02
8.74
10.5
7.14%
13.27
11.37
9.75
8.35
6.82%
12.71
10.97
9.48
8.18
6.52%
12.19
10.60
9.22
8.02
12.5
6.25%
11.72
10.25
8.97
7.85
6.00%
11.28
9.93
8.73
7.69
13.5
5.77%
10.87
9.62
8.51
7.53
5.56%
10.49
9.33
8.29
7.37
5.36%
10.14
9.05
8.08
7.22
5.00%
9.50
8.55
7.70
6.93
16.5
4.69%
8.94
8.10
7.34
6.65
4.55%
8.68
7.89
7.17
6.52
11.5
4.41%
8.43
7.69
7.01
6.39
8.74
8.74
8.74
8.74
8.74
8.35
8.35
8.35
8.36
8.35
7.98
7.97
7.98
7.97
7.98
7.64
7.64
7.63
7.64
7.63
7.33
7.33
7.33
7.33
7.33
7.05
7.05
7.05
7.04
7.05
6.79
6.79
6.79
6.79
6.79
6.55
6.55
6.55
6.55
6.55
6.44
6.32
6.32
6.32
6.32
6.23
5.90
5.90
5.91
5.90
6.03
5.55
5.55
5.55
5.55
5.93
5.39
5.39
5.39
5.39
5.83
5.32
5.23
5.23
5.23
4.37 8.36 7.97
3.99
7.64
7.63
7.32
7.33
3.66
7.04
7.05
7.04
6.79
6.78
6.79
3.39
6.55
6.55
6.56
6.55
6.32
6.32
6.32
6.31
3.16
5.91
5.90
5.91
5.90
5.91
5.55
5.55
5.54
5.55
5.54
5.39
5.39
5.38
5.39
5.38
5.23
5.23
5.23
5.23
5.23
2.95 5.55
2.77
5.39
5.38
5.23
5.23
2.62
Table A-13. Residential Rental Property Placed in Service After 2017
Straight Line—30 Years
Mid-Month Convention
Year
2–30
Month property placed in service
3.204%
3.333
0.139
2.926%
3.333
0.417
2.649%
3.333
0.694
2.371%
3.333
0.972
2.093%
3.333
1.250
1.815%
3.333
1.528
1.528%
3.333
1.815
1.250%
3.333
2.093
0.972%
3.333
2.371
0.694%
3.333
2.649
0.417%
3.333
2.926
0.139%
3.333
3.20484 Publication 946 (2024)
Table A-14. ( Continued)
Year
Recovery periods in years
4.17%
7.99
7.32
6.71
6.15
3.95%
7.58
6.98
6.43
5.93
3.750%
7.219
6.677
6.177
5.713
3.409%
6.586
6.137
5.718
5.328
3.125%
6.055
5.676
5.322
4.989
26.5
3.000%
5.820
5.471
5.143
4.834
2.830%
5.500
5.189
4.895
4.618
2.679%
5.214
4.934
4.670
4.420
2.500%
4.875
4.631
4.400
4.180
2.143%
4.194
4.014
3.842
3.677
1.875%
3.680
3.542
3.409
3.281
1.667%
3.278
3.169
3.063
2.961
1.500%
2.955
2.866
2.780
2.697
5.64
5.17
4.94
4.94
4.94
5.46
5.03
4.69
4.69
4.69
5.285
4.888
4.522
4.462
4.461
4.965
4.627
4.311
4.063
4.063
4.677
4.385
4.111
3.854
3.729
4.544
4.271
4.015
3.774
3.584
4.357
4.110
3.877
3.658
3.451
4.183
3.959
3.747
3.546
3.356
3.971
3.772
3.584
3.404
3.234
3.520
3.369
3.225
3.086
2.954
3.158
3.040
2.926
2.816
2.710
2.862
2.767
2.674
2.585
2.499
2.616
2.538
2.461
2.388
2.316
4.94
4.95
4.94
4.95
4.94
4.69
4.69
4.69
4.69
4.69
4.462
4.461
4.462
4.461
4.462
4.063
4.063
4.064
4.063
4.064
3.729
3.729
3.730
3.729
3.730
3.583
3.584
3.583
3.584
3.583
3.383
3.383
3.383
3.383
3.383
3.205
3.205
3.205
3.205
3.205
3.072
2.994
2.994
2.994
2.994
2.828
2.706
2.590
2.571
2.571
2.609
2.511
2.417
2.326
2.253
2.416
2.335
2.257
2.182
2.110
2.246
2.179
2.114
2.050
1.989
4.95
4.94
4.95
2.47
4.69
4.69
4.70
4.69
2.35
4.461
4.462
4.461
4.462
4.461
4.063
4.064
4.063
4.064
4.063
3.729
3.730
3.729
3.730
3.729
3.584
3.583
3.584
3.583
3.584
3.383
3.383
3.383
3.383
3.384
3.205
3.205
3.205
3.205
3.205
2.994
2.994
2.994
2.994
2.993
2.571
2.571
2.571
2.571
2.571
2.253
2.253
2.253
2.253
2.253
2.039
2.005
2.005
2.005
2.005
1.929
1.871
1.815
1.806
1.806
2.231 4.064
4.063
2.032
3.730
3.729
3.730
3.729
1.865
3.583
3.584
3.583
3.584
3.583
3.383
3.384
3.383
3.384
3.383
3.205
3.205
3.205
3.205
3.205
2.994
2.993
2.994
2.993
2.994
2.571
2.571
2.571
2.571
2.571
2.253
2.253
2.253
2.253
2.253
2.005
2.005
2.005
2.004
2.005
1.806
1.806
1.806
1.806
1.806
1.792 3.384
3.383
3.205
3.205
3.205
1.602
2.993
2.994
2.993
2.994
2.993
2.571
2.571
2.572
2.571
2.572
2.253
2.253
2.253
2.253
2.253
2.004
2.005
2.004
2.005
2.004
1.806
1.806
1.806
1.806
1.806
1.497 2.571
2.572
2.571
2.572
2.571
2.253
2.253
2.252
2.253
2.252
2.005
2.004
2.005
2.004
2.005
1.806
1.806
1.806
1.806
1.806
1.286 2.253
2.252
2.253
2.252
2.253
2.004
2.005
2.004
2.005
2.004
1.806
1.806
1.806
1.806
1.806
1.126 2.005
2.004
2.005
2.004
2.005
1.806
1.805
1.806
1.805
1.806
1.002 1.805
1.806
1.805
1.806
1.805
51 0.903Publication 946 (2024) 85
Table A-15. 150% Declining Balance Method
Mid-Quarter Convention
Property Placed in Service in First Quarter
Year
Recovery periods in years
2.5
52.50%
29.23
18.27
43.75%
28.13
25.00
3.12
3.5
37.50%
26.79
21.98
13.73
32.81%
25.20
19.76
19.76
2.47
26.25%
22.13
16.52
16.52
16.52
2.06
21.88%
19.53
14.65
14.06
14.06
14.06
1.76
6.5
20.19%
18.42
14.17
13.03
13.02
13.03
8.14
18.75%
17.41
13.68
12.16
12.16
12.16
12.16
1.52
7.5
17.50%
16.50
13.20
11.42
11.42
11.41
11.42
7.13
16.41%
15.67
12.74
10.77
10.77
10.76
10.77
10.76
1.35
8.5
15.44%
14.92
12.29
10.20
10.19
10.20
10.19
10.20
6.37
14.58%
14.24
11.86
9.89
9.64
9.65
9.64
9.65
9.64
1.21
9.5
13.82%
13.61
11.46
9.65
9.15
9.15
9.15
9.15
9.14
5.72
Table A-15. ( Continued)
Year
Recovery periods in years
10 10.5 11 11.5 12 12.5 13 13.5 14 15 16 16.5 17
13.13%
13.03
11.08
9.41
8.71
8.71
8.71
8.71
8.71
8.71
1.09
12.50%
12.50
10.71
9.18
8.32
8.32
8.32
8.32
8.32
8.31
5.20
11.93%
12.01
10.37
8.96
7.96
7.96
7.96
7.96
7.96
7.97
7.96
1.00
11.41%
11.56
10.05
8.74
7.64
7.64
7.64
7.64
7.64
7.63
7.64
4.77
10.94%
11.13
9.74
8.52
7.46
7.33
7.33
7.33
7.33
7.32
7.33
7.32
0.92
10.50%
10.74
9.45
8.32
7.32
7.04
7.04
7.04
7.04
7.04
7.04
7.03
4.40
10.10%
10.37
9.18
8.12
7.18
6.78
6.77
6.78
6.77
6.78
6.77
6.78
6.77
0.85
9.72%
10.03
8.92
7.93
7.04
6.53
6.54
6.53
6.54
6.53
6.54
6.53
6.54
4.08
8.75%
9.13
8.21
7.39
6.65
5.99
5.90
5.91
5.90
5.91
5.90
5.91
5.90
5.91
5.90
0.74
9.38%
9.71
8.67
7.74
6.91
6.31
6.31
6.31
6.31
6.31
6.31
6.31
6.32
6.31
0.79
8.20%
8.61
7.80
7.07
6.41
5.80
5.54
5.54
5.54
5.54
5.54
5.54
5.54
5.55
5.54
5.55
0.69
7.95%
8.37
7.61
6.92
6.29
5.71
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.37
3.36
7.72%
8.14
7.42
6.77
6.17
5.63
5.23
5.23
5.23
5.23
5.23
5.22
5.23
5.22
5.23
5.22
5.23
0.6586 Publication 946 (2024)
Table A-15. ( Continued)
Year
Recovery periods in years
18 19 20 22 24 25 26.5 28 30 35 40 45 50
7.29% 6.91% 6.563% 5.966% 5.469% 5.250% 4.953% 4.688% 3.750%4.375% 3.281% 2.917% 2.625%
7.73
7.08
6.49
5.95
5.45
5.00
4.94
4.95
4.94
4.95
4.94
4.95
4.94
4.95
4.94
4.95
4.94
0.62
7.35 7.008 6.411 5.908 5.685 5.380 5.106 4.781 4.125
6.77 6.482 5.974 5.539 5.344 5.075 4.832 4.542
6.23 5.996 5.567 5.193 5.023 4.788 4.574 4.315
5.74 5.546 5.187 4.868 4.722 4.517 4.329 4.099
5.29 5.130 4.834 4.564 4.439 4.262 4.097 3.894 3.462
4.87 4.746 4.504 4.279 4.172 4.020 3.877 3.700 3.314
4.69 4.459 4.197 4.011 3.922 3.793 3.669 3.515 3.172
4.69 4.459 4.061 3.761 3.687 3.578 3.473 3.339 3.036
4.69 4.459 4.061 3.729 3.582 3.383 3.287 3.172 2.906
4.69 4.459 4.061 3.729 3.582 3.384 3.204 3.013 2.781
4.69 4.460 4.061 3.730 3.582 3.383 3.204 2.994 2.662
4.69 4.459 4.061 3.729 3.582 3.384 3.204 2.994 2.571
4.69 4.460 4.061 3.730 3.582 3.383 3.204 2.994 2.571
4.68 4.459 4.061 3.729 3.582 3.384 3.204 2.994 2.571
4.69 4.460 4.061 3.730 3.582 3.383 3.204 2.994 2.571
4.68 4.459 4.061 3.729 3.582 3.384 3.204 2.994 2.571
4.69 4.460 4.061 3.730 3.582 3.383 3.204 2.994 2.571
4.68 4.459 4.061 3.729 3.581 3.384 3.204 2.994 2.571
0.59 4.460 4.060 3.730 3.582 3.383 3.204 2.994 2.571
0.557 4.061 3.729 3.581 3.384 3.203 2.993 2.571
4.060 3.730 3.582 3.383 3.204 2.994 2.571
0.508 3.729 3.581 3.384 3.203 2.993 2.571
3.730 3.582 3.383 3.204 2.994 2.570
0.466 3.581 3.384 3.203 2.993 2.571
0.448 3.383 3.204 2.994 2.570
2.115 3.203 2.993 2.571
3.204 2.994 2.570
0.400 2.993 2.571
2.994 2.570
0.374 2.571
2.570
2.571
2.570
2.571
3.948
3.779
3.617
0.321
3.627
3.491
3.360
3.234
3.113
2.996
2.884
2.776
2.671
2.571
2.475
2.382
2.293
2.252
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
0.282
3.236
3.128
3.024
2.923
2.826
2.732
2.640
2.552
2.467
2.385
2.306
2.229
2.154
2.083
2.013
2.005
2.005
2.005
2.005
2.005
2.005
2.005
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
0.251
2.921
2.834
2.749
2.666
2.586
2.509
2.433
2.360
2.290
2.221
2.154
2.090
2.027
1.966
1.907
1.850
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
0.226Publication 946 (2024) 87
Table A-16. 150% Declining Balance Method
Mid-Quarter Convention
Property Placed in Service in Second Quarter
Year
Recovery periods in years
2.5 3 3.5 4 5 6 6.5 7 7.5 8 8.5 9 9.5
Table A-16. ( Continued)
Year
Recovery periods in years
10 10.5 11 11.5 12 12.5 13 13.5 14 15 16 16.5 17
37.50%
37.50
25.00
31.25%
34.38
25.00
9.37
26.79%
31.38
22.31
19.52
23.44%
28.71
20.15
20.15
7.55
18.75%
6.29
15.63%
21.09
15.82
14.06
14.06
14.07
5.27
24.38
17.06
16.76
16.76
14.42%
19.75
15.19
13.07
13.07
13.07
11.43
13.39%
18.56
14.58
12.22
12.22
12.22
12.23
4.58
12.50%
17.50
14.00
11.49
11.49
11.49
11.48
10.05
11.72%
16.55
13.45
10.93
10.82
10.82
10.83
10.82
4.06
11.03%
15.70
12.93
10.65
10.19
10.19
10.19
10.20
8.92
10.42%
14.93
12.44
10.37
9.64
9.65
9.64
9.65
9.64
3.62
9.87%
14.23
11.98
10.09
9.16
9.16
9.16
9.17
9.16
8.02
9.38%
13.59
11.55
9.82
8.73
8.73
8.73
8.73
8.73
8.73
3.28
8.93%
13.01
11.15
9.56
8.34
8.34
8.34
8.34
8.34
8.35
7.30
8.52%
12.47
10.77
9.31
8.04
7.98
7.98
7.98
7.99
7.98
7.99
2.99
8.15%
11.98
10.42
9.06
7.88
7.64
7.64
7.64
7.64
7.63
7.64
6.68
7.81%
11.52
10.08
8.82
7.72
7.33
7.33
7.33
7.33
7.33
7.33
7.32
2.75
7.50%
11.10
9.77
8.60
7.56
7.04
7.04
7.05
7.04
7.05
7.04
7.05
6.16
7.21%
10.71
9.47
8.38
7.41
6.78
6.79
6.78
6.79
6.78
6.79
6.78
6.79
2.54
6.94%
10.34
9.19
8.17
7.26
6.55
6.55
6.55
6.54
6.55
6.54
6.55
6.54
5.73
6.70%
10.00
8.92
7.97
7.12
6.35
6.32
6.32
6.32
6.32
6.32
6.32
6.32
6.33
2.37
6.25%
9.38
8.44
7.59
6.83
6.15
5.91
5.90
5.91
5.90
5.91
5.90
5.91
5.90
5.91
2.21
5.86%
8.83
8.00
7.25
6.57
5.95
5.55
5.55
5.55
5.54
5.55
5.54
5.55
5.54
5.55
5.54
2.08
5.68%
8.57
7.80
7.09
6.44
5.86
5.38
5.39
5.38
5.39
5.38
5.39
5.38
5.39
5.38
5.39
4.71
5.51%
8.34
7.60
6.93
6.32
5.76
5.25
5.23
5.23
5.23
5.23
5.23
5.24
5.23
5.24
5.23
5.24
1.9688 Publication 946 (2024)
Table A-16. ( Continued)
Year
Recovery periods in years
18 19 20 22 24 25 26.5 28 30 35 40 45 50
5.21%
7.90
7.24
6.64
6.08
4.93%
7.51
6.91
6.37
5.86
4.688%
7.148
6.612
6.116
5.658
4.261%
6.528
6.083
5.668
5.281
3.906%
6.006
5.631
5.279
4.949
3.750%
5.775
5.429
5.103
4.797
3.538%
5.460
5.151
4.859
4.584
3.348%
5.178
4.900
4.638
4.389
3.125%
4.844
4.602
4.371
4.153
2.679%
4.171
3.992
3.821
3.657
2.344%
3.662
3.525
3.393
3.265
2.083%
3.264
3.155
3.050
2.948
1.875%
2.944
2.855
2.770
2.687
5.58
5.11
4.94
4.94
4.95
4.94
4.95
4.94
4.95
4.94
4.95
4.94
4.95
1.85
5.40
4.98
4.69
4.69
4.69
4.69
4.69
4.69
4.69
4.69
4.69
4.69
4.69
4.69
1.76
5.233
4.841
4.478
4.463
4.463
4.463
4.463
4.463
4.463
4.462
4.463
4.462
4.463
4.462
4.463
1.673
4.921
4.586
4.273
4.063
4.063
4.062
4.063
4.062
4.063
4.062
4.063
4.062
4.063
4.062
4.063
4.062
4.063
1.523
4.639
4.349
4.078
3.823
3.729
3.729
3.729
3.730
3.729
3.730
3.729
3.730
3.729
3.730
3.729
3.730
3.729
3.730
3.729
1.399
4.509
4.238
3.984
3.745
3.583
3.583
3.583
3.583
3.583
3.583
3.583
3.583
3.583
3.583
3.583
3.583
3.583
3.583
3.582
3.583
1.343
4.325
4.080
3.849
3.631
3.426
3.384
3.383
3.384
3.383
3.384
3.383
3.384
3.383
3.384
3.383
3.384
3.383
3.384
3.383
3.384
3.383
2.961
4.154
3.932
3.721
3.522
3.333
3.205
3.205
3.205
3.205
3.205
3.204
3.205
3.204
3.205
3.204
3.205
3.204
3.205
3.204
3.205
3.204
3.205
3.204
1.202
3.945
3.748
3.561
3.383
3.213
3.053
2.994
2.994
2.994
2.994
2.994
2.994
2.993
2.994
2.993
2.994
2.993
2.994
2.993
2.994
2.993
2.994
2.993
2.994
2.993
1.123
3.501
3.351
3.207
3.069
2.938
2.812
2.692
2.576
2.571
2.571
2.571
2.571
2.571
2.571
2.571
2.572
2.571
2.572
2.571
2.572
2.571
2.572
2.571
2.572
2.571
2.572
2.571
2.572
2.571
2.572
0.964
3.143
3.025
2.912
2.802
2.697
2.596
2.499
2.405
2.315
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
0.845
2.850
2.755
2.663
2.574
2.489
2.406
2.325
2.248
2.173
2.101
2.031
2.005
2.005
2.005
2.005
2.005
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
0.752
2.606
2.528
2.452
2.378
2.307
2.238
2.171
2.106
2.042
1.981
1.922
1.864
1.808
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.805
1.806
1.805
1.806
1.805
1.806
0.677Publication 946 (2024) 89
Table A-17. 150% Declining Balance Method
Mid-Quarter Convention
Property Placed in Service in Third Quarter
Year
Recovery periods in years
2.5
22.50%
46.50
27.56
3.44
18.75%
40.63
25.00
15.62
3.5
16.07%
35.97
22.57
22.57
2.82
14.06%
32.23
20.46
20.46
12.79
11.25%
26.63
18.64
16.56
16.57
10.35
9.38%
22.66
16.99
14.06
14.06
14.06
8.79
6.5
8.65%
21.08
16.22
13.10
13.10
13.11
13.10
1.64
8.04%
19.71
15.48
12.27
12.28
12.27
12.28
7.67
7.5
7.50%
18.50
14.80
11.84
11.48
11.48
11.48
11.48
1.44
7.03%
17.43
14.16
11.51
10.78
10.78
10.78
10.79
6.74
8.5
6.62%
16.48
13.57
11.18
10.18
10.17
10.18
10.17
10.18
1.27
6.25%
15.63
13.02
10.85
9.64
9.65
9.64
9.65
9.64
6.03
9.5
5.92%
14.85
12.51
10.53
9.17
9.17
9.18
9.17
9.18
9.17
Table A-17. ( Continued)
Year
Recovery periods in years
10 10.5 11 11.5 12 12.5 13 13.5 14 15 16 16.5 17
5.63%
14.16
12.03
10.23
8.75
8.75
8.75
8.74
8.75
8.74
5.47
5.36%
13.52
11.59
9.93
8.51
8.34
8.34
8.34
8.34
8.34
8.35
1.04
5.11%
12.94
11.18
9.65
8.33
7.97
7.97
7.97
7.97
7.97
7.96
4.98
4.89%
7.63
7.63
7.63
7.63
7.63
7.63
7.64
0.95
4.69%
11.91
10.43
9.12
7.98
7.33
7.33
7.33
7.33
7.32
7.33
7.32
4.58
4.50%
11.46
10.08
8.88
7.81
7.05
7.05
7.05
7.05
7.05
7.05
7.04
7.05
0.88
4.33%
11.04
9.77
8.64
7.64
6.79
6.79
6.79
6.79
6.79
6.79
6.80
6.79
4.25
4.17%
10.65
9.46
8.41
7.48
6.65
6.55
6.54
6.55
6.54
6.55
6.54
6.55
6.54
0.82
3.75%
9.63
8.66
7.80
7.02
6.31
5.90
5.90
5.91
5.90
5.91
5.90
5.91
5.90
5.91
3.69
4.02%
10.28
9.18
8.20
7.32
6.54
6.31
6.31
6.32
6.31
6.32
6.31
6.32
6.31
3.95
3.52%
9.05
8.20
7.43
6.73
6.10
5.55
5.55
5.55
5.55
5.55
5.55
5.55
5.55
5.55
5.55
3.47
3.41%
8.78
7.98
7.26
6.60
6.00
5.45
5.38
5.39
5.38
5.39
5.38
5.39
5.38
5.39
5.38
5.39
0.67
3.31%
8.53
7.78
7.09
6.47
5.90
5.38
5.23
5.23
5.23
5.23
5.23
5.22
5.23
5.22
5.23
5.22
3.27
11 1.15
12.41
10.79
9.38
8.1690 Publication 946 (2024)
Table A-17. ( Continued)
Year
Recovery periods in years
18 19 20 22 24 25 26.5 28 30 35 40 45 50
3.13% 2.96% 2.813% 2.557% 2.344% 2.250% 2.123% 2.009% 1.607%1.875% 1.406% 1.250% 1.125%
8.07
7.40
6.78
6.22
5.70
5.23
4.94
4.94
4.94
4.94
4.95
4.94
4.95
4.94
4.95
4.94
4.95
3.09
7.66
7.06
6.50
5.99
7.289
6.742
6.237
5.769
6.644
6.191
5.769
5.375
6.104
5.722
5.364
5.029
5.865
5.513
5.182
4.871
5.540
5.227
4.931
4.652
5.250
4.968
4.702
4.450
4.906
4.661
4.428
4.207
4.217
4.036
3.863
3.698
5.51
5.08
4.69
4.69
4.69
5.336
4.936
4.566
4.460
4.460
5.009
4.667
4.349
4.064
4.064
4.715
4.420
4.144
3.885
3.729
4.579
4.304
4.046
3.803
3.584
4.388
4.140
3.906
3.685
3.476
4.212
3.986
3.773
3.571
3.379
3.996
3.796
3.607
3.426
3.255
3.539
3.387
3.242
3.103
2.970
4.69
4.69
4.69
4.69
4.70
4.460
4.460
4.461
4.460
4.461
4.064
4.064
4.064
4.064
4.064
3.730
3.729
3.730
3.729
3.730
3.584
3.584
3.584
3.584
3.584
3.383
3.383
3.383
3.383
3.383
3.205
3.205
3.205
3.205
3.205
3.092
2.994
2.994
2.994
2.994
2.843
2.721
2.605
2.571
2.571
4.69
4.70
4.69
4.70
2.93
4.460
4.461
4.460
4.461
4.460
4.064
4.064
4.065
4.064
4.065
3.729
3.730
3.729
3.730
3.729
3.584
3.584
3.584
3.584
3.584
3.383
3.383
3.383
3.383
3.383
3.206
3.205
3.206
3.205
3.206
2.994
2.994
2.994
2.994
2.993
2.571
2.571
2.571
2.571
2.571
2.788 4.064
4.065
2.540
3.730
3.729
3.730
3.729
2.331
3.383
3.383
3.383
3.383
3.382
3.205
3.206
3.205
3.206
3.205
2.994
2.993
2.994
2.993
2.994
2.571
2.571
2.571
2.571
2.571
2.240 3.383
3.382
0.423
3.206
3.205
3.206
2.003
2.993
2.994
2.993
2.994
2.993
2.571
2.571
2.571
2.571
2.571
1.871 2.571
2.571
2.571
2.571
2.571
1.607
3.697
3.559
3.425
3.297
2.621
2.523
2.428
2.337
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.254
2.253
2.254
1.408
3.292
3.182
3.076
2.973
2.874
2.778
2.686
2.596
2.510
2.426
2.345
2.267
2.192
2.118
2.048
2.005
2.005
2.005
2.005
2.005
2.005
2.005
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
1.253
2.966
2.877
2.791
2.707
2.626
2.547
2.471
2.397
2.325
2.255
2.187
2.122
2.058
1.996
1.937
1.878
1.822
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.128
3.585
3.584
3.585
3.584
3.585
3.173
3.054
2.940
2.829
2.723Publication 946 (2024) 91
Table A-18. 150% Declining Balance Method
Mid-Quarter Convention
Property Placed in Service in Fourth Quarter
Year
Recovery periods in years
2.5
7.50%
55.50
26.91
10.09
6.25%
46.88
25.00
21.87
3.5
5.36%
40.56
23.18
22.47
8.43
4.69%
35.74
22.34
19.86
17.37
3.75%
28.88
20.21
16.40
16.41
14.35
3.13%
24.22
18.16
14.06
14.06
14.06
12.31
6.5
2.88%
22.41
17.24
13.26
13.10
13.10
13.10
4.91
2.68%
20.85
16.39
12.87
12.18
12.18
12.19
10.66
7.5
2.50%
19.50
15.60
12.48
11.41
11.41
11.41
11.41
4.28
2.34%
18.31
14.88
12.09
10.74
10.75
10.74
10.75
9.40
8.5
2.21%
17.26
14.21
11.70
10.16
10.16
10.16
10.16
10.17
3.81
2.08%
16.32
13.60
11.33
9.65
9.65
9.64
9.65
9.64
8.44
9.5
1.97%
15.48
13.03
10.98
9.24
9.17
9.17
9.17
9.17
9.18
Table A-18. ( Continued)
Year
Recovery periods in years
10 10.5 11 11.5 12 12.5 13 13.5 14 15 16 16.5 17
1.88%
14.72
12.51
10.63
9.04
8.72
8.72
8.72
8.72
8.71
7.63
1.79%
14.03
12.03
10.31
8.83
8.32
8.31
8.32
8.31
8.32
8.31
3.12
1.70%
13.40
11.58
10.00
8.63
7.95
7.96
7.95
7.96
7.95
7.96
6.96
1.63%
7.63
7.63
7.62
7.63
7.62
7.63
7.62
2.86
1.56%
12.31
10.77
9.42
8.24
7.33
7.33
7.33
7.33
7.32
7.33
7.32
6.41
1.50%
11.82
10.40
9.15
8.06
7.09
7.05
7.05
7.05
7.05
7.05
7.04
7.05
2.64
1.44%
11.37
10.06
8.90
7.87
6.96
6.78
6.78
6.78
6.78
6.78
6.78
6.78
5.94
1.39%
10.96
9.74
8.66
7.69
6.84
6.53
6.53
6.53
6.54
6.53
6.54
6.53
6.54
2.45
1.25%
9.88
8.89
8.00
7.20
6.48
5.90
5.90
5.90
5.91
5.90
5.91
5.90
5.91
5.90
5.17
1.34%
10.57
9.44
8.43
7.52
6.72
6.31
6.31
6.31
6.31
6.31
6.30
6.31
6.30
5.52
1.17%
9.27
8.40
7.61
6.90
6.25
5.66
5.54
5.54
5.54
5.54
5.55
5.54
5.55
5.54
5.55
4.85
1.14%
8.99
8.17
7.43
6.75
6.14
5.58
5.38
5.38
5.38
5.38
5.38
5.38
5.38
5.37
5.38
5.37
2.02
1.10%
8.73
7.96
7.25
6.61
6.03
5.50
5.22
5.23
5.22
5.23
5.22
5.23
5.22
5.23
5.22
5.23
4.57
11 3.44
12.83
11.16
9.70
8.4492 Publication 946 (2024)
Table A-18. ( Continued)
Year
Recovery periods in years
18 19 20 22 24 25 26.5 28 30 35 40 45 50
1.04% 0.99% 0.938% 0.852% 0.781% 0.750% 0.708% 0.670% 0.536%0.625% 0.469% 0.417% 0.375%
8.25
7.56
6.93
6.35
5.82
5.34
4.94
4.94
4.94
4.95
4.94
4.95
4.94
4.95
4.94
4.95
4.94
4.33
7.82
7.20
6.63
6.11
7.430
6.872
6.357
5.880
6.760
6.299
5.870
5.469
6.201
5.814
5.450
5.110
5.955
5.598
5.262
4.946
5.620
5.302
5.002
4.719
5.321
5.036
4.766
4.511
4.969
4.720
4.484
4.260
4.263
4.080
3.905
3.738
5.63
5.18
4.77
4.69
4.69
5.439
5.031
4.654
4.458
4.458
5.097
4.749
4.425
4.124
4.062
4.790
4.491
4.210
3.947
3.730
4.649
4.370
4.108
3.862
3.630
4.452
4.200
3.962
3.738
3.526
4.269
4.041
3.824
3.619
3.426
4.047
3.845
3.653
3.470
3.296
3.578
3.424
3.278
3.137
3.003
4.69
4.69
4.69
4.69
4.69
4.458
4.458
4.458
4.458
4.458
4.062
4.062
4.062
4.061
4.062
3.729
3.730
3.729
3.730
3.729
3.582
3.582
3.582
3.582
3.582
3.383
3.382
3.383
3.382
3.383
3.242
3.204
3.204
3.204
3.204
3.132
2.994
2.994
2.994
2.994
2.874
2.751
2.633
2.570
2.571
4.69
4.68
4.69
4.68
4.10
4.458
4.458
4.459
4.458
4.459
4.061
4.062
4.061
4.062
4.061
3.730
3.729
3.730
3.729
3.730
3.583
3.582
3.583
3.582
3.583
3.382
3.383
3.382
3.383
3.382
3.204
3.204
3.204
3.204
3.204
2.994
2.994
2.994
2.993
2.994
2.570
2.571
2.570
2.571
2.570
3.901 4.062
4.061
3.554
3.729
3.730
3.729
3.730
3.263
3.383
3.382
3.383
3.382
3.383
3.204
3.204
3.205
3.204
3.205
2.993
2.994
2.993
2.994
2.993
2.571
2.570
2.571
2.570
2.571
3.135 3.382
3.383
1.268
3.204
3.205
3.204
2.804
2.994
2.993
2.994
2.993
2.994
2.570
2.571
2.570
2.571
2.570
2.619 2.571
2.570
2.571
2.570
2.571
2.249
3.732
3.592
3.458
3.328
2.646
2.547
2.451
2.359
2.271
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
2.253
2.252
1.971
3.319
3.209
3.102
2.998
2.898
2.802
2.708
2.618
2.531
2.447
2.365
2.286
2.210
2.136
2.065
2.005
2.005
2.005
2.005
2.005
2.005
2.005
2.005
2.005
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
2.005
2.004
1.754
2.989
2.899
2.812
2.728
2.646
2.567
2.490
2.415
2.342
2.272
2.204
2.138
2.074
2.011
1.951
1.893
1.836
1.806
1.806
1.806
1.806
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.806
1.805
1.580
3.582
3.583
3.582
3.583
3.582
3.203
3.083
2.968
2.856
2.749Publication 946 (2024) 93
Table A-19. Amount A Percentages
Recovery Period
of Property
Under ADS
Less than 7 years
7 to 10 years
More than 10 years
First Tax Year During Lease in Which
Business Use is 50% or Less
2.1%
–7.2%
–19.8%
–20.1%
–12.4%
–12.4%
7 8 9 10 11 12 & Later
Table A-20.
RATES TO FIGURE INCLUSION AMOUNTS
FOR
LEASED LISTED PROPERTY
Amount B Percentages
–12.4% –12.4% –12.4% –12.4% –12.4% –12.4%
3.9% –3.8% –17.7% –25.1% –27.8% –27.2% –27.1% –27.6% –23.7% –14.7% –14.7% –14.7%
6.6% –1.6% –16.9% –25.6% –29.9% –31.1% –32.8% –35.1% –33.3% –26.7% –19.7% –12.2%
Recovery Period
of Property
Under ADS
Less than 7 years
7 to 10 years
More than 10 years
First Tax Year During Lease in Which
Business Use is 50% or Less
0.0%
10.0%
22.0%
21.2%
12.7%
12.7%
7 8 9 10 11 12 & Later
12.7% 12.7% 12.7% 12.7% 12.7% 12.7%
0.0% 9.3% 23.8% 31.3% 33.8% 32.7% 31.6% 30.5% 25.0% 15.0% 15.0% 15.0%
0.0% 10.1% 26.3% 35.4% 39.6% 40.2% 40.8% 41.4% 37.5% 29.2% 20.8% 12.5%94 Publication 946 (2024)
Year
Qualified Indian Reservation Property Tables
for Property Placed in Service Before 2022
2-Year Qualified Indian Reservation Property
Half-Year and Mid-Quarter Conventions
Table A-21.
Half-Year
Convention Q-1 Q-2 Q-3 Q-4
50.00% 87.50% 62.50% 37.50% 12.50%
2 50.00 12.50 37.50 62.50 87.50
Year Half-Year
Convention Q-1 Q-2 Q-3 Q-4
25.00% 43.75% 31.25% 18.75% 6.25%
2 37.50 28.13 34.37 40.63 46.87
4-Year Qualified Indian Reservation Property
Half-Year and Mid-Quarter Conventions
Table A-22.
3 18.75 14.06 17.19 20.31 23.44
4 12.50 12.50 12.50 12.50 12.50
5 6.25 1.56 4.69 7.81 10.94
Year Half-Year
Convention Q-1 Q-2 Q-3 Q-4
16.67% 29.17% 20.83% 12.50% 4.17%
2 27.78 23.61 26.39 29.17 31.94
6-Year Qualified Indian Reservation Property
Half-Year and Mid-Quarter Conventions
Table A-23.
3 18.52 15.74 17.59 19.44 21.30
4 12.35 10.49 11.73 12.96 14.20
5 9.87 9.88 9.88 9.88 9.87
6 9.87 9.88 9.88 9.88 9.88
7 4.94 1.23 3.70 6.17 8.64Publication 946 (2024) 95
Table A-24. Qualified Nonresidential Real Indian Reservation Property
Mid-Month Convention
Straight Line—22 Years
Year
Month property placed in service
7 8 9 10 11 12
0.189%
654321
0.568%0.947%1.326%1.705%2.083%2.462%2.841%3.220%3.598%3.977%4.356%
4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.5452–3
4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545 4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545
4.545 4.545 4.545 4.545
4.546 4.546 4.546 4.546 4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546 4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546 4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546 4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546 4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546 4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546 4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546 4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546 4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546 4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546
4.546 4.546 4.546 4.546
4.356%3.977%3.598%3.220%2.841%2.462%2.083%1.705%1.326%0.947%0.568%0.189%96 Publication 946 (2024)
Appendix B—Table of Class Lives and Recovery Periods
The Table of Class Lives and Recovery
Periods has two sections. The first sec-
tion, Specific Depreciable Assets Used
in All Business Activities, Except as
Noted, generally lists assets used in all
business activities. It is shown as Table
B-1. The second section, Depreciable
Assets Used in the Following Activities,
describes assets used only in certain
activities. It is shown as Table B-2.
How To Use the Tables
You will need to look at both Table B-1
and Table B-2 to find the correct recov-
ery period. Generally, if the property is
listed in Table B-1, you use the recov-
ery period shown in that table. How-
ever, if the property is specifically listed
in Table B-2 under the type of activity in
which it is used, you use the recovery
period listed under the activity in that
table. Use the tables in the order
shown below to determine the recovery
period of your depreciable property.
Table B-1. Check Table B-1 for a de-
scription of the property. If it is descri-
bed in Table B-1, also check Table B-2
to find the activity in which the property
is being used. If the activity is descri-
bed in Table B-2, read the text (if any)
under the title to determine if the prop-
erty is specifically included in that as-
set class. If it is, use the recovery pe-
riod shown in the appropriate column
of Table B-2 following the description of
the activity. If the activity is not descri-
bed in Table B-2 or if the activity is de-
scribed but the property either is not
specifically included in or is specifically
excluded from that asset class, then
use the recovery period shown in the
appropriate column following the de-
scription of the property in Table B-1.
Tax-exempt use property subject to
a lease. The recovery period for ADS
cannot be less than 125% of the lease
term for any property leased under a
leasing arrangement to a tax-exempt
organization, governmental unit, or for-
eign person or entity (other than a part-
nership).
Table B-2. If the property is not listed
in Table B-1, check Table B-2 to find
the activity in which the property is be-
ing used and use the recovery period
shown in the appropriate column fol-
lowing the description.
Property not in either table. If the
activity or the property is not included
in either table, check the end of Table
B-2 to find Certain Property for Which
Recovery Periods Assigned. This prop-
erty generally has a recovery period of
7 years for GDS or 12 years for ADS.
See Which Property Class Applies Un-
der GDS? and Which Recovery Period
Applies? in chapter 4 for the class lives
or the recovery periods for GDS and
ADS for the following.
• Residential rental property and
nonresidential real property (also
see Appendix A, Chart 2).
• Qualified rent-to-own property.
• A motorsport entertainment com-
plex.
• Any retail motor fuels outlet.
• Initial clearing and grading land im-
provements for gas utility property
and electric utility transmission and
distribution plants.
• Any water utility property.
• Certain electric transmission prop-
erty used in the transmission at 69
or more kilovolts of electricity for
sale and placed in service after
April 11, 2005.
• Natural gas gathering and distribu-
tion lines placed in service after
April 11, 2005.
Example 1. You are a paper manu-
facturer. During the year, you made
substantial improvements to the land
on which your paper plant is located.
You check Table B-1 and find land im-
provements under asset class 00.3.
You then check Table B-2 and find your
activity, paper manufacturing, under
asset class 26.1, Manufacture of Pulp
and Paper. You use the recovery period
under this asset class because it spe-
cifically includes land improvements.
The land improvements have a 13-year
class life and a 7-year recovery period
for GDS. If you elect to use ADS, the
recovery period is 13 years. If you only
looked at Table B-1, you would select
asset class 00.3, Land Improvements,
and incorrectly use a recovery period
of 15 years for GDS or 20 years for
ADS.
Example 2. You produce rubber
products. During the year, you made
substantial improvements to the land
on which your rubber plant is located.
You check Table B-1 and find land im-
provements under asset class 00.3.
You then check Table B-2 and find your
activity, producing rubber products, un-
der asset class 30.1, Manufacture of
Rubber Products. Reading the head-
ings and descriptions under asset
class 30.1, you find that it does not in-
clude land improvements. Therefore,
you use the recovery period under as-
set class 00.3. The land improvements
have a 20-year class life and a 15-year
recovery period for GDS. If you elect to
use ADS, the recovery period is 20
years.
Example 3. You own a retail cloth-
ing store. During the year, you pur-
chased a desk and a cash register for
use in your business. You check Table
B-1 and find office furniture under as-
set class 00.11. Cash registers are not
listed in any of the asset classes in Ta-
ble B-1. You then check Table B-2 and
find your activity, retail store, under as-
set class 57.0, Distributive Trades and
Services, which includes assets used
in wholesale and retail trade. This
asset class does not specifically list of-
fice furniture or a cash register. You
look back at Table B-1 and use asset
class 00.11 for the desk. The desk has
a 10-year class life and a 7-year recov-
ery period for GDS. If you elect to use
ADS, the recovery period is 10 years.
For the cash register, you use asset
class 57.0 because cash registers are
not listed in Table B-1 but it is an asset
used in your retail business. The cash
register has a 9-year class life and a
5-year recovery period for GDS. If you
elect to use the ADS method, the re-
covery period is 9 years.
Table B-1.
Asset
class
00.11
00.12
00.13
00.21
00.22
Description of assets included
Table of Class Lives and Recovery Periods
Recovery Periods
(in years)
Class Life
(in years)
GDS
(MACRS) ADS
SPECIFIC DEPRECIABLE ASSETS USED IN ALL BUSINESS ACTIVITIES, EXCEPT AS NOTED:
00.23
00.241
00.242
00.25
00.26
00.27
00.28
00.3
00.4
Office Furniture, Fixtures, and Equipment:
Includes furniture and fixtures that are not a structural component of a building. Includes such
assets as desks, files, safes, and communications equipment. Does not include
communications equipment that is included in other classes.
10 7 10
Information Systems:
Includes computers and their peripheral equipment used in administering normal business
transactions and the maintenance of business records, their retrieval and analysis.
Information systems are defined as:
1) Computers: A computer is a programmable electronically activated device capable of
accepting information, applying prescribed processes to the information, and supplying the
results of these processes with or without human intervention. It usually consists of a central
processing unit containing extensive storage, logic, arithmetic, and control capabilities.
Excluded from this category are adding machines, electronic desk calculators, etc., and other
equipment described in class 00.13.
2) Peripheral equipment consists of the auxiliary machines which are designed to be placed
under control of the central processing unit. Nonlimiting examples are: Card readers, card
punches, magnetic tape feeds, high speed printers, optical character readers, tape cassettes,
mass storage units, paper tape equipment, keypunches, data entry devices, teleprinters,
terminals, tape drives, disc drives, disc files, disc packs, visual image projector tubes, card
sorters, plotters, and collators. Peripheral equipment may be used online or offline.
Does not incude equipment that is an integral part of other capital equipment that is included
in other classes of economic activity, that is, computers used primarily for process or production
control, switching, channeling, and automating distributive trades and services such as point
of sale (POS) computer systems. Also, does not include equipment of a kind used primarily for
amusement or entertainment of the user.
6 5 5
Data Handling Equipment; except Computers:
Includes only typewriters, calculators, adding and accounting machines, copiers, and
duplicating equipment. 6 5 6
Airplanes (airframes and engines), except those used in commercial or contract carrying
of passengers or freight, and all helicopters (airframes and engines) 6 5 6
Automobiles, Taxis 3 5 5
Buses 9 5 9
Light General Purpose Trucks: 554)sdnuop000,31nahtsselthgiewlautca(daorehtrevoesurofskcurtsedulcnI
Heavy General Purpose Trucks:
Includes heavy general purpose trucks, concrete ready mix-trucks, and ore trucks, for use
over the road (actual unloaded weight 13,000 pounds or more) 6 5 6
Railroad Cars and Locomotives, except those owned by railroad transportation
companies 15 7 15
Tractor Units for Use Over-the-Road 4 3 4
Trailers and Trailer-Mounted Containers 6 5 6
Vessels, Barges, Tugs, and Similar Water Transportation Equipment, except those used
in marine construction
18 10 18
Land Improvements:
Includes improvements directly to or added to land, whether such improvements are section
1245 property or section 1250 property, provided such improvements are depreciable.
Examples of such assets might include sidewalks, roads, canals, waterways, drainage
facilities, sewers (not including municipal sewers in class 51), wharves and docks, bridges,
fences, landscaping shrubbery, or radio and television transmitting towers. Does not include
land improvements that are explicitly included in any other class, and buildings and structural
components as defined in section 1.48-1(e) of the regulations. Excludes public utility initial
clearing and grading land improvements as specified in Rev. Rul. 72-403, 1972-2 C.B. 102.
20 15 20
Industrial Steam and Electric Generation and/or Distribution Systems:
Includes assets, whether such assets are section 1245 property or 1250 property, providing
such assets are depreciable, used in the production and/or distribution of electricity with rated
total capacity in excess of 500 Kilowatts and/or assets used in the production and/or
distribution of steam with rated total capacity in excess of 12,500 pounds per hour for use by
the taxpayer in its industrial manufacturing process or plant activity and not ordinarily available
for sale to others. Does not include buildings and structural components as defined in section
1.48-1(e) of the regulations. Assets used to generate and/or distribute electricity or steam of
the type described above, but of lesser rated capacity, are not included, but are included in
the appropriate manufacturing equipment classes elsewhere specified. Also includes electric
generating and steam distribution assets, which may utilize steam produced by a waste
reduction and resource recovery plant, used by the taxpayer in its industrial manufacturing
process or plant activity. Steam and chemical recovery boiler systems used for the recovery
and regeneration of chemicals used in manufacturing, with rated capacity in excess of that
described above, with specifically related distribution and return systems are not included but
are included in appropriate manufacturing equipment classes elsewhere specified. An example
of an excluded steam and chemical recovery boiler system is that used in the pulp and paper
manufacturing equipment classes elsewhere specified. An example of an excluded steam and
chemical recovery boiler system is that used in the pulp and paper manufacturing industry.
22 15 2298 Publication 946 (2024)
Table B-2.
Asset
class Description of assets included
Table of Class Lives and Recovery Periods
Recovery Periods
(in years)
Class Life
(in years)
GDS
(MACRS) ADS
DEPRECIABLE ASSETS USED IN THE FOLLOWING ACTIVITIES:
Agriculture:
Includes machinery and equipment, grain bins, and fences but no other land improvements,
that are used in the production of crops or plants, vines, and trees; livestock; the operation of
farm dairies, nurseries, greenhouses, sod farms, mushroom cellars, cranberry bogs, apiaries,
and fur farms; the performance of agriculture, animal husbandry, and horticultural services.
12 7 12
7 5 7
10 7 10
10 3 10
* 3 12
* 3 12
* 7 12
3 3 3
5 5 5
25 20 25
10 7 10
7.5 5 7.5
01.1
01.11
01.21
01.221
01.222
01.223
01.224
01.225
01.23
01.24
01.3
01.4
10.0
13.0
13.1
13.2
13.3
15.0
20.1
20.2
20.3
20.4
20.5
Cotton Ginning Assets
Cattle, Breeding or Dairy
Any breeding or work horse that is 12 years old or less at the time it is placed in service**
Any breeding or work horse that is more than 12 years old at the time it is placed in service**
Any race horse that is more than 2 years old at the time it is placed in service**
Any horse that is more than 12 years old at the time it is placed in service and that is
neither a race horse nor a horse described in class 01.222**
Any horse not described in class 01.221, 01.222, 01.223, or 01.224
Hogs, Breeding
Sheep and Goats, Breeding
Farm buildings except structures included in class 01.4
Single purpose agricultural or horticultural structures (within the meaning of section
168(i)(13) of the Code)
Mining:
Includes assets used in the mining and quarrying of metallic and nonmetallic minerals (including sand,
gravel, stone, and clay) and the milling, beneficiation, and other primary preparation of such materials.
Offshore Drilling:
Includes assets used in offshore drilling for oil and gas such as floating, self-propelled and
other drilling vessels, barges, platforms, and drilling equipment and support vessels such as
tenders, barges, towboats, and crewboats. Excludes oil and gas production assets.
Drilling of Oil and Gas Wells:
Includes assets used in the drilling of onshore oil and gas wells and the provision of
geophysical and other exploration services; and the provision of such oil and gas field services
as chemical treatment, plugging and abandoning of wells, and cementing or perforating well
casings. Does not include assets used in the performance of any of these activities and
services by integrated petroleum and natural gas producers for their own account.
Exploration for and Production of Petroleum and Natural Gas Deposits:
Includes assets used by petroleum and natural gas producers for drilling of wells and production of
petroleum and natural gas, including gathering pipelines and related storage facilities. Also includes
petroleum and natural gas offshore transportation facilities used by producers and others consisting
of platforms (other than drilling platforms classified in class 13.0), compression or pumping
equipment, and gathering and transmission lines to the first onshore transshipment facility. The assets
used in the first onshore transshipment facility are also included and consist of separation equipment
(used for separation of natural gas, liquids, and in class 49.23), and liquid holding or storage facilities
(other than those classified in class 49.25). Does not include support vessels.
Petroleum Refining:
Includes assets used for the distillation, fractionation, and catalytic cracking of crude petroleum
into gasoline and its other components.
Construction:
Includes assets used in construction by general building, special trade, heavy, and marine
construction contractors; operative and investment builders; real estate subdividers and
developers; and others except railroads.
Manufacture of Grain and Grain Mill Products:
Includes assets used in the production of flours, cereals, livestock feeds, and other grain and
grain mill products.
Manufacture of Sugar and Sugar Products:
Includes assets used in the production of raw sugar, syrup, or finished sugar from sugar cane or sugar beets.
Manufacture of Vegetable Oils and Vegetable Oil Products:
Includes assets used in the production of oil from vegetable materials and the manufacture of
related vegetable oil products.
Manufacture of Other Food and Kindred Products:
Includes assets used in the production of foods and beverages not included in classes 20.1,
20.2, and 20.3.
Manufacture of Food and Beverages—Special Handling Devices:
Includes assets defined as specialized materials handling devices such as returnable pallets,
palletized containers, and fish processing equipment including boxes, baskets, carts, and flaking trays
used in activities as defined in classes 20.1, 20.2, 20.3, and 20.4. Does not include general purpose
small tools such as wrenches and drills, both hand and power-driven, and other general purpose
equipment such as conveyors, transfer equipment, and materials handling devices.
6 5 6
14 7 14
16 10 16
6 5 6
17 10 17
18 10 18
18 10 18
12 7 12
4 3 4
Property described in asset classes 01.223, 01.224, and 01.225 are assigned recovery periods but have no class lives.
A horse is more than 2 (or 12) years old after the day that is 24 (or 144) months after its actual birthdate.
7 if property was placed in service before 1989.
*
**
***
10*** 15
7**** 10
5 if machinery and equipment used in a farming business (other than any grain bin, cotton ginning asset, fence, or other land improvement) placed in service
after 2017, in tax years ending after 2017.
****Publication 946 (2024) 99
Table B-2.
Asset
class Description of assets included
Table of Class Lives and Recovery Periods
Recovery Periods
(in years)
Class Life
(in years)
GDS
(MACRS) ADS
Manufacture of Tobacco and Tobacco Products:
15 7 15
21.0
Includes assets used in the production of cigarettes, cigars, smoking and chewing tobacco,
snuff, and other tobacco products.
22.1
22.2
22.3
22.4
22.5
23.0
24.1
24.2
24.3
24.4
26.1
Manufacture of Knitted Goods:
Includes assets used in the production of knitted and netted fabrics and lace. Assets used in
yarn preparation, bleaching, dyeing, printing, and other similar finishing processes, texturing,
and packaging are elsewhere classified.
Manufacture of Yarn, Thread, and Woven Fabric:
Includes assets used in the production of spun yarns including the preparing, blending, spinning, and
twisting of fibers into yarns and threads, the preparation of yarns such as twisting, warping, and winding, the
production of covered elastic yarn and thread, cordage, woven fabric, tire fabric, braided fabric, twisted jute
for packaging, mattresses, pads, sheets, and industrial belts, and the processing of textile mill waste to
recover fibers, flocks, and shoddies. Assets used to manufacture carpets, man-made fibers, and nonwovens,
and assets used in texturing, bleaching, dyeing, printing, and other similar finishing processes, are elsewhere
classified.
Manufacture of Carpets and Dyeing, Finishing, and Packaging of Textile Products and
Manufacture of Medical and Dental Supplies:
Includes assets used in the production of carpets, rugs, mats, woven carpet backing, chenille, and other
tufted products, and assets used in the joining together of backing with carpet yarn or fabric. Includes assets
used in washing, scouring, bleaching, dyeing, printing, drying, and similar finishing processes applied to
textile fabrics, yarns, threads, and other textile goods. Includes assets used in the production and packaging
of textile products, other than apparel, by creasing, forming, trimming, cutting, and sewing, such as the
preparation of carpet and fabric samples, or similar joining together processes (other than the production of
scrim reinforced paper products and laminated paper products) such as the sewing and folding of hosiery
and panty hose, and the creasing, folding, trimming, and cutting of fabrics to produce nonwoven products,
such as disposable diapers and sanitary products. Also includes assets used in the production of medical
and dental supplies other than drugs and medicines. Assets used in the manufacture of nonwoven carpet
backing, and hard surface floor covering such as tile, rubber, and cork, are elsewhere classified.
Manufacture of Textile Yarns:
Includes assets used in the processing of yarns to impart bulk and/or stretch properties to the
yarn. The principal machines involved are falsetwist, draw, beam-to-beam, and stuffer box
texturing equipment and related highspeed twisters and winders. Assets, as described above,
which are used to further process man-made fibers are elsewhere classified when located in
the same plant in an integrated operation with man-made fiber producing assets. Assets used
to manufacture man-made fibers and assets used in bleaching, dyeing, printing, and other
similar finishing processes are elsewhere classified.
Manufacture of Nonwoven Fabrics:
Includes assets used in the production of nonwoven fabrics, felt goods including felt hats, padding, batting,
wadding, oakum, and fillings, from new materials and from textile mill waste. Nonwoven fabrics are defined
as fabrics (other than reinforced and laminated composites consisting of nonwovens and other products)
manufactured by bonding natural and/or synthetic fibers and/or filaments by means of induced mechanical
interlocking, fluid entanglement, chemical adhesion, thermal or solvent reaction, or by combination thereof
other than natural hydration bonding as occurs with natural cellulose fibers. Such means include resin
bonding, web bonding, and melt bonding. Specifically includes assets used to make flocked and needle
punched products other than carpets and rugs. Assets, as described above, which are used to manufacture
nonwovens are elsewhere classified when located in the same plant in an integrated operation with
man-made fiber producing assets. Assets used to manufacture man-made fibers and assets used in
bleaching, dyeing, printing, and other similar finishing processes are elsewhere classified.
Manufacture of Apparel and Other Finished Products:
Includes assets used in the production of clothing and fabricated textile products by the cutting
and sewing of woven fabrics, other textile products, and furs; but does not include assets used
in the manufacture of apparel from rubber and leather.
Cutting of Timber:
Includes logging machinery and equipment and roadbuilding equipment used by logging and
sawmill operators and pulp manufacturers for their own account.
Sawing of Dimensional Stock From Logs:
Includes machinery and equipment installed in permanent or well-established sawmills.
Sawing of Dimensional Stock From Logs:
Includes machinery and equipment in sawmills characterized by temporary foundations and a
lack, or minimum amount, of lumberhandling, drying, and residue disposal equipment and
facilities.
Manufacture of Wood Products, and Furniture:
Includes assets used in the production of plywood, hardboard, flooring, veneers, furniture, and
other wood products, including the treatment of poles and timber.
Manufacture of Pulp and Paper:
Includes assets for pulp materials handling and storage, pulp mill processing, bleach processing, paper and
paperboard manufacturing, and on-line finishing. Includes pollution control assets and all land improvements
associated with the factory site or production process such as effluent ponds and canals, provided such
improvements are depreciable but does not include buildings and structural components as defined in
section 1.48-1(e)(1) of the regulations. Includes steam and chemical recovery boiler systems, with any rated
capacity, used for the recovery and regeneration of chemicals used in manufacturing. Does not include
assets used either in pulpwood logging, or in the manufacture of hardboard.
7.5 5 7.5
11 7 11
9 5 9
8 5 8
10 7 10
9 5 9
6 5 6
10 7 10
6 5 6
10 7 10
13 7 13100 Publication 946 (2024)
Table B-2.
Asset
class Description of assets included
Table of Class Lives and Recovery Periods
Recovery Periods
(in years)
Class Life
(in years)
GDS
(MACRS) ADS
Manufacture of Converted Paper, Paperboard, and Pulp Products:
10 7 10
26.2
Includes assets used for modification, or remanufacture of paper and pulp into converted
products, such as paper coated off the paper machine, paper bags, paper boxes, cartons, and
envelopes. Does not include assets used for manufacture of nonwovens that are elsewhere
classified.
11 7 11
9.5 5 9.5
14 7 14
4 3 4
11 7 11
3.5 3 3.5
11 7 11
14 7 14
2.5 3 2.5
20 15 20
15 7 15
27.0
28.0
30.1
30.11
30.2
30.21
31.0
32.1
32.11
32.2
32.3
Printing, Publishing, and Allied Industries:
Includes assets used in printing by one or more processes, such as letter-press, lithography,
gravure, or screen; the performance of services for the printing trade, such as bookbinding,
typesetting, engraving, photo-engraving, and electrotyping; and the publication of newspapers,
books, and periodicals.
Manufacture of Chemicals and Allied Products:
Includes assets used to manufacture basic organic and inorganic chemicals; chemical products
to be used in further manufacture, such as synthetic fibers and plastics materials; and finished
chemical products. Includes assets used to further process man-made fibers, to manufacture
plastic film, and to manufacture nonwoven fabrics, when such assets are located in the same
plant in an integrated operation with chemical products producing assets. Also includes assets
used to manufacture photographic supplies, such as film, photographic paper, sensitized
photographic paper, and developing chemicals. Includes all land improvements associated with
plant site or production processes, such as effluent ponds and canals, provided such land
improvements are depreciable but does not include buildings and structural components as
defined in section 1.48-1(e) of the regulations. Does not include assets used in the manufacture
of finished rubber and plastic products or in the production of natural gas products, butane,
propane, and by-products of natural gas production plants.
Manufacture of Rubber Products:
Includes assets used for the production of products from natural, synthetic, or reclaimed
rubber, gutta percha, balata, or gutta siak, such as tires, tubes, rubber footwear, mechanical
rubber goods, heels and soles, flooring, and rubber sundries; and in the recapping, retreading,
and rebuilding of tires.
Manufacture of Rubber Products—Special Tools and Devices:
Includes assets defined as special tools, such as jigs, dies, mandrels, molds, lasts, patterns,
specialty containers, pallets, shells; and tire molds, and accessory parts such as rings and
insert plates used in activities as defined in class 30.1. Does not include tire building drums
and accessory parts and general purpose small tools such as wrenches and drills, both power
and hand-driven, and other general purpose equipment such as conveyors and transfer
equipment.
Manufacture of Finished Plastic Products:
Includes assets used in the manufacture of plastics products and the molding of primary
plastics for the trade. Does not include assets used in the manufacture of basic plastics
materials nor the manufacture of phonograph records.
Manufacture of Finished Plastic Products—Special Tools:
Includes assets defined as special tools, such as jigs, dies, fixtures, molds, patterns, gauges,
and specialty transfer and shipping devices, used in activities as defined in class 30.2. Special
tools are specifically designed for the production or processing of particular parts and have no
significant utilitarian value and cannot be adapted to further or different use after changes or
improvements are made in the model design of the particular part produced by the special
tools. Does not include general purpose small tools such as wrenches and drills, both hand and
power-driven, and other general purpose equipment such as conveyors, transfer equipment,
and materials handling devices.
Manufacture of Leather and Leather Products:
Includes assets used in the tanning, currying, and finishing of hides and skins; the processing
of fur pelts; and the manufacture of finished leather products, such as footwear, belting,
apparel, and luggage.
Manufacture of Glass Products:
Includes assets used in the production of flat, blown, or pressed products of glass, such as
float and window glass, glass containers, glassware, and fiberglass. Does not include assets
used in the manufacture of lenses.
Manufacture of Glass Products—Special Tools:
Includes assets defined as special tools such as molds, patterns, pallets, and specialty transfer
and shipping devices such as steel racks to transport automotive glass, used in activities as
defined in class 32.1. Special tools are specifically designed for the production or processing of
particular parts and have no significant utilitarian value and cannot be adapted to further or
different use after changes or improvements are made in the model design of the particular
part produced by the special tools. Does not include general purpose small tools such as
wrenches and drills, both hand and power-driven, and other general purpose equipment such
as conveyors, transfer equipment, and materials handling devices.
Manufacture of Cement:
Includes assets used in the production of cement, but does not include assets used in the
manufacture of concrete and concrete products nor in any mining or extraction process.
Manufacture of Other Stone and Clay Products:
Includes assets used in the manufacture of products from materials in the form of clay and
stone, such as brick, tile, and pipe; pottery and related products, such as vitreous-china,
plumbing fixtures, earthenware, and ceramic insulating materials; and also includes assets used
in manufacture of concrete and concrete products. Does not include assets used in any mining
or extraction processes.Publication 946 (2024) 101
Table B-2.
Asset
class Description of assets included
Table of Class Lives and Recovery Periods
Recovery Periods
(in years)
Class Life
(in years)
GDS
(MACRS) ADS
Manufacture of Primary Nonferrous Metals:
14 7 14
33.2
Includes assets used in the smelting, refining, and electrolysis of nonferrous metals from ore,
pig, or scrap, the rolling, drawing, and alloying of nonferrous metals; the manufacture of
castings, forgings, and other basic products of nonferrous metals; and the manufacture of
nails, spikes, structural shapes, tubing, wire, and cable.
33.21
33.3
33.4
34.0
34.01
35.0
36.0
36.1
Manufacture of Primary Nonferrous Metals—Special Tools:
Includes assets defined as special tools such as dies, jigs, molds, patterns, fixtures, gauges,
and drawings concerning such special tools used in the activities as defined in class 33.2,
Manufacture of Primary Nonferrous Metals. Special tools are specifically designed for the
production or processing of particular products or parts and have no significant utilitarian value
and cannot be adapted to further or different use after changes or improvements are made in
the model design of the particular part produced by the special tools. Does not include general
purpose small tools such as wrenches and drills, both hand and power-driven, and other
general purpose equipment such as conveyors, transfer equipment, and materials handling
devices. Rolls, mandrels, and refractories are not included in class 33.21 but are included in
class 33.2.
Manufacture of Foundry Products:
Includes assets used in the casting of iron and steel, including related operations such as
molding and coremaking. Also includes assets used in the finishing of castings and
patternmaking when performed at the foundry, all special tools, and related land improvements.
Manufacture of Primary Steel Mill Products:
Includes assets used in the smelting, reduction, and refining of iron and steel from ore, pig, or
scrap; the rolling, drawing, and alloying of steel; the manufacture of nails, spikes, structural
shapes, tubing, wire, and cable. Includes assets used by steel service centers and ferrous metal
forges, and assets used in coke production, regardless of ownership. Also includes related land
improvements and all special tools used in the above activities.
Manufacture of Fabricated Metal Products:
Includes assets used in the production of metal cans, tinware, fabricated structural metal
products, metal stampings, and other ferrous and nonferrous metal and wire products not
elsewhere classified. Does not include assets used to manufacture non-electric heating
apparatus.
Manufacture of Fabricated Metal Products—Special Tools:
Includes assets defined as special tools such as dies, jigs, molds, patterns, fixtures, gauges,
and returnable containers and drawings concerning such special tools used in the activities as
defined in class 34.0. Special tools are specifically designed for the production or processing of
particular machine components, products, or parts, and have no significant utilitarian value and
cannot be adapted to further or different use after changes or improvements are made in the
model design of the particular part produced by the special tools. Does not include general
small tools such as wrenches and drills, both hand and power-driven, and other general
purpose equipment such as conveyors, transfer equipment, and materials handling devices.
Manufacture of Electrical and Non-Electrical Machinery and Other Mechanical Products:
Includes assets used to manufacture or rebuild finished machinery and equipment and
replacement parts thereof such as machine tools, general industrial and special industry
machinery, electrical power generation, transmission, and distribution systems, space heating,
cooling, and refrigeration systems, commercial and home appliances, farm and garden
machinery, construction machinery, mining and oil field machinery, internal combustion engines
(except those elsewhere classified), turbines (except those that power airborne vehicles),
batteries, lamps and lighting fixtures, carbon and graphite products, and electromechanical and
mechanical products including business machines, instruments, watches and clocks, vending
and amusement machines, photographic equipment, medical and dental equipment and
appliances, and ophthalmic goods. Includes assets used by manufacturers or rebuilders of
such finished machinery and equipment in activities elsewhere classified such as the
manufacture of castings, forgings, rubber and plastic products, electronic subassemblies or
other manufacturing activities if the interim products are used by the same manufacturer
primarily in the manufacture, assembly, or rebuilding of such finished machinery and
equipment. Does not include assets used in mining, assets used in the manufacture of primary
ferrous and nonferrous metals, assets included in class 00.11 through 00.4, and assets
elsewhere classified.
Manufacture of Electronic Components, Products, and Systems:
Includes assets used in the manufacture of electronic communication, computation,
instrumentation and control system, including airborne applications; also includes assets used
in the manufacture of electronic products such as frequency and amplitude modulated
transmitters and receivers, electronic switching stations, television cameras, video recorders,
record players and tape recorders, computers and computer peripheral machines, and
electronic instruments, watches, and clocks; also includes assets used in the manufacture of
components, provided their primary use is products and systems defined above such as
electron tubes, capacitors, coils, resistors, printed circuit substrates, switches, harness cables,
lasers, fiber optic devices, and magnetic media devices. Specifically excludes assets used to
manufacture electronic products and components, photocopiers, typewriters, postage meters
and other electromechanical and mechanical business machines and instruments that are
elsewhere classified. Does not include semiconductor manufacturing equipment included in
class 36.1.
Any Semiconductor Manufacturing Equipment
6.5 5 6.5
14 7 14
15 7 15
12 7 12
3 3 3
10 7 10
6 5 6
5 5 5102 Publication 946 (2024)
Table B-2.
Asset
class Description of assets included
Table of Class Lives and Recovery Periods
Recovery Periods
(in years)
Class Life
(in years)
GDS
(MACRS) ADS
Manufacture of Motor Vehicles:
12 7 12
37.11
Includes assets used in the manufacture and assembly of finished automobiles, trucks, trailers,
motor homes, and buses. Does not include assets used in mining, printing and publishing,
production of primary metals, electricity, or steam, or the manufacture of glass, industrial
chemicals, batteries, or rubber products, which are classified elsewhere. Includes assets used
in manufacturing activities elsewhere classified other than those excluded above, where such
activities are incidental to and an integral part of the manufacture and assembly of finished
motor vehicles such as the manufacture of parts and subassemblies of fabricated metal
products, electrical equipment, textiles, plastics, leather, and foundry and forging operations.
Does not include any assets not classified in manufacturing activity classes, for example, does
not include any assets classified in asset guideline classes 00.11 through 00.4. Activities will be
considered incidental to the manufacture and assembly of finished motor vehicles only if 75%
or more of the value of the products produced under one roof are used for the manufacture
and assembly of finished motor vehicles. Parts that are produced as a normal replacement
stock complement in connection with the manufacture and assembly of finished motor
vehicles are considered used for the manufacture assembly of finished motor vehicles.
Does not include assets used in the manufacture of component parts if these assets are used
by taxpayers not engaged in the assembly of finished motor vehicles.
37.12
37.2
37.31
37.32
37.33
37.41
37.42
39.0
Manufacture of Motor Vehicles—Special Tools:
Includes assets defined as special tools, such as jigs, dies, fixtures, molds, patterns, gauges,
and specialty transfer and shipping devices, owned by manufacturers of finished motor vehicles
and used in qualified activities as defined in class 37.11. Special tools are specifically designed
for the production or processing of particular motor vehicle components and have no
significant utilitarian value, and cannot be adapted to further or different use, after changes or
improvements are made in the model design of the particular part produced by the special
tools. Does not include general purpose small tools such as wrenches and drills, both hand and
power-driven, and other general purpose equipment such as conveyors, transfer equipment, and
materials handling devices.
Manufacture of Aerospace Products:
Includes assets used in the manufacture and assembly of airborne vehicles and their component
parts including hydraulic, pneumatic, electrical, and mechanical systems. Does not include assets
used in the production of electronic airborne detection, guidance, control, radiation, computation,
test, navigation, and communication equipment or the components thereof.
Ship and Boat Building Machinery and Equipment:
Includes assets used in the manufacture and repair of ships, boats, caissons, marine drilling
rigs, and special fabrications not included in asset classes 37.32 and 37.33. Specifically
includes all manufacturing and repairing machinery and equipment, including machinery and
equipment used in the operation of assets included in asset class 37.32. Excludes buildings
and their structural components.
Ship and Boat Building Dry Docks and Land Improvements:
Includes assets used in the manufacture and repair of ships, boats, caissons, marine drilling
rigs, and special fabrications not included in asset classes 37.31 and 37.33. Specifically
includes floating and fixed dry docks, ship basins, graving docks, shipways, piers, and all other
land improvements such as water, sewer, and electric systems. Excludes buildings and their
structural components.
Ship and Boat Building—Special Tools:
Includes assets defined as special tools such as dies, jigs, molds, patterns, fixtures, gauges,
and drawings concerning such special tools used in the activities defined in classes 37.31 and
37.32. Special tools are specifically designed for the production or processing of particular
machine components, products, or parts, and have no significant utilitarian value and cannot
be adapted to further or different use after changes or improvements are made in the model
design of the particular part produced by the special tools. Does not include general purpose
small tools such as wrenches and drills, both hand and power-driven, and other general
purpose equipment such as conveyors, transfer equipment, and materials handling devices.
Manufacture of Locomotives:
Includes assets used in building or rebuilding railroad locomotives (including mining and
industrial locomotives). Does not include assets of railroad transportation companies or assets
of companies which manufacture components of locomotives but do not manufacture finished
locomotives.
Manufacture of Railroad Cars:
Includes assets used in building or rebuilding railroad freight or passenger cars (including rail
transit cars). Does not include assets of railroad transportation companies or assets of
companies which manufacture components of railroad cars but do not manufacture finished
railroad cars.
Manufacture of Athletic, Jewelry, and Other Goods:
Includes assets used in the production of jewelry; musical instruments; toys and sporting
goods; motion picture and television films and tapes; and pens, pencils, office and art supplies,
brooms, brushes, caskets, etc.
Railroad Transportation:
Classes with the prefix 40 include the assets identified below that are used in the commercial
and contract carrying of passengers and freight by rail. Assets of electrified railroads will be
classified in a manner corresponding to that set forth below for railroads not independently
operated as electric lines. Excludes the assets included in classes with the prefix beginning
00.1 and 00.2 above, and also excludes any non-depreciable assets included in Interstate
Commerce Commission accounts enumerated for this class.
3 3 3
10 7 10
12 7 12
16 10 16
6.5 5 6.5
11.5 7 11.5
12 7 12
12 7 12Publication 946 (2024) 103
Table B-2.
Asset
class Description of assets included
Table of Class Lives and Recovery Periods
Recovery Periods
(in years)
Class Life
(in years)
GDS
(MACRS) ADS
Railroad Machinery and Equipment:
14 7 14
40.1 Includes assets classified in the following Interstate Commerce Commission accounts:
Roadway accounts:
(16) Station and office buildings (freight handling machinery and equipment only)
TOFC/COFC terminals (freight handling machinery and equipment only)
Communication systems
Signals and interlockers
Roadway machines
Shop machinery
Equipment accounts:
Locomotives
Freight train cars
Passenger train cars
Work equipment
(25)
(26)
(27)
(37)
(44)
(52)
(53)
(54)
(57)
40.2 Railroad Structures and Similar Improvements:
Includes assets classified in the following Interstate Commerce Commission road accounts:
(6)
(7)
(13)
(16)
(17)
(18)
(19)
(20)
(25)
(31)
(35)
(39)
Bridges, trestles, and culverts
Elevated structures
Fences, snowsheds, and signs
Station and office buildings (stations and other operating structures only)
Roadway buildings
Water stations
Fuel stations
Shops and enginehouses
TOFC/COFC terminals (operating structures only)
Power transmission systems
Miscellaneous structures
Public improvements construction
30 20 30
40.3 Railroad Wharves and Docks:
Includes assets classified in the following Interstate Commission Commerce accounts:
Wharves and docks
Coal and ore wharves
(23)
(24)
20 15 20
40.4
40.51
40.52
40.53
40.54
41.0
42.0
44.0
45.0
45.1
46.0
Railroad Track
Railroad Hydraulic Electric Generating Equipment
Railroad Nuclear Electric Generating Equipment
Railroad Steam Electric Generating Equipment
Railroad Steam, Compressed Air, and Other Power Plan Equipment
Motor Transport—Passengers:
Includes assets used in the urban and interurban commercial and contract carrying of
passengers by road, except the transportation assets included in classes with the prefix 00.2.
Motor Transport—Freight:
Includes assets used in the commercial and contract carrying of freight by road, except the
transportation assets included in classes with the prefix 00.2.
Water Transportation:
Includes assets used in the commercial and contract carrying of freight and passengers by
water except the transportation assets included in classes with the prefix 00.2. Includes all
related land improvements.
Air Transport:
Includes assets (except helicopters) used in commercial and contract carrying of passengers
and freight by air. For purposes of section 1.167(a)-11(d)(2)(iv)(a) of the regulations,
expenditures for “repair, maintenance, rehabilitation, or improvement” shall consist of direct
maintenance expenses (irrespective of airworthiness provisions or charges) as defined by Civil
Aeronautics Board uniform accounts 5200, maintenance burden (exclusive of expenses
pertaining to maintenance buildings and improvements) as defined by Civil Aeronautics Board
accounts 5300, and expenditures which are not “excluded additions” as defined in section
1.167(a)-11(d)(2)(vi) of the regulations and which would be charged to property and equipment
accounts in the Civil Aeronautics Board uniform system of accounts.
Air Transport (restricted):
Includes each asset described in the description of class 45.0 which was held by the taxpayer
on April 15, 1976, or is acquired by the taxpayer pursuant to a contract which was, on April 15,
1976, and at all times thereafter, binding on the taxpayer. This criterion of classification based
on binding contract concept is to be applied in the same manner as under the general rules
expressed in sections 49(b)(1), (4), (5), and (8) of the Code (as in effect prior to its repeal by the
Revenue Act of 1978, section 312(c)(1), (d), 1978-3 C.B. 1, 60).
Pipeline Transportation:
Includes assets used in the private, commercial, and contract carrying of petroleum, gas, and
other products by means of pipes and conveyors. The trunk lines and related storage facilities
of integrated petroleum and natural gas producers are included in this class. Excludes initial
clearing and grading land improvements as specified in Rev. Rul. 72-403, 1972-2 C.B. 102, but
includes all other related land improvements.
10 7 10
50 20 50
20 15 20
28 20 28
28 20 28
8 5 8
8 5 8
20 15 20
12 7 12
22 15 22
6 5 6104 Publication 946 (2024)
Table B-2.
Asset
class Description of assets included
Table of Class Lives and Recovery Periods
Recovery Periods
(in years)
Class Life
(in years) GDS
(MACRS) ADS
Telephone Communications:
45 20 45
48.11
Includes the assets classified below and that are used in the provision of commercial and
contract telephonic services such as:
48.12
48.121
48.13
48.14
48.2
48.31
48.32
48.33
48.34
48.35
48.36
48.37
48.38
48.39
Telephone Central Office Buildings:
Includes assets intended to house central office equipment, as defined in Federal
Communications Commission Part 31 Account No. 212 whether section 1245 or section 1250
property.
Telephone Central Office Equipment:
Includes central office switching and related equipment as defined in Federal Communications
Commission Part 31 Account No. 221.
Does not include computer-based telephone central office switching equipment included in
class 48.121. Does not include private branch exchange (PBX) equipment.
Computer-Based Telephone Central Office Switching Equipment:
Includes equipment whose functions are those of a computer or peripheral equipment (as
defined in section 168(i)(2)(B) of the Code) used in its capacity as telephone central office
equipment. Does not include private exchange (PBX) equipment.
Telephone Station Equipment:
Includes such station apparatus and connections as teletypewriters, telephones, booths, private
exchanges, and comparable equipment as defined in Federal Communications Commission
Part 31 Account No. 231, 232, and 234.
Telephone Distribution Plant:
Includes such assets as pole lines, cable, aerial wire, underground conduits, and comparable
equipment, and related land improvements as defined in Federal Communications Commission
Part 31 Account Nos. 241, 242.1, 242.2, 242.3, 242.4, 243, and 244.
Radio and Television Broadcastings:
Includes assets used in radio and television broadcasting, except transmitting towers.
Telegraph, Ocean Cable, and Satellite Communications (TOCSC) includes
communications-related assets used to provide domestic and international radio-telegraph,
wire-telegraph, ocean-cable, and satellite communications services; also includes related land
improvements. If property described in classes 48.31–48.45 is comparable to telephone
distribution plant described in class 48.14 and used for 2-way exchange of voice and data
communication which is the equivalent of telephone communication, such property is assigned
a class life of 24 years under this revenue procedure. Comparable equipment does not include
cable television equipment used primarily for 1-way communication.
TOCSC—Electric Power Generating and Distribution Systems:
Includes assets used in the provision of electric power by generation, modulation, rectification,
channelization, control, and distribution. Does not include these assets when they are installed
on customers’ premises.
TOCSC—High Frequency Radio and Microwave Systems:
Includes assets such as transmitters and receivers, antenna supporting structures, antennas,
transmission lines from equipment to antenna, transmitter cooling systems, and control and
amplification equipment. Does not include cable and long-line systems.
TOCSC—Cable and Long-Line Systems:
Includes assets such as transmission lines, pole lines, ocean cables, buried cable and conduit,
repeaters, repeater stations, and other related assets. Does not include high frequency radio or
microwave systems.
TOCSC—Central Office Control Equipment:
Includes assets for general control, switching, and monitoring of communications signals
including electromechanical switching and channeling apparatus, multiplexing equipment
patching and monitoring facilities, in-house cabling, teleprinter equipment, and associated site
improvements.
TOCSC—Computerized Switching, Channeling, and Associated Control Equipment:
Includes central office switching computers, interfacing computers, other associated specialized
control equipment, and site improvements.
TOCSC—Satellite Ground Segment Property:
Includes assets such as fixed earth station equipment, antennas, satellite communications
equipment, and interface equipment used in satellite communications. Does not include general
purpose equipment or equipment used in satellite space segment property.
TOCSC—Satellite Space Segment Property:
Includes satellites and equipment used for telemetry, tracking, control, and monitoring when
used in satellite communications.
TOCSC—Equipment Installed on Customer’s Premises:
Includes assets installed on customer’s premises, such as computers, terminal equipment,
power generation and distribution systems, private switching center, teleprinters, facsimile
equipment, and other associated and related equipment.
TOCSC—Support and Service Equipment:
Includes assets used to support but not engage in communications. Includes store, warehouse
and shop tools, and test and laboratory assets.
Cable Television (CATV): Includes communications-related assets used to provide cable
television community antenna television services. Does not include assets used to provide
subscribers with 2-way communications services.
18 10 18
9.5 5
10 7*
24 15
6 5
19 10
13 7
26.5 20
16.5 10
10.5 7
10 7
8 5
10 7
13.5 7
9.5
10*
26.5
16.5
10.5
13.5
* Property described in asset guideline class 48.13 which is qualified technological equipment as defined in section 168(i)(2) is assigned a 5-year recovery period.Publication 946 (2024) 105
Table B-2.
Asset
class Description of assets included
Table of Class Lives and Recovery Periods
Recovery Periods
(in years)
Class Life
(in years) GDS
(MACRS) ADS
CATV—Headend: 11 7
48.41 Includes assets such as towers, antennas, preamplifiers, converters, modulation equipment, and program
non-duplication systems. Does not include headend buildings and program origination assets.
48.42
48.43
48.44
48.45
49.11
49.12
49.121
49.13
49.14
49.15
49.21
49.221
49.222
49.223
49.23
49.24
49.25
CATV—Subscriber Connection and Distribution Systems:
Includes assets such as trunk and feeder cable, connecting hardware, amplifiers, power
equipment, passive devices, directional taps, pedestals, pressure taps, drop cables, matching
transformers, multiple set connector equipment, and convertors.
10 7
CATV—Program Origination:
Includes assets such as cameras, film chains, videotape recorders, lighting, and remote location
equipment excluding vehicles. Does not include buildings and their structural components.
CATV—Service and Test:
Includes assets such as oscilloscopes, field strength meters, spectrum analyzers, and cable
testing equipment, but does not include vehicles.
CATV—Microwave Systems:
Includes assets such as towers, antennas, transmitting and receiving equipment, and broad
band microwave assets used in the provision of cable television services. Does not include
assets used in the provision of common carrier services.
Electric, Gas, Water, and Steam Utility Services:
Includes assets used in the production, transmission and distribution of electricity, gas, steam,
or water for sale including related land improvements.
Electric Utility Hydraulic Production Plant:
Includes assets used in the hydraulic power production of electricity for sale, including related
land improvements, such as dams, flumes, canals, and waterways.
Electric Utility Nuclear Production Plant:
Includes assets used in the nuclear power production and electricity for sale and related land
improvements. Does not include nuclear fuel assemblies.
Electric Utility Nuclear Fuel Assemblies:
Includes initial core and replacement core nuclear fuel assemblies (i.e., the composite of fabricated nuclear
fuel and container) when used in a boiling water, pressurized water, or high temperature gas reactor used in
the production of electricity. Does not include nuclear fuel assemblies used in breader reactors.
Electric Utility Steam Production Plant:
Includes assets used in the steam power production of electricity for sale, combustion turbines operated in a
combined cycle with a conventional steam unit and related land improvements. Also includes package
boilers, electric generators, and related assets, such as, electricity and steam distribution systems as used by
a waste reduction and resource recovery plant if the steam or electricity is normally for sale to others.
Electric Utility Transmission and Distribution Plant:
Includes assets used in the transmission and distribution of electricity for sale and related land
improvements. Excludes initial clearing and grading land improvements as specified in Rev. Rul.
72-403, 1972-2 C.B. 102.
Electric Utility Combustion Turbine Production Plant:
Includes assets used in the production of electricity for sale by the use of such prime movers as jet
engines, combustion turbines, diesel engines, gasoline engines, and other internal combustion
engines, their associated power turbines and/or generators, and related land improvements. Does not
include combustion turbines operated in a combined cycle with a conventional steam unit.
Gas Utility Distribution Facilities:
Includes gas water heaters and gas conversion equipment installed by utility on customers’
premises on a rental basis.
Gas Utility Manufactured Gas Production Plants:
Includes assets used in the manufacture of gas having chemical and/or physical properties
which do not permit complete interchangeability with domestic natural gas. Does not include
gas-producing systems and related systems used in waste reduction and resource recovery
plants which are elsewhere classified.
Gas Utility Substitute Natural Gas (SNG) Production Plant (naphtha or lighter hydrocarbon
feedstocks):
Includes assets used in the catalytic conversion of feedstocks or naphtha or lighter
hydrocarbons to a gaseous fuel which is completely interchangeable with domestic natural gas.
Substitute Natural Gas—Coal Gasification:
Includes assets used in the manufacture and production of pipeline quality gas from coal using the basic Lurgi
process with advanced methanation. Includes all process plant equipment and structures used in this coal
gasification process and all utility assets such as cooling systems, water supply and treatment facilities, and
assets used in the production and distribution of electricity and steam for use by the taxpayer in a gasification
plant and attendant coal mining site processes but not for assets used in the production and distribution of
electricity and steam for sale to others. Also includes all other related land improvements. Does not include
assets used in the direct mining and treatment of coal prior to the gasification process itself.
Natural Gas Production Plant
Gas Utility Trunk Pipelines and Related Storage Facilities:
Excluding initial clearing and grading land improvements as specified in Rev. Rul. 72-40.
Liquefied Natural Gas Plant:
Includes assets used in the liquefaction, storage, and regasification of natural gas including
loading and unloading connections, instrumentation equipment and controls, pumps, vaporizers
and odorizers, tanks, and related land improvements. Also includes pipeline interconnections
with gas transmission lines and distribution systems and marine terminal facilities.
9 5
8.5 5
9.5 5
50 20
20 15
5 5
28 20
30 20
20 15
35 20
30 20
14 7
18 10
22 15
22 15
14 7
8.5
9.5
11106 Publication 946 (2024)
Table B-2.
Asset
class Description of assets included
Table of Class Lives and Recovery Periods
Recovery Periods
(in years)
Class Life
(in years) GDS
(MACRS) ADS
Water Utilities:
50 20*** 50
49.3
Includes assets used in the gathering, treatment, and commercial distribution of water.
49.4
49.5
50.0
51.0
57.0
57.1
79.0
80.0
Central Steam Utility Production and Distribution:
Includes assets used in the production and distribution of steam for sale. Does not include
assets used in waste reduction and resource recovery plants which are elsewhere classified.
Waste Reduction and Resource Recovery Plants:
Includes assets used in the conversion of refuse or other solid waste or biomass to heat or to a
solid, liquid, or gaseous fuel. Also includes all process plant equipment and structures at the
site used to receive, handle, collect, and process refuse or other solid waste or biomass in a
waterwall, combustion system, oil or gas pyrolysis system, or refuse-derived fuel system to
create hot water, gas, steam, and electricity. Includes material recovery and support assets
used in refuse or solid refuse or solid waste receiving, collecting, handling, sorting, shredding,
classifying, and separation systems. Does not include any package boilers, or electric
generators and related assets such as electricity, hot water, steam, and manufactured gas
production plants classified in classes 00.4, 49.13, 49.221, and 49.4. Does include, however, all
other utilities such as water supply and treatment facilities, ash handling, and other related land
improvements of a waste reduction and resource recovery plant.
Municipal Wastewater Treatment Plant
Municipal Sewer
Distributive Trades and Services:
Includes assets used in wholesale and retail trade, and personal and professional services.
Includes section 1245 assets used in marketing petroleum and petroleum products.
Distributive Trades and Services—Billboard, Service Station Buildings, and Petroleum
Marketing Land Improvements:
Includes section 1250 assets, including service station buildings and depreciable land
improvements, whether section 1245 property or section 1250 property, used in the marketing
of petroleum and petroleum products, but not including any of these facilities related to
petroleum and natural gas trunk pipelines. Includes car wash buildings and related land
improvements. Includes billboards, whether such assets are section 1245 property or section
1250 property. Excludes all other land improvements, buildings, and structural components as
defined in section 1.48-1(e) of the regulations.
Recreation:
Includes assets used in the provision of entertainment services on payment of a fee or
admission charge, as in the operation of bowling alleys, billiard and pool establishments,
theaters, concert halls, and miniature golf courses. Does not include amusement and theme
parks and assets which consist primarily of specialized land improvements or structures, such
as golf courses, sports stadia, race tracks, ski slopes, and buildings which house the assets
used in entertainment services.
Theme and Amusement Parks:
Includes assets used in the provision of rides, attractions, and amusements in activities defined as theme
and amusement parks, and includes appurtenances associated with a ride, attraction, amusement, or theme
setting within the park such as ticket booths, facades, shop interiors, and props, special purpose structures,
and buildings other than warehouses, administration buildings, hotels, and motels. Includes all land
improvements for or in support of park activities (for example, parking lots, sidewalks, waterways, bridges,
fences, landscaping, etc.), and support functions (for example, food and beverage retailing, souvenir vending,
and other nonlodging accommodations) if owned by the park and provided exclusively for the benefit of park
patrons. Theme and amusement parks are defined as combinations of amusements, rides, and attractions
which are permanently situated on park land and open to the public for the price of admission. This guideline
class is a composite of all assets used in this industry except transportation equipment (general purpose
airplanes, etc., which are included in asset guideline classes with the prefix 00.2); assets used in the
trucks, cars,provision of administrative services (asset classes with the prefix 00.1) and warehouses,
administration buildings, hotels, and motels.
Certain Property for Which Recovery Periods Assigned
A. Personal Property With No Class Life
Section 1245 Real Property With No Class Life
B. Qualified Technological Equipment, as defined in section 168(i)(2).
C. Property Used in Connection with Research and Experimentation referred to in section
168(e)(3)(B).
D. Alternative energy property described in sections 48(l)(3)(A)(ix) (as in effect on the day before
the date of enactment (11/5/90) of the Revenue Reconciliation Act of 1990).
E. Biomass property described in section 48(l)(15) (as in effect on the day before the date of
enactment (11/5/90) of the Revenue Reconciliation Act of 1990) and is a qualifying small
production facility within the meaning of section 3(17)(c) of the Federal Power Act (16 U.S.C.
796(17)(C)), as in effect on September 1, 1986.
* Any high technology medical equipment as defined in section 168(i)(2)(C) which is described in asset guideline class 57.0 is assigned a 5-year
recovery period for the alternate MACRS method.
** The class life (if any) of property described in class B, C, D, E, or F is determined by reference to the asset guideline classes. If an item of property
described in paragraph B, C, D, E, or F is not described in any asset guideline class, such item of property has no class life.
*** Use straight line over 25 years if placed in service after June 12, 1996, unless placed in service under a binding contract in effect before June 10,
1996, and at all times until placed in service.
28 20
10 7
24 15
50 20***
9 5
20 15
10 7
12.5 7
9*
12.5
7 12
7 40
** 5 5
** 5 class life if
no class
life—12
** 5
** 5
class life if
no class
life—12
class life if
no class
life—12
F. Energy property described in section 48(a)(3)(A) (or would be described if “solar or wind
energy” were substituted for “solar energy” in section 48(a)(3)(A)(i)).
** 5 class life if
no class
life—12Publication 946 (2024) 107
Glossary
Abstract fees: Expenses generally
paid by a buyer to research the title of
real property.
Active conduct of a trade or busi-
ness: Generally, for the section 179
deduction, a taxpayer is considered to
conduct a trade or business actively if
they meaningfully participate in the
management or operations of the trade
or business. A mere passive investor in
a trade or business does not actively
conduct the trade or business.
Adjusted basis: The original cost of
property, plus certain additions and im-
provements, minus certain deductions
such as depreciation allowed or allowa-
ble and casualty losses.
Amortization: A ratable deduction for
the cost of intangible property over its
useful life.
Amount realized: The total of all
money received plus the fair market
value of all property or services re-
ceived from a sale or exchange. The
amount realized also includes any lia-
bilities assumed by the buyer and any
liabilities to which the property transfer-
red is subject, such as real estate taxes
or a mortgage.
Basis: A measure of an individual's in-
vestment in property for tax purposes.
Business/investment use: Usually, a
percentage showing how much an item
of property, such as an automobile, is
used for business and investment pur-
poses.
Capitalized: Expended or treated as
an item of a capital nature. A capital-
ized amount is not deductible as a cur-
rent expense and must be included in
the basis of property.
Circumstantial evidence: Details or
facts which indirectly point to other
facts.
Class life: A number of years that es-
tablish the property class and recovery
period for most types of property under
the General Depreciation System
(GDS) and Alternative Depreciation
System (ADS).
Commuting: Travel between a per-
sonal home and work or job site within
the area of an individual's tax home.
Convention: A method established
under the Modified Accelerated Cost
Recovery System (MACRS) to deter-
mine the portion of the year to depreci-
ate property both in the year the prop-
erty is placed in service and in the year
of disposition.
Declining balance method: An ac-
celerated method to depreciate prop-
erty. The GDS of MACRS uses the
150% and 200% declining balance
methods for certain types of property. A
depreciation rate (percentage) is deter-
mined by dividing the declining bal-
ance percentage by the recovery pe-
riod for the property.
Disposition: The permanent with-
drawal from use in a trade or business
or from the production of income.
Documentary evidence: Written re-
cords that establish certain facts. Other
records, such as emails, pictures, or
other electronic records could serve as
evidence.
Exchange: To barter, swap, part with,
give, or transfer property for other prop-
erty or services.
Fair market value (FMV): The price
that property brings when it is offered
for sale by one who is willing but not
obligated to sell, and is bought by one
who is willing or desires to buy but is
not compelled to do so.
Fiduciary: The one who acts on be-
half of another as a guardian, trustee,
executor, administrator, receiver, or
conservator.
Fungible commodity: A commodity
of a nature that one part may be used
in place of another part.
Goodwill: An intangible property such
as the advantage or benefit received in
property beyond its mere value. It is not
confined to a name but can also be at-
tached to a particular area where busi-
ness is transacted, to a list of custom-
ers, or to other elements of value in
business as a going concern.
Grantor: The one who transfers prop-
erty to another.
Improvement: An addition to or par-
tial replacement of property that adds
to its value, appreciably lengthens the
time you can use it, or adapts it to a dif-
ferent use.
Intangible property: Property that
has value but cannot be seen or
touched, such as goodwill, patents,
copyrights, and computer software.
Listed property: Passenger automo-
biles; any other property used for trans-
portation; and property of a type gener-
ally used for entertainment, recreation,
or amusement.
Nonresidential real property: Most
real property other than residential
rental property.
Placed in service: Ready and availa-
ble for a specific use whether in a trade
or business, the production of income,
a tax-exempt activity, or a personal ac-
tivity.
Property class: A category for prop-
erty under MACRS. It generally deter-
mines the depreciation method, recov-
ery period, and convention.
Recapture: To include as income on
your return an amount allowed or al-
lowable as a deduction in a prior year.
Recovery period: The number of
years over which the basis of an item of
property is recovered.
Remainder interest: That part of an
estate that is left after all the other pro-
visions of a will have been satisfied.
Residential rental property: Real
property, generally buildings or struc-
tures, if 80% or more of its annual
108 Publication 946 (2024)
gross rental income is from dwelling
units.
Salvage value: An estimated value of
property at the end of its useful life. Not
used under MACRS.
Section 1245 property: Property that
is or has been subject to an allowance
for depreciation or amortization. Sec-
tion 1245 property includes personal
property, single-purpose agricultural
and horticultural structures, storage fa-
cilities used in connection with the dis-
tribution of petroleum or primary prod-
ucts of petroleum, and railroad grading
or tunnel bores.
Section 1250 property: Real prop-
erty (other than section 1245 property)
which is or has been subject to an al-
lowance for depreciation.
Standard mileage rate: The estab-
lished amount for optional use in deter-
mining a tax deduction for automobiles
instead of deducting depreciation and
actual operating expenses.
Straight line method: A way to figure
depreciation for property that ratably
deducts the same amount for each
year in the recovery period. The rate (in
percentage terms) is determined by di-
viding 1 by the number of years in the
recovery period.
Structural components: Parts that
together form an entire structure, such
as a building. The term includes those
parts of a building such as walls, parti-
tions, floors, and ceilings, as well as
any permanent coverings such as pan-
eling or tiling, windows and doors, and
all components of a central air condi-
tioning or heating system including mo-
tors, compressors, pipes, and ducts. It
also includes plumbing fixtures such as
sinks, bathtubs, electrical wiring and
lighting fixtures, and other parts that
form the structure.
Tangible property: Property you can
see or touch, such as buildings, machi-
nery, vehicles, furniture, and equip-
ment.
Tax exempt: Not subject to tax.
Term interest: A life interest in prop-
erty, an interest in property for a term of
years, or an income interest in a trust. It
generally refers to a present or future
interest in income from property or the
right to use property that terminates or
fails upon the lapse of time, the occur-
rence of an event, or the failure of an
event to occur.
Unadjusted basis: The basis of an
item of property for purposes of figur-
ing gain on a sale without taking into
account any depreciation taken in ear-
lier years but with adjustments for other
amounts, including amortization, the
section 179 deduction, any special de-
preciation allowance, any deduction
claimed for clean-fuel vehicles or
clean-fuel vehicle refueling property
placed in service before January 1,
2006, and any electric vehicle credit.
Unit-of-production method: A way
to figure depreciation for certain prop-
erty. It is determined by estimating the
number of units that can be produced
before the property is worn out. For ex-
ample, if it is estimated that a machine
will produce 1,000 units before its use-
ful life ends, and it actually produces
100 units in a year, the percentage to
figure depreciation for that year is 10%
of the machine's cost less its salvage
value.
Useful life: An estimate of how long
an item of property can be expected to
be usable in a trade or business or to
produce income.
To help us develop a more useful index, please let us know if you have ideas for index entries.
See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.Index
A
Addition to property 33
Adjusted basis 12
Alternative Depreciation System (ADS):
Recovery periods 32
Required use 27
Amended return 13
Apartment:
Cooperative 4
Rental 29
Assistance (See Tax help)
Automobile (See Passenger automobile)
B
Basis:
Adjustments 12, 21, 36
Basis for depreciation 31
Casualty loss 36
Change in use 12
Cost 11
Depreciable basis 25
Other than cost 12
Recapture of clean-fuel vehicle deduction or
credit 36
Term interest 6
Unadjusted 37
Business use of property, partial 5
Business-use limit, recapture of Section 179
deduction 22
Business-use requirement, listed
property 54
C
Car (See Passenger automobile)
Carryover of section 179 deduction 20
Casualty loss, effect of 36
Changing accounting method 14
Communication equipment (See Listed
property)
Commuting 55
Computer software 10, 16
Containers 5
Conventions 33
Cooperative apartment 4
Copyright 10
(See also Section 197 intangibles)
Correcting depreciation deductions 13
Cost basis 11
D
Declining balance:
Method 39
Rates 39
Deduction limit:
Automobile 58
Section 179 18
Depreciation:
Deduction:
Employee 53
Listed property 53
Determinable useful life 6
Excepted property 6
Incorrect amount deducted 13
Methods 34
Property lasting more than one year 6
Property owned 4
Property used in business 5
Recapture 50, 56
Depreciation allowable 12
Depreciation allowed 12
Depreciation deduction:
Listed property 54
Determinable useful life 6
Disposition:
Before recovery period ends 38
General asset account property 47
Section 179 deduction 22
E
Election:
ADS 28, 34
Declining balance (150% DB) method 34
Exclusion from MACRS 11
General asset account 50
Not to claim special depreciation
allowance 26
Section 179 deduction 22
Straight line method 34
Electric vehicle 60
Employee:
Depreciation deduction 53
How to claim depreciation 13
Employee deduction, listed property 53
Exchange of MACRS property 43
F
Farm:
Property 34
Figuring MACRS:
Using percentage tables 36
Without using percentage tables 39
Films 11
G
General asset account:
Abusive transaction 48
Disposing of property 47
Grouping property in 46
Nonrecognition transaction 48
General Depreciation System (GDS),
recovery periods 32
Gift (See Basis, other than cost)
Glossary 108
I
Idle property 7
Improvements 13, 33
Income forecast method 10
Incorrect depreciation deductions 13
index 7, 8, 11, 13, 15, 17, 25, 46, 50, 63
Index 6
Inheritance (See Basis, other than cost)
Intangible property:
Depreciation method 10
Income forecast method 10
Straight line method 10
Inventory 5
Investment use of property, partial 5
Involuntary conversion of MACRS
property 43
L
Land:
Not depreciable 6
Preparation costs 6
Leased property 17
Leasehold improvement property,
defined 30
Life tenant 4
(See also Term interests)
Limit on deduction:
Automobile 58
Section 179 18
Listed property:
5% owner 55
Condition of employment 53
Defined 51
Employee deduction 53
Employer convenience 53
Improvements to 51
Leased 56
Passenger automobile 52
Qualified business use 55
Recordkeeping 63
Related person 55
Reporting on Form 4562 64
M
Maximum deduction:
Electric vehicles 60
Passenger automobiles 59
Trucks 60
Vans 60
Mobile home (See Residential rental property)
Modified ACRS (MACRS):
Addition or improvement 33
Alternative Depreciation System (ADS) 27
Conventions 33
Declining balance method 39
Depreciation methods 34
Farm property 34
Figuring, short tax year 45
General Depreciation System (GDS) 27
Percentage tables 36
Property classes 28
Recovery periods 31
Short tax year 43
Straight line method 40
N
Nonresidential real property 29
Nontaxable transfer of MACRS property 43
O
Office in the home 5, 32
Ownership, incidents of 4
P
Partial business use 17
Passenger automobile:
Defined 52
Electric vehicles 60
Limit on 58
Maximum depreciation deduction 59
Trucks 60
Vans 60
Patent 10
(See also Section 197 intangibles)
Personal property 8
Phonographic equipment (See Listed
property)
Photographic equipment (See Listed
property)
Placed in service:
Before 1987 8
110 Publication 946 (2024)
Date 31
Rule 7
Property:
Classes 28
Depreciable 3
Idle 7
Improvements 13
Leased 4, 17
Listed 51
Personal 8
Real 8
Retired from service 7
Tangible personal 16
Term interest 6
Publications (See Tax help)
Q
Qualified leasehold improvement property,
defined 30
Qualified property, special depreciation
allowance 23
R
Real property 8
Recapture:
Clean-fuel vehicle deduction or credit 36
General asset account, abusive
transaction 48
Listed property 56
MACRS depreciation 50
Section 179 deduction 22
Special depreciation allowance 26
Recordkeeping:
Listed property 63
Section 179 22
Recovery periods:
ADS 32
GDS 32
Related persons 6, 9, 17, 55
Rent-to-own property, defined 29
Rental home (See Residential rental property)
Rented property, improvements 13
Repairs 13
Residential rental property 29
Retail motor fuels outlet 30
Revoking:
ADS election 28
General asset account election 50
Section 179 election 22
S
Sale of property 38
Section 179 deduction:
Business use required 17
Carryover 20
Dispositions 22
Electing 22
Limits:
Business (taxable) income 19
Business-use, recapture 22
Dollar 18
Partial business use 17
Married filing separate returns 19
Partnership rules 20
Property:
Eligible 16
Excepted 17
Purchase required 17
Recapture 22
Recordkeeping 22
S corporation rules 21
Settlement fees 12
Short tax year:
Figuring depreciation 45
Figuring placed-in-service date 43
Software, computer 10, 16
Sound recording 11
Special depreciation allowance:
Election not to claim 26
Qualified property 23
Recapture 26
Stock, constructive ownership of 9
Straight line method 10, 40
Created intangibles 10
T
Tangible personal property 16
Tax help 65
Term interest 6
Trade-in of property 18
Trucks 60
U
Unadjusted basis 37
Useful life 6
V
Vans 60
Video tape 11
Video-recording equipment (See Listed
property)
W
When to use ADS 27
Worksheet:
Leased listed property 57
MACRS 37
Tax Publications for Business Taxpayers
General Guides
Commonly Used Tax Forms
Spanish-Language Publications
Your Rights as a Taxpayer
Your Federal Income Tax
Farmer’s Tax Guide
Tax Guide for Small Business
(Circular E), Employer’s Tax Guide
Employer’s Supplemental Tax Guide
Household Employer’s Tax Guide
Travel, Gift, and Car Expenses
Tax Withholding and Estimated Tax
Excise Taxes
Withholding of Tax on Nonresident
Aliens and Foreign Entities
Social Security and Other Information
for Members of the Clergy and
Religious Workers
Residential Rental Property
Depreciating Property Placed in
Service Before 1987
Net Operating Losses (NOLs) for
Individuals, Estates, and Trusts
Installment Sales
Accounting Periods and Methods
Corporations
Sales and Other Dispositions of Assets
Basis of Assets
Examination of Returns, Appeal Rights,
and Claims for Refund
Retirement Plans for Small Business
Determining the Value of Donated
Property
Starting a Business and Keeping
Records
The IRS Collection Process
Information on the United States-
Canada Income Tax Treaty
How To Depreciate Property
Reporting Cash Payments of Over
$10,000
Taxpayer Advocate Service —
We Are Here To Help You
Derechos del Contribuyente
English-Spanish Glossary of Words
and Phrases
Tax on Unrelated Business Income of
Exempt Organizations
Wage and Tax Statement
Itemized Deductions
Interest and Ordinary Dividends
Capital Gains and Losses
Supplemental Income and Loss
Credit for the Elderly or the Disabled
Estimated Tax for Individuals
Self-Employment Tax
Amended U.S. Individual Income Tax Return
Capital Gains and Losses
Partner’s Share of Income,
Deductions, Credits, etc.
Employee Business Expenses
Power of Attorney and Declaration of
Representative
Child and Dependent Care Expenses
General Business Credit
Application for Automatic Extension of Time To File
U.S. Individual Income Tax Return
Moving Expenses
IRAs) and Other Tax-Favored Accounts
Installment Sale Income
Noncash Charitable Contributions
Change of Address
Expenses for Business Use of Your Home
Nondeductible IRAs
Passive Activity Loss Limitations
15-A
Partnerships
1544
1546
1SP
(EN/SP)
El Proceso de Cobro del IRS594SP
Sch A
Sch C
Sch D
Sch E
Sch F
Sch H Household Employment Taxes
Sch R
Sch SE
1040-ES
1040-X
Sch D
Sch K-1
1065 U.S. Return of Partnership Income
2106
2441
2848
3800
4868
3903
5329
6252
8283
8582
8606
8822
8829
Specialized Publications
W-4
Employer’s Annual Federal Unemployment
(FUTA) Tax Return
U.S. Individual Income Tax Return1040 or
Business Use of Your Home587
U.S. Tax Treaties
Practice Before the IRS and Power
of Attorney
Employer’s Guides
Underpayment of Estimated Tax by Individuals,
Estates, and Trusts
2210
Report of Cash Payments Over $10,000 Received
in a Trade or Business
8300
Depreciation and Amortization4562
Sales of Business Property4797
Informe de Pagos en Efectivo en
Exceso de $10,000
1544SP
See How To Get Tax Help for a variety of ways to get forms, including by computer, phone,
and mail.
Form Number and Title
W-2
Employer’s QUARTERLY Federal Tax Return941
Sch J Income Averaging for Farmers and Fishermen
Form Number and Title
Employer’s Tax Guide to Fringe15-B
See How To Get Tax Help for a variety of ways to get publications, including by
computer, phone, and mail.
Catalog
Number
10134
10220
11234
17001
11320
17145
Sch B 17146
11334
11338
11344
11346
12187
25513
11359
11358
11340
11360
11390
11393
11394
Catalog
Number
11700
11744
11862
11980
12392
12490
12906
13086
13141
13329
13601
62299
62133
63704
63966
12081
Change of Address or Responsible Party — Business8822-B 57465
13232
966 Electronic Federal Tax Payment System:
A Guide to Getting Started
Sales and Other Dispositions of Capital Assets8949 37768
(Circular PR), Guía Contributiva Federal
para Patronos Puertorriqueños
U.S. Corporation Income Tax Return
U.S. Income Tax Return for an S Corporation
1120
1120-S
Capital Gains and Losses and Built-in Gains
Shareholder’s Share of Income,
Deductions, Credits, etc.
Sch D
Sch K-1
11450
11510
11516
11520
Bankruptcy Tax Guide
Passive Activity and At-Risk Rules925
8959 57495xaTeracideMlanoitiddA
1040-SR 71930112 Publication 946 (2024)