[farhan1426]

I am using CPAExcel and I hear people saying we should know MACRS but it has not been covered well in any of my sims.

I googled some information. Would we be given both tables (asset class as well as depreciation rates) on the exam? Or do I need to memorize all of the asset classes.

Also I am struggling to know the difference between MACRS 150 and 200. Are these two different tables or do I have to calculate one based on the table of the other?

If anyone knows of a great example that covers this topic I would appreciate it.

Thanks

FAR: 11/21/13: 84 PASSED
AUD: 08/29/14: 52 11/26/14: 84 PASSED
BEC: 01/24/15: 75 PASSED
REG: 02/28/15: 65 05/20/15: 82 PASSED

I. AM. DONE!

[SIMmer Down]

MACRS 200 is effectively the tax name for Double Declining Balance. That is, MACRS 200 is calculated exactly like Double Declining Balance. MACRS 150 is using 1.5 instead of 2 in the Double Declining Balance Calculation. I've never actually heard of anyone say MACRS 100 before, but in the interest of driving home the point of what the MACRS depreciation methods would be equivalent to, MACRS 100 (if it existed) would be the same thing as Straight Line Depreciation. So you actually know, or should know, how to calculate all of these.

The hard part is knowing the life of the asset and which convention (ex. Mid-Month, Mid-Quarter, Half-Year) is used.

This should help: https://www.irs.gov/publications/p946/ch04.html#en_US_2013_publink1000107538

I would definitely know the asset life of following major ones though

3-year property.

Tractor units for over-the-road use.

5-year property.

Automobiles, taxis, buses, and trucks.

Computers and peripheral equipment.

Office machinery (such as typewriters, calculators, and copiers).

Any property used in research and experimentation.

Cows – Breeding cattle and dairy cattle.

Appliances, carpets, furniture, etc., used in a residential rental real estate activity.

7-year property.

Office furniture and fixtures (such as desks, files, and safes).

Agricultural machinery and equipment.

Any property that does not have a class life and has not been designated by law as being in any other class.

15-year property.

Certain improvements made directly to land or added to it (such as shrubbery, fences, roads, sidewalks, and bridges).

Any qualified leasehold improvement

Residential Rental Property – 27.5 years Can only use Straight Line

NonResidential Real Property – 39 years Can only use Straight Line

Also, just fyi you can't Section 179 anything that is on a rental.

[mkrohmer]

From my testing experience, the explanation above is far more detailed than what is needed. I wasn't heavily tested on the topic but if you get a sim you may need to know the stuff above. This is what I have in my notes and it was sufficient for my test:

5 & 7 year depr class = Machinery & Equipment

2 conventions:

1. Half yr – Yr of disposal, take half of the % amount in tables

2. Mid quarter – if more than 40% of depr personal prop is placed in service during the last quarter, mid quarter must be used (do NOT include real estate in 40%)

5 year – cars, trucks, computers

7 year– furniture, fixtures, equipment

27.5 and 39 yr depr class = Buildings

1 convention: Mid Month (One half month is taken for month of purchase and sale)

27.5 years- residential rental property (apartments, rental homes)

39 years – NONresidential real prop (office buildings warehouses)

BEC - 83 (1/23/15)
FAR - 80 (4/3/15)
REG - 88 (5/14/15)
AUD - 81 (7/3/15)

[Author]

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