Depreciation

Question 1

what does ACRS stand for?

Answer 1

Accelerated Cost Recovery System

Question 2

what does MACRS stand for?

Answer 2

Modified Accelerated Cost Recovery System

Question 3

what are the features of an asset that make it required to use ACRS/MACRS depreciation?

Answer 3

• placed in service after 1980
• subject to wear and tear
• has a determinable useful life
• tangible personalty or realty

Question 4

what is the formula to find the annual depreciation deduction under the straight line method?

Answer 4

(adjusted basis) - (salvage value) = depreciable amount

(depreciable amount) / (useful life) = annual depreciation deduction

Question 5

what are the different property classes under GDS?

Answer 5

3-year
5-year
7-year
27.5-year
39-year

Question 6

what types of property fall under the 3-year property class?

Answer 6

tractors

Question 7

what types of property fall under the 5-year property class?

Answer 7

computer, automobiles, taxis (use Section 1245 recapture)

Question 8

what types of property fall under the 7-year property class?

Answer 8

office furnishings (use Section 1245 recapture)

Question 9

what types of property fall under the 27.5-year property class?

Answer 9

residential real property (use Section 1250 recapture)

Question 10

what types of property fall under the 39-year property class?

Answer 10

non-residential real property (use Section 1250 recapture)