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Irs 2011 Tax Forms

Irs Form 1040ez Tax Tables1040es FormE File 1040xHr Block Tax CalculatorTax Act Online 2009Irs Gov Form1040ezAarp Org TaxaideMilitary Tax CreditsFile Tax ExtensionFederal Tax TableNeed To File 2011 Taxes2011 Tax Form 1040ezAmend Federal Tax ReturnTaxaid ComWhat Is A 1040nrWww Irs Gov 2011freeefileFree State Tax Preparation SoftwareFree H&r Block Military1040nr TurbotaxFree Websites To File State TaxesH&r Block Key Code Free State FilingIrs Tax Extention FormIrs 1040x FormE File Taxes Free1040ez InstructionIrs Extension FormHow To File An Amended Tax Return For 2013File Taxes 2012 FreeH&r Tax Software1040nr FreeHow Can I File An Amended Tax ReturnOnline Tax Forms 1040ezIncome Tax For StudentsHelp Me File 1040ezIrs 1040ez Form1090ezFile Taxes 2008Free 2011 Tax Return OnlineTax TableIrs Tax Forms 2012

Irs 2011 Tax Forms

Irs 2011 tax forms Publication 938 - Introductory Material Table of Contents Introduction Introduction Section references are to the Internal Revenue Code unless otherwise noted. Irs 2011 tax forms This publication contains directories relating to real estate mortgage investment conduits (REMICs) and collateralized debt obligations (CDOs). Irs 2011 tax forms The directory for each calendar quarter is based on information submitted to the IRS during that quarter. Irs 2011 tax forms For each quarter, there is a directory of new REMICs and CDOs and, if required, a section containing amended listings. Irs 2011 tax forms You can use the directory to find the representative of the REMIC or the issuer of the CDO from whom you can request tax information. Irs 2011 tax forms The amended listing section shows changes to previously listed REMICs and CDOs. Irs 2011 tax forms The update for each calendar quarter will be added to this publication approximately six weeks after the end of the quarter. Irs 2011 tax forms Publication 938 is only available on the Internet. Irs 2011 tax forms To get Publication 938, including prior issues, visit IRS. Irs 2011 tax forms gov. Irs 2011 tax forms Future developments. Irs 2011 tax forms   The IRS has created a page on IRS. Irs 2011 tax forms gov that includes information about Publication 938 at www. Irs 2011 tax forms irs. Irs 2011 tax forms gov/pub938. Irs 2011 tax forms Information about any future developments affecting Publication 938 (such as legislation enacted after we release it) will be posted on that page. Irs 2011 tax forms Other information. Irs 2011 tax forms   Publication 550, Investment Income and Expenses, discusses the tax treatment that applies to holders of these investment products. Irs 2011 tax forms For other information about REMICs, see sections 860A through 860G and the regulations issued under those sections. Irs 2011 tax forms Prev  Up  Next   Home   More Online Publications
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Consumer Protection Offices

City, county, regional, and state consumer offices offer a variety of important services. They might mediate complaints, conduct investigations, prosecute offenders of consumer laws, license and regulate professional service providers, provide educational materials and advocate for consumer rights. To save time, call before sending a written complaint. Ask if the office handles the type of complaint you have and if complaint forms are provided.

State Consumer Protection Offices

South Dakota Office of the Attorney General

Website: South Dakota Office of the Attorney General

Address: South Dakota Office of the Attorney General
Consumer Protection
1302 E. Hwy. 14, Suite 3
Pierre, SD 57501-8503

Phone Number: 605-773-4400

Toll-free: 1-800-300-1986 (SD)

TTY: 605-773-6585

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Banking Authorities

The officials listed in this section regulate and supervise state-chartered banks. Many of them handle or refer problems and complaints about other types of financial institutions as well. Some also answer general questions about banking and consumer credit. If you are dealing with a federally chartered bank, check Federal Agencies.

Department of Labor and Regulation

Website: Department of Labor and Regulation

Address: Department of Labor and Regulation
Division of Banking
217 1/2 W. Missouri Ave.
Pierre, SD 57501

Phone Number: 605-773-3421

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Insurance Regulators

Each state has its own laws and regulations for each type of insurance. The officials listed in this section enforce these laws. Many of these offices can also provide you with information to help you make informed insurance buying decisions.

Department of Labor and Regulation

Website: Department of Labor and Regulation

Address: Department of Labor and Regulation
Division of Insurance
445 E. Capitol Ave.
Pierre, SD 57501

Phone Number: 605-773-3563

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Securities Administrators

Each state has its own laws and regulations for securities brokers and securities - including stocks, mutual funds, commodities, real estate, etc. The officials and agencies listed in this section enforce these laws and regulations. Many of these offices can also provide information to help you make informed investment decisions.

Department of Labor and Regulation

Website: Department of Labor and Regulation

Address: Department of Labor and Regulation
Division of Securities
445 E. Capitol Ave.
Pierre, SD 57501-3185

Phone Number: 605-773-4823

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Utility Commissions

State Utility Commissions regulate services and rates for gas, electricity and telephones within your state. In some states, the utility commissions regulate other services such as water, transportation, and the moving of household goods. Many utility commissions handle consumer complaints. Sometimes, if a number of complaints are received about the same utility matter, they will conduct investigations.

Public Utilities Commission

Website: Public Utilities Commission

Address: Public Utilities Commission
Consumer Affairs
500 E. Capitol Ave.
Pierre, SD 57501-5070

Phone Number: 605-773-3201

Toll-free: 1-800-332-1782

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The Irs 2011 Tax Forms

Irs 2011 tax forms 4. Irs 2011 tax forms   Figuring Depreciation Under MACRS Table of Contents Introduction Useful Items - You may want to see: Which Depreciation System (GDS or ADS) Applies? Which Property Class Applies Under GDS?Rent-to-own dealer. Irs 2011 tax forms Rent-to-own contract. Irs 2011 tax forms What Is the Placed in Service Date? What Is the Basis for Depreciation? Which Recovery Period Applies?Recovery Periods Under GDS Recovery Periods Under ADS Additions and Improvements Which Convention Applies? Which Depreciation Method Applies?Depreciation Methods for Farm Property Electing a Different Method How Is the Depreciation Deduction Figured?Using the MACRS Percentage Tables Figuring the Deduction Without Using the Tables Figuring the Deduction for Property Acquired in a Nontaxable Exchange Figuring the Deduction for a Short Tax Year How Do You Use General Asset Accounts?Grouping Property Figuring Depreciation for a GAA Disposing of GAA Property Terminating GAA Treatment Electing To Use a GAA When Do You Recapture MACRS Depreciation? 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. Irs 2011 tax forms MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Irs 2011 tax forms Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. Irs 2011 tax forms To be sure you can use MACRS to figure depreciation for your property, see What Method Can You Use To Depreciate Your Property in chapter 1. Irs 2011 tax forms This chapter explains how to determine which MACRS depreciation system applies to your property. Irs 2011 tax forms It also discusses other information you need to know before you can figure depreciation under MACRS. Irs 2011 tax forms This information includes the property's recovery class, placed in service date, and basis, as well as the applicable recovery period, convention, and depreciation method. Irs 2011 tax forms 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. Irs 2011 tax forms Finally, it explains when and how to recapture MACRS depreciation. Irs 2011 tax forms Useful Items - You may want to see: Publication 225 Farmer's Tax Guide 463 Travel, Entertainment, Gift, and Car  Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 587 Business Use of Your Home (Including Use by Daycare Providers) Form (and Instructions) 2106 Employee Business Expenses 2106-EZ Unreimbursed Employee Business Expenses 4562 Depreciation and Amortization See chapter 6 for information about getting publications and forms. Irs 2011 tax forms Which Depreciation System (GDS or ADS) Applies? Your use of either the General Depreciation System (GDS) or the Alternative Depreciation System (ADS) to depreciate property under MACRS determines what depreciation method and recovery period you use. Irs 2011 tax forms You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Irs 2011 tax forms If you placed your property in service in 2013, complete Part III of Form 4562 to report depreciation using MACRS. Irs 2011 tax forms Complete section B of Part III to report depreciation using GDS, and complete section C of Part III to report depreciation using ADS. Irs 2011 tax forms If you placed your property in service before 2013 and are required to file Form 4562, report depreciation using either GDS or ADS on line 17 in Part III. Irs 2011 tax forms Required use of ADS. Irs 2011 tax forms   You must use ADS for the following property. Irs 2011 tax forms Listed property used 50% or less in a qualified business use. Irs 2011 tax forms See chapter 5 for information on listed property. Irs 2011 tax forms Any tangible property used predominantly outside the United States during the year. Irs 2011 tax forms Any tax-exempt use property. Irs 2011 tax forms Any tax-exempt bond-financed property. Irs 2011 tax forms 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. Irs 2011 tax forms 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 discriminatory acts. Irs 2011 tax forms If you are required to use ADS to depreciate your property, you cannot claim any special depreciation allowance (discussed in chapter 3) for the property. Irs 2011 tax forms Electing ADS. Irs 2011 tax forms   Although your property may qualify for GDS, you can elect to use ADS. Irs 2011 tax forms The election generally must cover all property in the same property class that you placed in service during the year. Irs 2011 tax forms However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. Irs 2011 tax forms Once you make this election, you can never revoke it. Irs 2011 tax forms   You make the election by completing line 20 in Part III of Form 4562. Irs 2011 tax forms Which Property Class Applies Under GDS? The following is a list of the nine property classifications under GDS and examples of the types of property included in each class. Irs 2011 tax forms These property classes are also listed under column (a) in section B, Part III, of Form 4562. Irs 2011 tax forms For detailed information on property classes, see Appendix B, Table of Class Lives and Recovery Periods, in this publication. Irs 2011 tax forms 3-year property. Irs 2011 tax forms Tractor units for over-the-road use. Irs 2011 tax forms Any race horse over 2 years old when placed in service. Irs 2011 tax forms (All race horses placed in service after December 31, 2008, and before January 1, 2014, are deemed to be 3-year property, regardless of age. Irs 2011 tax forms ) Any other horse (other than a race horse) over 12 years old when placed in service. Irs 2011 tax forms Qualified rent-to-own property (defined later). Irs 2011 tax forms 5-year property. Irs 2011 tax forms Automobiles, taxis, buses, and trucks. Irs 2011 tax forms Computers and peripheral equipment. Irs 2011 tax forms Office machinery (such as typewriters, calculators, and copiers). Irs 2011 tax forms Any property used in research and experimentation. Irs 2011 tax forms Breeding cattle and dairy cattle. Irs 2011 tax forms Appliances, carpets, furniture, etc. Irs 2011 tax forms , used in a residential rental real estate activity. Irs 2011 tax forms Certain geothermal, solar, and wind energy property. Irs 2011 tax forms 7-year property. Irs 2011 tax forms Office furniture and fixtures (such as desks, files, and safes). Irs 2011 tax forms Agricultural machinery and equipment. Irs 2011 tax forms Any property that does not have a class life and has not been designated by law as being in any other class. Irs 2011 tax forms Certain motorsports entertainment complex property (defined later) placed in service before January 1, 2014. Irs 2011 tax forms Any natural gas gathering line placed in service after April 11, 2005. Irs 2011 tax forms See Natural gas gathering line and electric transmission property , later. Irs 2011 tax forms 10-year property. Irs 2011 tax forms Vessels, barges, tugs, and similar water transportation equipment. Irs 2011 tax forms Any single purpose agricultural or horticultural structure. Irs 2011 tax forms Any tree or vine bearing fruits or nuts. Irs 2011 tax forms Qualified small electric meter and qualified smart electric grid system (defined later) placed in service on or after October 3, 2008. Irs 2011 tax forms 15-year property. Irs 2011 tax forms Certain improvements made directly to land or added to it (such as shrubbery, fences, roads, sidewalks, and bridges). Irs 2011 tax forms Any retail motor fuels outlet (defined later), such as a convenience store. Irs 2011 tax forms Any municipal wastewater treatment plant. Irs 2011 tax forms Any qualified leasehold improvement property (defined later) placed in service before January 1, 2014. Irs 2011 tax forms Any qualified restaurant property (defined later) placed in service before January 1, 2014. Irs 2011 tax forms Initial clearing and grading land improvements for gas utility property. Irs 2011 tax forms 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. Irs 2011 tax forms See Natural gas gathering line and electric transmission property , later. Irs 2011 tax forms Any natural gas distribution line placed in service after April 11, 2005 and before January 1, 2011. Irs 2011 tax forms Any qualified retail improvement property placed in service before January 1, 2014. Irs 2011 tax forms 20-year property. Irs 2011 tax forms Farm buildings (other than single purpose agricultural or horticultural structures). Irs 2011 tax forms Municipal sewers not classified as 25-year property. Irs 2011 tax forms Initial clearing and grading land improvements for electric utility transmission and distribution plants. Irs 2011 tax forms 25-year property. Irs 2011 tax forms This class is water utility property, which is either of the following. Irs 2011 tax forms 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. Irs 2011 tax forms Municipal sewers other than property placed in service under a binding contract in effect at all times since June 9, 1996. Irs 2011 tax forms Residential rental property. Irs 2011 tax forms 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. Irs 2011 tax forms A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. Irs 2011 tax forms 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. Irs 2011 tax forms 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. Irs 2011 tax forms Nonresidential real property. Irs 2011 tax forms This is section 1250 property, such as an office building, store, or warehouse, that is neither residential rental property nor property with a class life of less than 27. Irs 2011 tax forms 5 years. Irs 2011 tax forms Qualified rent-to-own property. Irs 2011 tax forms   Qualified rent-to-own property is property held by a rent-to-own dealer for purposes of being subject to a rent-to-own contract. Irs 2011 tax forms It is tangible personal property generally used in the home for personal use. Irs 2011 tax forms It includes computers and peripheral equipment, televisions, videocassette recorders, stereos, camcorders, appliances, furniture, washing machines and dryers, refrigerators, and other similar consumer durable property. Irs 2011 tax forms Consumer durable property does not include real property, aircraft, boats, motor vehicles, or trailers. Irs 2011 tax forms   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 still can treat this property as qualified property as long as it does not represent a significant portion of your leasing property. Irs 2011 tax forms However, if this dual-use property does represent a significant portion of your leasing property, you must prove that this property is qualified rent-to-own property. Irs 2011 tax forms Rent-to-own dealer. Irs 2011 tax forms   You are a rent-to-own dealer if you meet all the following requirements. Irs 2011 tax forms You regularly enter into rent-to-own contracts (defined below) in the ordinary course of your business for the use of consumer property. Irs 2011 tax forms A substantial portion of these contracts end with the customer returning the property before making all the payments required to transfer ownership. Irs 2011 tax forms The property is tangible personal property of a type generally used within the home for personal use. Irs 2011 tax forms Rent-to-own contract. Irs 2011 tax forms   This is any lease for the use of consumer property between a rent-to-own dealer and a customer who is an individual which— Is titled “Rent-to-Own Agreement,” “Lease Agreement with Ownership Option,” or other similar language. Irs 2011 tax forms 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). Irs 2011 tax forms Provides for regular periodic (weekly or monthly) payments that can be either level or decreasing. Irs 2011 tax forms If the payments are decreasing, no payment can be less than 40% of the largest payment. Irs 2011 tax forms Provides for total payments that generally exceed the normal retail price of the property plus interest. Irs 2011 tax forms Provides for total payments that do not exceed $10,000 for each item of property. Irs 2011 tax forms 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. Irs 2011 tax forms 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 payments required under the contract to acquire legal title. Irs 2011 tax forms Provides that the customer has no right to sell, sublease, mortgage, pawn, pledge, or otherwise dispose of the property until all contract payments have been made. Irs 2011 tax forms Motorsports entertainment complex. Irs 2011 tax forms   This is a racing track facility permanently situated on land that hosts one or more racing events for automobiles, trucks, or motorcycles during the 36-month period after the first day of the month in which the facility is placed in service. Irs 2011 tax forms The events must be open to the public for the price of admission. Irs 2011 tax forms Qualified smart electric grid system. Irs 2011 tax forms   A qualified smart electric grid system means any smart grid property used as part of a system for electric distribution grid communications, 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 services. Irs 2011 tax forms 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 monitor 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 performance. Irs 2011 tax forms Retail motor fuels outlet. Irs 2011 tax forms   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. Irs 2011 tax forms It is not larger than 1,400 square feet. Irs 2011 tax forms 50% or more of the gross revenues generated from the property are derived from petroleum sales. Irs 2011 tax forms 50% or more of the floor space in the property is devoted to petroleum marketing sales. Irs 2011 tax forms A retail motor fuels outlet does not include any facility related to petroleum and natural gas trunk pipelines. Irs 2011 tax forms Qualified leasehold improvement property. Irs 2011 tax forms    Generally, this is any improvement to an interior part of a building (placed in service before January 1, 2014) that is nonresidential real property, provided all of the requirements discussed in chapter 3 under Qualified leasehold improvement property are met. Irs 2011 tax forms   In addition, an improvement made by the lessor does not qualify as qualified leasehold improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor's death or in any of the following types of transactions. Irs 2011 tax forms A transaction to which section 381(a) applies, A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business, A like-kind exchange, involuntary conversion, or reacquisition of real property to the extent that the basis in the property represents the carryover basis, or Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor's or distributor's basis in the property. Irs 2011 tax forms Examples include the following. Irs 2011 tax forms A complete liquidation of a subsidiary. Irs 2011 tax forms A transfer to a corporation controlled by the transferor. Irs 2011 tax forms An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Irs 2011 tax forms Qualified restaurant property. Irs 2011 tax forms   Qualified restaurant property is any section 1250 property that is a building placed in service after December 31, 2008, and before January 1, 2014. Irs 2011 tax forms Also, more than 50% of the building's square footage must be devoted to preparation of meals and seating for on-premises consumption of prepared meals. Irs 2011 tax forms Qualified smart electric meter. Irs 2011 tax forms   A qualified smart electric meter is any time-based meter and related communication 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: 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 information to customers electronically, and Provides all commercial and residential customers of such supplier or provider with net metering. Irs 2011 tax forms Net metering 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. Irs 2011 tax forms Natural gas gathering line and electric transmission property. Irs 2011 tax forms   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 property) used in the transmission at 69 or more kilovolts of electricity and any natural gas distribution line placed in service after April 11, 2005, are treated as 15-year property, if the following requirements are met. Irs 2011 tax forms The original use of the property must have begun with you after April 11, 2005. Irs 2011 tax forms Original use means the first use to which the property is put, whether or not by you. Irs 2011 tax forms Therefore, property used by any person before April 12, 2005, is not original use. Irs 2011 tax forms Original use includes additional capital expenditures you incurred to recondition or rebuild your property. Irs 2011 tax forms However, original use does not include the cost of reconditioned or rebuilt property you acquired. Irs 2011 tax forms 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. Irs 2011 tax forms The property must not be placed in service under a binding contract in effect before April 12, 2005. Irs 2011 tax forms The property must not be self-constructed property (property you manufacture, construct, or produce for your own use), if you began the manufacture, construction, or production of the property before April 12, 2005. Irs 2011 tax forms Property that is manufactured, constructed, or produced for your use by another person under a written binding contract entered into by you or a related party before the manufacture, construction, or production of the property is considered to be manufactured, constructed, or produced by you. Irs 2011 tax forms What Is the Placed in Service Date? 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. Irs 2011 tax forms The placed in service date for your property is the date the property is ready and available for a specific use. Irs 2011 tax forms It is therefore not necessarily the date it is first used. Irs 2011 tax forms If you converted property held for personal use to use in a trade or business or for the production of income, treat the property as being placed in service on the conversion date. Irs 2011 tax forms See Placed in Service under When Does Depreciation Begin and End in chapter 1 for examples illustrating when property is placed in service. Irs 2011 tax forms What Is the Basis for Depreciation? The basis for depreciation of MACRS property is the property's cost or other basis multiplied by the percentage of business/investment use. Irs 2011 tax forms For a discussion of business/investment use, see Partial business or investment use under Property Used in Your Business or Income-Producing Activity in chapter 1 . Irs 2011 tax forms Reduce that amount by any credits and deductions allocable to the property. Irs 2011 tax forms The following are examples of some credits and deductions that reduce basis. Irs 2011 tax forms Any deduction for section 179 property. Irs 2011 tax forms Any deduction under section 179B of the Internal Revenue Code for capital costs to comply with Environmental Protection Agency sulfur regulations. Irs 2011 tax forms Any deduction under section 179C of the Internal Revenue Code for certain qualified refinery property placed in service after August 8, 2005, and before January 1, 2014. Irs 2011 tax forms Any deduction under section 179D of the Internal Revenue Code for certain energy efficient commercial building property placed in service after December 31, 2005, and before January 1, 2014. Irs 2011 tax forms Any deduction under section 179E of the Internal Revenue Code for qualified advanced mine safety equipment property placed in service after December 20, 2006, and before January 1, 2014 . Irs 2011 tax forms Any deduction for removal of barriers to the disabled and the elderly. Irs 2011 tax forms Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Irs 2011 tax forms Any special depreciation allowance. Irs 2011 tax forms Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. Irs 2011 tax forms For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Irs 2011 tax forms Enter the basis for depreciation under column (c) in Part III of Form 4562. Irs 2011 tax forms For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property in chapter 1 . Irs 2011 tax forms Which Recovery Period Applies? The recovery period of property is the number of years over which you recover its cost or other basis. Irs 2011 tax forms It is determined based on the depreciation system (GDS or ADS) used. Irs 2011 tax forms Recovery Periods Under GDS Under GDS, property that is not qualified Indian reservation property is depreciated over one of the following recovery periods. Irs 2011 tax forms Property Class Recovery Period 3-year property   3 years 1   5-year property   5 years     7-year property   7 years     10-year property   10 years     15-year property   15 years 2   20-year property   20 years     25-year property   25 years 3   Residential rental property   27. Irs 2011 tax forms 5 years     Nonresidential real property   39 years 4   15 years for qualified rent-to-own property placed in service before August 6, 1997. Irs 2011 tax forms 239 years for property that is a retail motor fuels outlet placed in service before August 20, 1996 (31. Irs 2011 tax forms 5 years if placed in service before May 13, 1993), unless you elected to depreciate it over 15 years. Irs 2011 tax forms 320 years for property placed in service before June 13, 1996, or under a binding contract in effect before June 10, 1996. Irs 2011 tax forms 431. Irs 2011 tax forms 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). Irs 2011 tax forms The GDS recovery periods for property not listed above can be found in Appendix B, Table of Class Lives and Recovery Periods. Irs 2011 tax forms Residential rental property and nonresidential real property are defined earlier under Which Depreciation System (GDS or ADS) Applies. Irs 2011 tax forms 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). Irs 2011 tax forms Office in the home. Irs 2011 tax forms   If your home is a personal-use single 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. Irs 2011 tax forms 5 years if you began using it for business before May 13, 1993). Irs 2011 tax forms 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 Depreciation System (GDS or ADS) Applies , depreciate the part used as an office as residential rental property over 27. Irs 2011 tax forms 5 years. Irs 2011 tax forms See Publication 587 for a discussion of the tests you must meet to claim expenses, including depreciation, for the business use of your home. Irs 2011 tax forms Home changed to rental use. Irs 2011 tax forms   If you begin to rent a home that was your personal home before 1987, you depreciate it as residential rental property over 27. Irs 2011 tax forms 5 years. Irs 2011 tax forms Indian Reservation Property The recovery periods for qualified property you placed in service on an Indian reservation after 1993 and before 2014 are shorter than those listed earlier. Irs 2011 tax forms The following table shows these shorter recovery periods. Irs 2011 tax forms Property Class Recovery  Period 3-year property 2 years 5-year property 3 years 7-year property 4 years 10-year property 6 years 15-year property 9 years 20-year property 12 years Nonresidential real property 22 years Nonresidential real property is defined earlier under Which Property Class Applies Under GDS . Irs 2011 tax forms Use this chart to find the correct percentage table to use for qualified Indian reservation property. Irs 2011 tax forms IF your recovery period is: THEN use the following table in Appendix A: 2 years A-21 3 years A-1, A-2, A-3, A-4, or A-5 4 years A-22 6 years A-23 9 years A-14, A-15, A-16, A-17, or A-18 12 years A-14, A-15, A-16, A-17, or A-18 22 years A-24 Qualified property. Irs 2011 tax forms   Property eligible for the shorter recovery periods are 3-, 5-, 7-, 10-, 15-, and 20-year property and nonresidential real property. Irs 2011 tax forms You must use this property predominantly in the active conduct of a trade or business within an Indian reservation. Irs 2011 tax forms The rental of real property that is located on an Indian reservation is treated as the active conduct of a trade or business within an Indian reservation. Irs 2011 tax forms   The following property is not qualified property. Irs 2011 tax forms Property used or located outside an Indian reservation on a regular basis, other than qualified infrastructure property. Irs 2011 tax forms Property acquired directly or indirectly from a related person. Irs 2011 tax forms Property placed in service for purposes of conducting or housing class I, II, or III gaming activities. Irs 2011 tax forms These activities are defined in section 4 of the Indian Regulatory Act (25 U. Irs 2011 tax forms S. Irs 2011 tax forms C. Irs 2011 tax forms 2703). Irs 2011 tax forms Any property you must depreciate under ADS. Irs 2011 tax forms Determine whether property is qualified without regard to the election to use ADS and after applying the special rules for listed property not used predominantly for qualified business use (discussed in chapter 5). Irs 2011 tax forms Qualified infrastructure property. Irs 2011 tax forms   Item (1) above does not apply to qualified infrastructure property located outside the reservation that is used to connect with qualified infrastructure property within the reservation. Irs 2011 tax forms Qualified infrastructure property is property that meets all the following rules. Irs 2011 tax forms It is qualified property, as defined earlier, except that it is outside the reservation. Irs 2011 tax forms It benefits the tribal infrastructure. Irs 2011 tax forms It is available to the general public. Irs 2011 tax forms It is placed in service in connection with the active conduct of a trade or business within a reservation. Irs 2011 tax forms Infrastructure property includes, but is not limited to, roads, power lines, water systems, railroad spurs, and communications facilities. Irs 2011 tax forms Related person. Irs 2011 tax forms   For purposes of item (2) above, see Related persons in the discussion on property owned or used in 1986 under What Method Can You Use To Depreciate Your Property in chapter 1 for a description of related persons. Irs 2011 tax forms Indian reservation. Irs 2011 tax forms   The term Indian reservation means a reservation as defined in section 3(d) of the Indian Financing Act of 1974 (25 U. Irs 2011 tax forms S. Irs 2011 tax forms C. Irs 2011 tax forms 1452(d)) or section 4(10) of the Indian Child Welfare Act of 1978 (25 U. Irs 2011 tax forms S. Irs 2011 tax forms C. Irs 2011 tax forms 1903(10)). Irs 2011 tax forms Section 3(d) of the Indian Financing Act of 1974 defines reservation to include former Indian reservations in Oklahoma. Irs 2011 tax forms For a definition of the term “former Indian reservations in Oklahoma,” see Notice 98-45 in Internal Revenue Bulletin 1998-35. Irs 2011 tax forms Recovery Periods Under ADS The recovery periods for most property generally are longer under ADS than they are under GDS. Irs 2011 tax forms The following table shows some of the ADS recovery periods. Irs 2011 tax forms 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 Personal property with no class life 12 years Natural gas gathering lines 14 years Single purpose agricultural and horticultural structures 15 years Any tree or vine bearing fruit 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 Any qualified leasehold improvement property 39 years Any qualified restaurant property 39 years Nonresidential real property 40 years Residential rental property 40 years Section 1245 real property not listed in Appendix B 40 years Railroad grading and tunnel bore 50 years The ADS recovery periods for property not listed above can be found in the tables in Appendix B. Irs 2011 tax forms Rent-to-own property, qualified leasehold improvement property, qualified restaurant property, residential rental property, and nonresidential real property are defined earlier under Which Property Class Applies Under GDS . Irs 2011 tax forms Tax-exempt use property subject to a lease. Irs 2011 tax forms   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. Irs 2011 tax forms Additions and Improvements An addition or improvement you make to depreciable property is treated as separate depreciable property. Irs 2011 tax forms See How Do You Treat Repairs and Improvements in chapter 1 for a definition of improvements. Irs 2011 tax forms Its property class and recovery period are the same as those that would apply to the original property if you had placed it in service at the same time you placed the addition or improvement in service. Irs 2011 tax forms The recovery period begins on the later of the following dates. Irs 2011 tax forms The date you place the addition or improvement in service. Irs 2011 tax forms The date you place in service the property to which you made the addition or improvement. Irs 2011 tax forms If the improvement you make is qualified leasehold improvement property, qualified restaurant property, or qualified retail improvement property, the GDS recovery period is 15 years (39 years under ADS). Irs 2011 tax forms Example. Irs 2011 tax forms You own a rental home that you have been renting out since 1981. Irs 2011 tax forms 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 addition. Irs 2011 tax forms Under GDS, the property class for the addition is residential rental property and its recovery period is 27. Irs 2011 tax forms 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. Irs 2011 tax forms Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. Irs 2011 tax forms 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. Irs 2011 tax forms The mid-month convention. Irs 2011 tax forms   Use this convention for nonresidential real property, residential rental property, and any railroad grading or tunnel bore. Irs 2011 tax forms   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. Irs 2011 tax forms This means that a one-half month of depreciation is allowed for the month the property is placed in service or disposed of. Irs 2011 tax forms   Your use of the mid-month convention is indicated by the “MM” already shown under column (e) in Part III of Form 4562. Irs 2011 tax forms The mid-quarter convention. Irs 2011 tax forms   Use this convention if the mid-month convention does not apply and the total depreciable bases of MACRS property you placed in service during the last 3 months of the tax year (excluding nonresidential real property, residential rental property, any railroad grading or tunnel bore, property placed in service and disposed of in the same year, and property that is being 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. Irs 2011 tax forms   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. Irs 2011 tax forms This means that 1½ months of depreciation is allowed for the quarter the property is placed in service or disposed of. Irs 2011 tax forms   If you use this convention, enter “MQ” under column (e) in Part III of Form 4562. Irs 2011 tax forms    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 expensed under section 179 and the part of the basis of property attributable to personal use. Irs 2011 tax forms However, it does not reflect any reduction in basis for any special depreciation allowance. Irs 2011 tax forms The half-year convention. Irs 2011 tax forms   Use this convention if neither the mid-quarter convention nor the mid-month convention applies. Irs 2011 tax forms   Under this convention, you treat all property placed in service or disposed of during a tax year as placed in service or disposed of at the midpoint of the year. Irs 2011 tax forms This means that a one-half year of depreciation is allowed for the year the property is placed in service or disposed of. Irs 2011 tax forms   If you use this convention, enter “HY” under column (e) in Part III of Form 4562. Irs 2011 tax forms Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. Irs 2011 tax forms The 200% declining balance method over a GDS recovery period. Irs 2011 tax forms The 150% declining balance method over a GDS recovery period. Irs 2011 tax forms The straight line method over a GDS recovery period. Irs 2011 tax forms The straight line method over an ADS recovery period. Irs 2011 tax forms For property placed in service before 1999, you could have elected the 150% declining balance method using the ADS recovery periods for certain property classes. Irs 2011 tax forms If you made this election, continue to use the same method and recovery period for that property. Irs 2011 tax forms Table 4–1 lists the types of property you can depreciate under each method. Irs 2011 tax forms It also gives a brief explanation of the method, including any benefits that may apply. Irs 2011 tax forms Depreciation Methods for Farm Property If you place personal property in service in a farming business after 1988, you generally must depreciate 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. Irs 2011 tax forms You can depreciate real property using the straight line method under either GDS or ADS. Irs 2011 tax forms Fruit or nut trees and vines. Irs 2011 tax forms   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a recovery period of 10 years. Irs 2011 tax forms ADS required for some farmers. Irs 2011 tax forms   If you elect not to apply the uniform capitalization rules to any plant produced in your farming business, you must use ADS. Irs 2011 tax forms You must use ADS for all property you place in service in any year the election is in effect. Irs 2011 tax forms See the regulations under section 263A of the Internal Revenue Code for information on the uniform capitalization rules that apply to farm property. Irs 2011 tax forms Electing a Different Method As shown in Table 4–1 , you can elect a different method for depreciation for certain types of property. Irs 2011 tax forms You must make the election by the due date of the return (including extensions) for the year you placed the property in service. Irs 2011 tax forms However, if you timely filed your return for the year without making the election, you still can make the election by filing an amended return within 6 months of the due date of the return (excluding extensions). Irs 2011 tax forms Attach the election to the amended return and write “Filed pursuant to section 301. Irs 2011 tax forms 9100-2” on the election statement. Irs 2011 tax forms File the amended return at the same address you filed the original return. Irs 2011 tax forms Once you make the election, you cannot change it. Irs 2011 tax forms 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 service during the year of the election. Irs 2011 tax forms However, you can make the election on a property-by-property basis for nonresidential real and residential rental property. Irs 2011 tax forms 150% election. Irs 2011 tax forms   Instead of using the 200% declining balance method over the GDS recovery period for nonfarm property in the 3-, 5-, 7-, and 10-year property classes, you can elect to use the 150% declining balance method. Irs 2011 tax forms Make the election by entering “150 DB” under column (f) in Part III of Form 4562. Irs 2011 tax forms Straight line election. Irs 2011 tax forms   Instead of using either the 200% or 150% declining balance methods over the GDS recovery period, you can elect to use the straight line method over the GDS recovery period. Irs 2011 tax forms Make the election by entering  “S/L” under column (f) in Part III of Form 4562. Irs 2011 tax forms Election of ADS. Irs 2011 tax forms   As explained earlier under Which Depreciation System (GDS or ADS) Applies , you can elect to use ADS even though your property may come under GDS. Irs 2011 tax forms ADS uses the straight line method of depreciation over fixed ADS recovery periods. Irs 2011 tax forms Most ADS recovery periods are listed in Appendix B, or see the table under Recovery Periods Under ADS , earlier. Irs 2011 tax forms   Make the election by completing line 20 in Part III of Form 4562. Irs 2011 tax forms Farm property. Irs 2011 tax forms   Instead of using the 150% declining balance method over a GDS recovery period for property you use in a farming business (other than real property), you can elect to depreciate it using either of the following methods. Irs 2011 tax forms The straight line method over a GDS recovery period. Irs 2011 tax forms The straight line method over an ADS recovery period. Irs 2011 tax forms Table 4-1. Irs 2011 tax forms Depreciation Methods Note. Irs 2011 tax forms The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. Irs 2011 tax forms Method Type of Property Benefit GDS using 200% DB • Nonfarm 3-, 5-, 7-, and 10-year property • 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 • All farm property (except real property) • All 15- and 20-year property (except qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property placed in service before January 1, 2014) • Nonfarm 3-, 5-, 7-, and 10-year property • 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 • Qualified leasehold improvement property placed in service before January 1, 2014 • Qualified restaurant property placed in service before January 1, 2014 • Qualified retail improvement property placed in service before January 1, 2014 • Residential rental property • Trees or vines bearing fruit or nuts • Water utility property • All 3-, 5-, 7-, 10-, 15-, and 20-year property2 • Property for which you elected section 168(k)(4) • 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 U. Irs 2011 tax forms S. Irs 2011 tax forms  • 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 • Provides for equal yearly deductions (except for the first and last years) 1The MACRS percentage tables in Appendix A have the switch to the straight line method built into their rates 2See section 168(b)(5) of the Internal Revenue Code. Irs 2011 tax forms 3See section 168(g)(6) of the Internal Revenue Code 4See section 168(g)(7) of the Internal Revenue Code How Is the Depreciation Deduction Figured? 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 applies to your property. Irs 2011 tax forms Then, you are ready to figure your depreciation deduction. Irs 2011 tax forms You can figure it using a percentage table provided by the IRS, or you can figure it yourself without using the table. Irs 2011 tax forms 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. Irs 2011 tax forms These percentage tables are in Appendix A near the end of this publication. Irs 2011 tax forms Which table to use. Irs 2011 tax forms    Appendix A contains the MACRS Percentage Table Guide, which is designed to help you locate the correct percentage table to use for depreciating your property. Irs 2011 tax forms The percentage tables immediately follow the guide. Irs 2011 tax forms Rules Covering the Use of the Tables The following rules cover the use of the percentage tables. Irs 2011 tax forms You must apply the rates in the percentage tables to your property's unadjusted basis. Irs 2011 tax forms You cannot use the percentage tables for a short tax year. Irs 2011 tax forms See Figuring the Deduction for a Short Tax Year, later, for information on the short tax year rules. Irs 2011 tax forms Once you start using the percentage tables for any item of property, you generally must continue to use them for the entire recovery period of the property. Irs 2011 tax forms You must stop using the tables if you adjust the basis of the property for any reason other than— Depreciation allowed or allowable, or An addition or improvement to that property that is depreciated as a separate item of property. Irs 2011 tax forms 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. Irs 2011 tax forms Basis adjustment due to recapture of clean-fuel vehicle deduction or credit. Irs 2011 tax forms   If you increase the basis of your property because of the recapture of part or all of a deduction for clean-fuel vehicles or the credit for clean-fuel vehicle refueling property placed in service before January 1, 2006, you cannot continue to use the percentage tables. Irs 2011 tax forms For the year of the adjustment and the remaining recovery period, you must figure the depreciation deduction yourself using the property's adjusted basis at the end of the year. Irs 2011 tax forms See Figuring the Deduction Without Using the Tables, later. Irs 2011 tax forms Basis adjustment due to casualty loss. Irs 2011 tax forms   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. Irs 2011 tax forms 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. Irs 2011 tax forms See Figuring the Deduction Without Using the Tables, later. Irs 2011 tax forms Example. Irs 2011 tax forms On October 26, 2012, Sandra Elm, a calendar year taxpayer, bought and placed in service in her business a new item of 7-year property. Irs 2011 tax forms It cost $39,000 and she elected a section 179 deduction of $24,000. Irs 2011 tax forms She also took a special depreciation allowance of $7,500 [50% of $15,000 ($39,000 − $24,000)]. Irs 2011 tax forms Her unadjusted basis after the section 179 deduction and special depreciation allowance was $7,500 ($15,000 − $7,500). Irs 2011 tax forms She figured her MACRS depreciation deduction using the percentage tables. Irs 2011 tax forms For 2012, her MACRS depreciation deduction was $268. Irs 2011 tax forms In July 2013, the property was vandalized and Sandra had a deductible casualty loss of $3,000. Irs 2011 tax forms She must adjust the property's basis for the casualty loss, so she can no longer use the percentage tables. Irs 2011 tax forms Her adjusted basis at the end of 2013, before figuring her 2013 depreciation, is $4,232. Irs 2011 tax forms She figures that amount by subtracting the 2012 MACRS depreciation of $268 and the casualty loss of $3,000 from the unadjusted basis of $7,500. Irs 2011 tax forms She must now figure her depreciation for 2013 without using the percentage tables. Irs 2011 tax forms Figuring the Unadjusted Basis of Your Property You must apply the table rates to your property's unadjusted basis each year of the recovery period. Irs 2011 tax forms Unadjusted basis is the same basis amount you would use to figure gain on a sale, but you figure it without reducing your original basis by any MACRS depreciation taken in earlier years. Irs 2011 tax forms However, you do reduce your original basis by other amounts, including the following. Irs 2011 tax forms Any amortization taken on the property. Irs 2011 tax forms Any section 179 deduction claimed. Irs 2011 tax forms Any special depreciation allowance taken on the property. Irs 2011 tax forms For business property you purchase during the year, the unadjusted basis is its cost minus these and other applicable adjustments. Irs 2011 tax forms If you trade property, your unadjusted basis in the property received is the cash paid plus the adjusted basis of the property traded minus these adjustments. Irs 2011 tax forms MACRS Worksheet You can use this worksheet to help you figure your depreciation deduction using the percentage tables. Irs 2011 tax forms Use a separate worksheet for each item of property. Irs 2011 tax forms Then, use the information from this worksheet to prepare Form 4562. Irs 2011 tax forms Do not use this worksheet for automobiles. Irs 2011 tax forms Use the Depreciation Worksheet for Passenger Automobiles in chapter 5. Irs 2011 tax forms MACRS Worksheet Part I   1. Irs 2011 tax forms MACRS system (GDS or ADS)   2. Irs 2011 tax forms Property class   3. Irs 2011 tax forms Date placed in service   4. Irs 2011 tax forms Recovery period   5. Irs 2011 tax forms Method and convention   6. Irs 2011 tax forms Depreciation rate (from tables)   Part II   7. Irs 2011 tax forms Cost or other basis* $     8. Irs 2011 tax forms Business/investment use   %   9. Irs 2011 tax forms Multiply line 7 by line 8   $ 10. Irs 2011 tax forms Total claimed for section 179 deduction and other items   $ 11. Irs 2011 tax forms Subtract line 10 from line 9. Irs 2011 tax forms This is your tentative basis for depreciation   $ 12. Irs 2011 tax forms Multiply line 11 by . Irs 2011 tax forms 50 if the 50% special depreciation allowance applies. Irs 2011 tax forms This is your special depreciation allowance. Irs 2011 tax forms 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. Irs 2011 tax forms Subtract line 12 from line 11. Irs 2011 tax forms This is your basis for depreciation     14. Irs 2011 tax forms Depreciation rate (from line 6)     15. Irs 2011 tax forms Multiply line 13 by line 14. Irs 2011 tax forms This is your MACRS depreciation deduction   $ *If real estate, do not include cost (basis) of land. Irs 2011 tax forms The following example shows how to figure your MACRS depreciation deduction using the percentage tables and the MACRS worksheet. Irs 2011 tax forms Example. Irs 2011 tax forms You bought office furniture (7-year property) for $10,000 and placed it in service on August 11, 2013. Irs 2011 tax forms You use the furniture only for business. Irs 2011 tax forms This is the only property you placed in service this year. Irs 2011 tax forms 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. Irs 2011 tax forms You use GDS and the half-year convention to figure your depreciation. Irs 2011 tax forms You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-1. Irs 2011 tax forms Multiply your property's unadjusted basis each year by the percentage for 7-year property given in Table A-1. Irs 2011 tax forms You figure your depreciation deduction using the MACRS worksheet as follows. Irs 2011 tax forms MACRS Worksheet Part I 1. Irs 2011 tax forms MACRS system (GDS or ADS) GDS 2. Irs 2011 tax forms Property class 7-year 3. Irs 2011 tax forms Date placed in service 8/11/13 4. Irs 2011 tax forms Recovery period 7-Year 5. Irs 2011 tax forms Method and convention 200%DB/Half-Year 6. Irs 2011 tax forms Depreciation rate (from tables) . Irs 2011 tax forms 1429 Part II 7. Irs 2011 tax forms Cost or other basis* $10,000     8. Irs 2011 tax forms Business/investment use 100 %   9. Irs 2011 tax forms Multiply line 7 by line 8   $10,000 10. Irs 2011 tax forms Total claimed for section 179 deduction and other items   -0- 11. Irs 2011 tax forms Subtract line 10 from line 9. Irs 2011 tax forms This is your tentative basis for depreciation   $10,000 12. Irs 2011 tax forms Multiply line 11 by . Irs 2011 tax forms 50 if the 50% special depreciation allowance applies. Irs 2011 tax forms This is your special depreciation allowance. Irs 2011 tax forms 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. Irs 2011 tax forms Subtract line 12 from line 11. Irs 2011 tax forms This is your basis for depreciation   $10,000 14. Irs 2011 tax forms Depreciation rate (from line 6)   . Irs 2011 tax forms 1429 15. Irs 2011 tax forms Multiply line 13 by line 14. Irs 2011 tax forms This is your MACRS depreciation deduction   $1,429 *If real estate, do not include cost (basis) of land. Irs 2011 tax forms 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 follows. Irs 2011 tax forms Year   Basis Percentage Deduction 2014 $ 10,000 24. Irs 2011 tax forms 49%   $2,449   2015   10,000 17. Irs 2011 tax forms 49   1,749   2016   10,000 12. Irs 2011 tax forms 49   1,249   2017   10,000 8. Irs 2011 tax forms 93   893   2018   10,000 8. Irs 2011 tax forms 92   892   2019   10,000 8. Irs 2011 tax forms 93   893   2020   10,000 4. Irs 2011 tax forms 46   446   Examples The following examples are provided to show you how to use the percentage tables. Irs 2011 tax forms In both examples, assume the following. Irs 2011 tax forms You use the property only for business. Irs 2011 tax forms You use the calendar year as your tax year. Irs 2011 tax forms You use GDS for all the properties. Irs 2011 tax forms Example 1. Irs 2011 tax forms You bought a building and land for $120,000 and placed it in service on March 8. Irs 2011 tax forms The sales contract showed that the building cost $100,000 and the land cost $20,000. Irs 2011 tax forms It is nonresidential real property. Irs 2011 tax forms The building's unadjusted basis is its original cost, $100,000. Irs 2011 tax forms You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-7a. Irs 2011 tax forms March is the third month of your tax year, so multiply the building's unadjusted basis, $100,000, by the percentages for the third month in Table A-7a. Irs 2011 tax forms Your depreciation deduction for each of the first 3 years is as follows: Year   Basis Percentage Deduction 1st $ 100,000 2. Irs 2011 tax forms 033%   $2,033   2nd   100,000 2. Irs 2011 tax forms 564   2,564   3rd   100,000 2. Irs 2011 tax forms 564   2,564   Example 2. Irs 2011 tax forms During the year, you bought a machine (7-year property) for $4,000, office furniture (7-year property) for $1,000, and a computer (5-year property) for $5,000. Irs 2011 tax forms You placed the machine in service in January, the furniture in September, and the computer in October. Irs 2011 tax forms You do not elect a section 179 deduction and none of these items is qualified property for purposes of claiming a special depreciation allowance. Irs 2011 tax forms 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. Irs 2011 tax forms The total bases of all property you placed in service during the year is $10,000. Irs 2011 tax forms 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. Irs 2011 tax forms Therefore, you must use the mid-quarter convention for all three items. Irs 2011 tax forms You refer to the MACRS Percentage Table Guide in Appendix A to determine which table you should use under the mid-quarter convention. Irs 2011 tax forms The machine is 7-year property placed in service in the first quarter, so you use Table A-2. Irs 2011 tax forms The furniture is 7-year property placed in service in the third quarter, so you use Table A-4. Irs 2011 tax forms Finally, because the computer is 5-year property placed in service in the fourth quarter, you use Table A-6. Irs 2011 tax forms Knowing what table to use for each property, you figure the depreciation for the first 2 years as follows. Irs 2011 tax forms Year Property Basis Percentage Deduction 1st Machine $4,000 25. Irs 2011 tax forms 00 $1,000   2nd Machine 4,000 21. Irs 2011 tax forms 43 857   1st Furniture 1,000 10. Irs 2011 tax forms 71 107   2nd Furniture 1,000 25. Irs 2011 tax forms 51 255   1st Computer 5,000 5. Irs 2011 tax forms 00 250   2nd Computer 5,000 38. Irs 2011 tax forms 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 depreciation amount for the full year. Irs 2011 tax forms 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. Irs 2011 tax forms After you figure the full-year depreciation amount, figure the deductible part using the convention that applies to the property. Irs 2011 tax forms Half-year convention used. Irs 2011 tax forms   For property for which you used a half-year convention, the depreciation deduction for the year of the disposition is half the depreciation determined for the full year. Irs 2011 tax forms Mid-quarter convention used. Irs 2011 tax forms   For property for which you used the mid-quarter convention, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter in which you disposed of the property. Irs 2011 tax forms Quarter Percentage First 12. Irs 2011 tax forms 5% Second 37. Irs 2011 tax forms 5 Third 62. Irs 2011 tax forms 5 Fourth 87. Irs 2011 tax forms 5 Example. Irs 2011 tax forms On December 2, 2010, you placed in service an item of 5-year property costing $10,000. Irs 2011 tax forms You did not claim a section 179 deduction and the property does not qualify for a special depreciation allowance. Irs 2011 tax forms Your unadjusted basis for the property was $10,000. Irs 2011 tax forms You used the mid-quarter convention because this was the only item of business property you placed in service in 2010 and it was placed in service during the last 3 months of your tax year. Irs 2011 tax forms Your property is in the 5-year property class, so you used Table A-5 to figure your depreciation deduction. Irs 2011 tax forms Your deductions for 2010, 2011, and 2012 were $500 (5% of $10,000), $3,800 (38% of $10,000), and $2,280 (22. Irs 2011 tax forms 80% of $10,000). Irs 2011 tax forms You disposed of the property on April 6, 2013. Irs 2011 tax forms To determine your depreciation deduction for 2013, first figure the deduction for the full year. Irs 2011 tax forms This is $1,368 (13. Irs 2011 tax forms 68% of $10,000). Irs 2011 tax forms April is in the second quarter of the year, so you multiply $1,368 by 37. Irs 2011 tax forms 5% to get your depreciation deduction of $513 for 2013. Irs 2011 tax forms Mid-month convention used. Irs 2011 tax forms   If you dispose of residential rental or nonresidential real property, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by a fraction. Irs 2011 tax forms The numerator of the fraction is the number of months (including partial months) in the year that the property is considered in service. Irs 2011 tax forms The denominator is 12. Irs 2011 tax forms Example. Irs 2011 tax forms On July 2, 2011, you purchased and placed in service residential rental property. Irs 2011 tax forms The property cost $100,000, not including the cost of land. Irs 2011 tax forms You used Table A-6 to figure your MACRS depreciation for this property. Irs 2011 tax forms You sold the property on March 2, 2013. Irs 2011 tax forms You file your tax return based on the calendar year. Irs 2011 tax forms A full year of depreciation for 2013 is $3,636. Irs 2011 tax forms This is $100,000 multiplied by . Irs 2011 tax forms 03636 (the percentage for the seventh month of the third recovery year) from Table A-6 . Irs 2011 tax forms You then apply the mid-month convention for the 2½ months of use in 2013. Irs 2011 tax forms Treat the month of disposition as one-half month of use. Irs 2011 tax forms Multiply $3,636 by the fraction, 2. Irs 2011 tax forms 5 over 12, to get your 2013 depreciation deduction of $757. Irs 2011 tax forms 50. Irs 2011 tax forms Figuring the Deduction Without Using the Tables Instead of using the rates in the percentage tables to figure your depreciation deduction, you can figure it yourself. Irs 2011 tax forms Before making the computation each year, you must reduce your adjusted basis in the property by the depreciation claimed the previous year. Irs 2011 tax forms Figuring MACRS deductions without using the tables generally will result in a slightly different amount than using the tables. Irs 2011 tax forms Declining Balance Method When using a declining balance method, you apply the same depreciation rate each year to the adjusted basis of your property. Irs 2011 tax forms 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. Irs 2011 tax forms The straight line method is explained later. Irs 2011 tax forms You figure depreciation for the year you place property in service as follows. Irs 2011 tax forms Multiply your adjusted basis in the property by the declining balance rate. Irs 2011 tax forms Apply the applicable convention. Irs 2011 tax forms You figure depreciation for all other years (before the year you switch to the straight line method) as follows. Irs 2011 tax forms Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years. Irs 2011 tax forms Multiply this new adjusted basis by the same declining balance rate used in earlier years. Irs 2011 tax forms If you dispose of property before the end of its recovery period, see Using the Applicable Convention, later, for information on how to figure depreciation for the year you dispose of it. Irs 2011 tax forms Figuring depreciation under the declining balance method and switching to the straight line method is illustrated in Example 1 , later, under Examples. Irs 2011 tax forms Declining balance rate. Irs 2011 tax forms   You figure your declining balance rate by dividing the specified declining balance percentage (150% or 200% changed to a decimal) by the number of years in the property's recovery period. Irs 2011 tax forms For example, for 3-year property depreciated using the 200% declining balance method, divide 2. Irs 2011 tax forms 00 (200%) by 3 to get 0. Irs 2011 tax forms 6667, or a 66. Irs 2011 tax forms 67% declining balance rate. Irs 2011 tax forms For 15-year property depreciated using the 150% declining balance method, divide 1. Irs 2011 tax forms 50 (150%) by 15 to get 0. Irs 2011 tax forms 10, or a 10% declining balance rate. Irs 2011 tax forms   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. Irs 2011 tax forms Property Class Method Declining Balance Rate Year 3-year 200% DB 66. Irs 2011 tax forms 667% 3rd 5-year 200% DB 40. Irs 2011 tax forms 0 4th 7-year 200% DB 28. Irs 2011 tax forms 571 5th 10-year 200% DB 20. Irs 2011 tax forms 0 7th 15-year 150% DB 10. Irs 2011 tax forms 0 7th 20-year 150% DB 7. Irs 2011 tax forms 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. Irs 2011 tax forms You must use the applicable convention in the year you place the property in service and the year you dispose of the property. Irs 2011 tax forms You figure depreciation for the year you place property in service as follows. Irs 2011 tax forms Multiply your adjusted basis in the property by the straight line rate. Irs 2011 tax forms Apply the applicable convention. Irs 2011 tax forms You figure depreciation for all other years (including the year you switch from the declining balance method to the straight line method) as follows. Irs 2011 tax forms Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years (under any method). Irs 2011 tax forms Determine the depreciation rate for the year. Irs 2011 tax forms Multiply the adjusted basis figured in (1) by the depreciation rate figured in (2). Irs 2011 tax forms If you dispose of property before the end of its recovery period, see Using the Applicable Convention , later, for information on how to figure depreciation for the year you dispose of it. Irs 2011 tax forms Straight line rate. Irs 2011 tax forms   You determine the straight line depreciation rate for any tax year by dividing the number 1 by the years remaining in the recovery period at the beginning of that year. Irs 2011 tax forms When figuring the number of years remaining, you must take into account the convention used in the year you placed the property in service. Irs 2011 tax forms If the number of years remaining is less than 1, the depreciation rate for that tax year is 1. Irs 2011 tax forms 0 (100%). Irs 2011 tax forms Using the Applicable Convention The applicable convention (discussed earlier under Which Convention Applies ) affects how you figure your depreciation deduction for the year you place your property in service and for the year you dispose of it. Irs 2011 tax forms It determines how much of the recovery period remains at the beginning of each year, so it also affects the depreciation rate for property you depreciate under the straight line method. Irs 2011 tax forms See Straight line rate in the previous discussion. Irs 2011 tax forms Use the applicable convention as explained in the following discussions. Irs 2011 tax forms Half-year convention. Irs 2011 tax forms   If this convention applies, you deduct a half-year of depreciation for the first year and the last year that you depreciate the property. Irs 2011 tax forms You deduct a full year of depreciation for any other year during the recovery period. Irs 2011 tax forms   Figure your depreciation deduction for the year you place the property in service by dividing the depreciation for a full year by 2. Irs 2011 tax forms 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. Irs 2011 tax forms 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 unrecovered basis in the property. Irs 2011 tax forms Mid-quarter convention. Irs 2011 tax forms   If this convention applies, the depreciation you can deduct for the first year you depreciate the property depends on the quarter in which you place the property in service. Irs 2011 tax forms   A quarter of a full 12-month tax year is a period of 3 months. Irs 2011 tax forms The first quarter in a year begins on the first day of the tax year. Irs 2011 tax forms The second quarter begins on the first day of the fourth month of the tax year. Irs 2011 tax forms The third quarter begins on the first day of the seventh month of the tax year. Irs 2011 tax forms The fourth quarter begins on the first day of the tenth month of the tax year. Irs 2011 tax forms A calendar year is divided into the following quarters. Irs 2011 tax forms 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 depreciation for a full year by the percentage listed below for the quarter you place the property in service. Irs 2011 tax forms Quarter Percentage First 87. Irs 2011 tax forms 5% Second 62. Irs 2011 tax forms 5 Third 37. Irs 2011 tax forms 5 Fourth 12. Irs 2011 tax forms 5   If you dispose of the property before the end of the recovery period, figure your depreciation deduction for the year of the disposition by multiplying a full year of depreciation by the percentage listed below for the quarter you dispose of the property. Irs 2011 tax forms Quarter Percentage First 12. Irs 2011 tax forms 5% Second 37. Irs 2011 tax forms 5 Third 62. Irs 2011 tax forms 5 Fourth 87. Irs 2011 tax forms 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. Irs 2011 tax forms Mid-month convention. Irs 2011 tax forms   If this convention applies, the depreciation you can deduct for the first year that you depreciate the property depends on the month in which you place the property in service. Irs 2011 tax forms Figure your depreciation deduction for the year you place the property in service by multiplying the depreciation for a full year by a fraction. Irs 2011 tax forms The numerator of the fraction is the number of full months in the year that the property is in service plus ½ (or 0. Irs 2011 tax forms 5). Irs 2011 tax forms The denominator is 12. Irs 2011 tax forms   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. Irs 2011 tax forms If you hold the property for the entire recovery period, your depreciation deduction for the year that includes the final month of the recovery period is the amount of your unrecovered basis in the property. Irs 2011 tax forms Example. Irs 2011 tax forms You use the calendar year and place nonresidential real property in service in August. Irs 2011 tax forms The property is in service 4 full months (September, October, November, and December). Irs 2011 tax forms Your numerator is 4. Irs 2011 tax forms 5 (4 full months plus 0. Irs 2011 tax forms 5). Irs 2011 tax forms You multiply the depreciation for a full year by 4. Irs 2011 tax forms 5/12, or 0. Irs 2011 tax forms 375. Irs 2011 tax forms Examples The following examples show how to figure depreciation under MACRS without using the percentage tables. Irs 2011 tax forms Figures are rounded for purposes of the examples. Irs 2011 tax forms Assume for all the examples that you use a calendar year as your tax year. Irs 2011 tax forms Example 1—200% DB method and half-year convention. Irs 2011 tax forms In February, you placed in service depreciable property with a 5-year recovery period and a basis of $1,000. Irs 2011 tax forms You do not elect to take the section 179 deduction and the property does not qualify for a special depreciation allowance. Irs 2011 tax forms You use GDS and the 200% declining balance (DB) method to figure your depreciation. Irs 2011 tax forms When the straight line (SL) method results in an equal or larger deduction, you switch to the SL method. Irs 2011 tax forms You did not place any property in service in the last 3 months of the year, so you must use the half-year convention. Irs 2011 tax forms First year. Irs 2011 tax forms You figure the depreciation rate under the 200% DB method by dividing 2 (200%) by 5 (the number of years in the recovery period). Irs 2011 tax forms The result is 40%. Irs 2011 tax forms You multiply the adjusted basis of the property ($1,000) by the 40% DB rate. Irs 2011 tax forms You apply the half-year convention by dividing the result ($400) by 2. Irs 2011 tax forms Depreciation for the first year under the 200% DB method is $200. Irs 2011 tax forms You figure the depreciation rate under the straight line (SL) method by dividing 1 by 5, the number of years in the recovery period. Irs 2011 tax forms The result is 20%. Irs 2011 tax forms You multiply the adjusted basis of the property ($1,000) by the 20% SL rate. Irs 2011 tax forms You apply the half-year convention by dividing the result ($200) by 2. Irs 2011 tax forms Depreciation for the first year under the SL method is $100. Irs 2011 tax forms The DB method provides a larger deduction, so you deduct the $200 figured under the 200% DB method. Irs 2011 tax forms Second year. Irs 2011 tax forms You reduce the adjusted basis ($1,000) by the depreciation claimed in the first year ($200). Irs 2011 tax forms You multiply the result ($800) by the DB rate (40%). Irs 2011 tax forms Depreciation for the second year under the 200% DB method is $320. Irs 2011 tax forms You figure the SL depreciation rate by dividing 1 by 4. Irs 2011 tax forms 5, the number of years remaining in the recovery period. Irs 2011 tax forms (Based on the half-year convention, you used only half a year of the recovery period in the first year. Irs 2011 tax forms ) You multiply the reduced adjusted basis ($800) by the result (22. Irs 2011 tax forms 22%). Irs 2011 tax forms Depreciation under the SL method for the second year is $178. Irs 2011 tax forms The DB method provides a larger deduction, so you deduct the $320 figured under the 200% DB method. Irs 2011 tax forms Third year. Irs 2011 tax forms You reduce the adjusted basis ($800) by the depreciation claimed in the second year ($320). Irs 2011 tax forms You multiply the result ($480) by the DB rate (40%). Irs 2011 tax forms Depreciation for the third year under the 200% DB method is $192. Irs 2011 tax forms You figure the SL depreciation rate by dividing 1 by 3. Irs 2011 tax forms 5. Irs 2011 tax forms You multiply the reduced adjusted basis ($480) by the result (28. Irs 2011 tax forms 57%). Irs 2011 tax forms Depreciation under the SL method for the third year is $137. Irs 2011 tax forms The DB method provides a larger deduction, so you deduct the $192 figured under the 200% DB method. Irs 2011 tax forms Fourth year. Irs 2011 tax forms You reduce the adjusted basis ($480) by the de