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Military Pay Chart

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Military Pay Chart

Military pay chart 12. Military pay chart   Filing Form 720 Table of Contents Attachments to Form 720. Military pay chart Conditions to allowance. Military pay chart Use Form 720 to report and pay the excise taxes previously discussed in this publication. Military pay chart File Form 720 for each calendar quarter until you file a final Form 720. Military pay chart For information on filing Form 720 electronically, visit the IRS e-file website at www. Military pay chart irs. Military pay chart gov/efile. Military pay chart You may be required to file your returns on a monthly or semimonthly basis instead of quarterly if you do not make deposits as required (see Payment of Taxes, later) or are liable for the excise tax on taxable fuels and meet certain conditions. Military pay chart Form 720 has three parts and three schedules. Military pay chart Part I consists of excise taxes generally required to be deposited (see Payment of Taxes, later). Military pay chart Part II consists of excise taxes that are not required to be deposited. Military pay chart Part III is used to figure your tax liability for the quarter and the amount of any balance due or overpayment. Military pay chart Schedule A, Excise Tax Liability, is used to record your net tax liability for each semimonthly period in a quarter. Military pay chart Complete it if you have an entry in Part I. Military pay chart Schedule C, Claims, is used to make claims. Military pay chart However, Schedule C can only be used if you are reporting a liability in Part I or Part II. Military pay chart Schedule T, Two-Party Exchange Information Reporting, is used to report certain exchanges of taxable fuel before or in connection with the removal at the terminal rack. Military pay chart Attachments to Form 720. Military pay chart   You may have to attach the following forms. Military pay chart Form 6197 for the gas guzzler tax. Military pay chart Form 6627 for environmental taxes. Military pay chart Form 720X. Military pay chart   This form is used to make adjustments to Forms 720 filed in prior quarters. Military pay chart You can file Form 720X by itself or, if it shows a decrease in tax, you can attach it to Form 720. Military pay chart See Form 720X for more information. Military pay chart Conditions to allowance. Military pay chart   For tax decreases, the claimant must check the appropriate box on Form 720X stating that: For adjustments of communications or air transportation taxes, the claimant has: Repaid the tax to the person from whom it was collected, or Obtained the consent of that person to the allowance of the adjustment. Military pay chart For other adjustments, the claimant has: Not included the tax in the price of the article and not collected the tax from the purchaser, Repaid the tax to the ultimate purchaser, or Attached the written consent of the ultimate purchaser to the allowance of the adjustment. Military pay chart However, the conditions listed under (2) do not apply to environmental taxes, the ship passenger tax, obligations not in registered form, foreign insurance taxes, fuels used on inland waterways, cellulosic or second generation biofuel sold as but not used as fuel, biodiesel sold as fuel but not used as fuel, and certain fuel taxes if the tax was based on use (for example, dyed diesel fuel used in trains, LPG, and CNG). Military pay chart Final return. Military pay chart   File a final return if: You go out of business, or You will not owe excise taxes that are reportable on Form 720 in future quarters. Military pay chart Due dates. Military pay chart   Form 720 must be filed by the following due dates. Military pay chart Quarter Covered Due Dates January, February, March April 30 April, May, June July 31 July, August, September October 31 October, November, December January 31   If any due date falls on a Saturday, Sunday, or legal holiday, you can file the return on the next business day. Military pay chart One-time filing. Military pay chart   If you import a gas guzzling automobile, you may be eligible to make a one-time filing using your SSN if you: Do not import gas guzzling automobiles in the course of your trade or business, and Are not required to file Form 720 reporting other excise taxes for the calendar quarter, except for a one-time filing. Military pay chart   If you meet both requirements above, see Gas guzzler tax (IRS No. Military pay chart 40) in the Instructions for Form 720 for how to file and pay the tax. Military pay chart Payment voucher. Military pay chart   Form 720-V, Payment Voucher, must be included with Form 720 if you have a balance due on line 10 of Form 720 and you are making your payment by check or money order. Military pay chart Prev  Up  Next   Home   More Online Publications
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Understanding Your CP75D Notice

We’re auditing your tax return and we need documentation to verify the income and withholding you reported on your tax return. This may affect your eligibility for the Earned Income Credit (EIC), dependent exemption(s) and other refundable credits that you claimed. We are holding your refund pending the results of the audit.


What you need to do

  • Read the notice and the enclosed forms carefully. They explain the information you must send to us.
  • Provide copies of supporting documentation to verify the items we're auditing.
  • Complete the response form by indicating which items your supporting documentation addresses on the copies you're submitting and return the form with the documents you are submitting.

You may want to


Answers to Common Questions

Why was my return selected for audit?
While most returns are accepted as filed, some are selected for examination. The IRS examines (or audits) some federal tax returns to determine if income, expenses, and credits are reported accurately. The IRS selects returns for examination using various methods which include random sampling, computerized screening, and comparison of information received by the IRS such as Forms W-2 and 1099. Having your return selected for examination doesn't suggest you made an error or were dishonest.

Why are my wages being audited?
The amounts you reported on the wages and withholding lines of your tax return appear incorrect.

Can I claim the earned income credit for my fiancé’s child?
No. You must be married to the child’s parent during the tax year in question to receive EIC.

What do I need to send?
Refer to the applicable Form 886-H and Form 886-L you received with your notice. There is a separate form for each item being audited that explains what supporting documentation to send.

What if I can’t provide the requested documentation?
We’ll disallow the items being audited and send you an examination report that shows the proposed changes to your tax return.

What if I did not file a tax return claiming the items you are questioning and someone else is using my name and social security number?
Contact us at the number listed on the top right corner of your notice. You can also refer to the IRS Identity Theft resource page for more information.

Can I file my tax return while I am being audited?
Yes, you should continue to file all required tax returns before the due date to avoid additional penalties and interest.


Tips for next year

Avoid errors that can delay your refund or result in IRS denying your EITC claim. Find out the most common errors in claiming EITC here.

Page Last Reviewed or Updated: 07-Mar-2014

How to get help

  • Call the 1-800 number listed on the top right corner of your notice.
  • Authorize someone (e.g., accountant) to contact the IRS on your behalf using Form 2848.
  • See if you qualify for help from a Low Income Taxpayer Clinic.
     

The Military Pay Chart

Military pay chart 4. Military pay chart   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. Military pay chart Rent-to-own contract. Military pay chart 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. Military pay chart MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Military pay chart Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. Military pay chart 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. Military pay chart This chapter explains how to determine which MACRS depreciation system applies to your property. Military pay chart It also discusses other information you need to know before you can figure depreciation under MACRS. Military pay chart 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. Military pay chart 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. Military pay chart Finally, it explains when and how to recapture MACRS depreciation. Military pay chart 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. Military pay chart 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. Military pay chart You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Military pay chart If you placed your property in service in 2013, complete Part III of Form 4562 to report depreciation using MACRS. Military pay chart Complete section B of Part III to report depreciation using GDS, and complete section C of Part III to report depreciation using ADS. Military pay chart 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. Military pay chart Required use of ADS. Military pay chart   You must use ADS for the following property. Military pay chart Listed property used 50% or less in a qualified business use. Military pay chart See chapter 5 for information on listed property. Military pay chart Any tangible property used predominantly outside the United States during the year. Military pay chart Any tax-exempt use property. Military pay chart Any tax-exempt bond-financed property. Military pay chart 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. Military pay chart 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. Military pay chart 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. Military pay chart Electing ADS. Military pay chart   Although your property may qualify for GDS, you can elect to use ADS. Military pay chart The election generally must cover all property in the same property class that you placed in service during the year. Military pay chart However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. Military pay chart Once you make this election, you can never revoke it. Military pay chart   You make the election by completing line 20 in Part III of Form 4562. Military pay chart 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. Military pay chart These property classes are also listed under column (a) in section B, Part III, of Form 4562. Military pay chart For detailed information on property classes, see Appendix B, Table of Class Lives and Recovery Periods, in this publication. Military pay chart 3-year property. Military pay chart Tractor units for over-the-road use. Military pay chart Any race horse over 2 years old when placed in service. Military pay chart (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. Military pay chart ) Any other horse (other than a race horse) over 12 years old when placed in service. Military pay chart Qualified rent-to-own property (defined later). Military pay chart 5-year property. Military pay chart Automobiles, taxis, buses, and trucks. Military pay chart Computers and peripheral equipment. Military pay chart Office machinery (such as typewriters, calculators, and copiers). Military pay chart Any property used in research and experimentation. Military pay chart Breeding cattle and dairy cattle. Military pay chart Appliances, carpets, furniture, etc. Military pay chart , used in a residential rental real estate activity. Military pay chart Certain geothermal, solar, and wind energy property. Military pay chart 7-year property. Military pay chart Office furniture and fixtures (such as desks, files, and safes). Military pay chart Agricultural machinery and equipment. Military pay chart Any property that does not have a class life and has not been designated by law as being in any other class. Military pay chart Certain motorsports entertainment complex property (defined later) placed in service before January 1, 2014. Military pay chart Any natural gas gathering line placed in service after April 11, 2005. Military pay chart See Natural gas gathering line and electric transmission property , later. Military pay chart 10-year property. Military pay chart Vessels, barges, tugs, and similar water transportation equipment. Military pay chart Any single purpose agricultural or horticultural structure. Military pay chart Any tree or vine bearing fruits or nuts. Military pay chart Qualified small electric meter and qualified smart electric grid system (defined later) placed in service on or after October 3, 2008. Military pay chart 15-year property. Military pay chart Certain improvements made directly to land or added to it (such as shrubbery, fences, roads, sidewalks, and bridges). Military pay chart Any retail motor fuels outlet (defined later), such as a convenience store. Military pay chart Any municipal wastewater treatment plant. Military pay chart Any qualified leasehold improvement property (defined later) placed in service before January 1, 2014. Military pay chart Any qualified restaurant property (defined later) placed in service before January 1, 2014. Military pay chart Initial clearing and grading land improvements for gas utility property. Military pay chart 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. Military pay chart See Natural gas gathering line and electric transmission property , later. Military pay chart Any natural gas distribution line placed in service after April 11, 2005 and before January 1, 2011. Military pay chart Any qualified retail improvement property placed in service before January 1, 2014. Military pay chart 20-year property. Military pay chart Farm buildings (other than single purpose agricultural or horticultural structures). Military pay chart Municipal sewers not classified as 25-year property. Military pay chart Initial clearing and grading land improvements for electric utility transmission and distribution plants. Military pay chart 25-year property. Military pay chart This class is water utility property, which is either of the following. Military pay chart 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. Military pay chart Municipal sewers other than property placed in service under a binding contract in effect at all times since June 9, 1996. Military pay chart Residential rental property. Military pay chart 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. Military pay chart A dwelling unit is a house or apartment used to provide living accommodations in a building or structure. Military pay chart 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. Military pay chart 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. Military pay chart Nonresidential real property. Military pay chart 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. Military pay chart 5 years. Military pay chart Qualified rent-to-own property. Military pay chart   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. Military pay chart It is tangible personal property generally used in the home for personal use. Military pay chart It includes computers and peripheral equipment, televisions, videocassette recorders, stereos, camcorders, appliances, furniture, washing machines and dryers, refrigerators, and other similar consumer durable property. Military pay chart Consumer durable property does not include real property, aircraft, boats, motor vehicles, or trailers. Military pay chart   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. Military pay chart 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. Military pay chart Rent-to-own dealer. Military pay chart   You are a rent-to-own dealer if you meet all the following requirements. Military pay chart You regularly enter into rent-to-own contracts (defined below) in the ordinary course of your business for the use of consumer property. Military pay chart A substantial portion of these contracts end with the customer returning the property before making all the payments required to transfer ownership. Military pay chart The property is tangible personal property of a type generally used within the home for personal use. Military pay chart Rent-to-own contract. Military pay chart   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. Military pay chart 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). Military pay chart Provides for regular periodic (weekly or monthly) payments that can be either level or decreasing. Military pay chart If the payments are decreasing, no payment can be less than 40% of the largest payment. Military pay chart Provides for total payments that generally exceed the normal retail price of the property plus interest. Military pay chart Provides for total payments that do not exceed $10,000 for each item of property. Military pay chart 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. Military pay chart 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. Military pay chart 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. Military pay chart Motorsports entertainment complex. Military pay chart   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. Military pay chart The events must be open to the public for the price of admission. Military pay chart Qualified smart electric grid system. Military pay chart   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. Military pay chart 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. Military pay chart Retail motor fuels outlet. Military pay chart   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. Military pay chart It is not larger than 1,400 square feet. Military pay chart 50% or more of the gross revenues generated from the property are derived from petroleum sales. Military pay chart 50% or more of the floor space in the property is devoted to petroleum marketing sales. Military pay chart A retail motor fuels outlet does not include any facility related to petroleum and natural gas trunk pipelines. Military pay chart Qualified leasehold improvement property. Military pay chart    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. Military pay chart   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. Military pay chart 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. Military pay chart Examples include the following. Military pay chart A complete liquidation of a subsidiary. Military pay chart A transfer to a corporation controlled by the transferor. Military pay chart An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization. Military pay chart Qualified restaurant property. Military pay chart   Qualified restaurant property is any section 1250 property that is a building placed in service after December 31, 2008, and before January 1, 2014. Military pay chart 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. Military pay chart Qualified smart electric meter. Military pay chart   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. Military pay chart 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. Military pay chart Natural gas gathering line and electric transmission property. Military pay chart   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. Military pay chart The original use of the property must have begun with you after April 11, 2005. Military pay chart Original use means the first use to which the property is put, whether or not by you. Military pay chart Therefore, property used by any person before April 12, 2005, is not original use. Military pay chart Original use includes additional capital expenditures you incurred to recondition or rebuild your property. Military pay chart However, original use does not include the cost of reconditioned or rebuilt property you acquired. Military pay chart 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. Military pay chart The property must not be placed in service under a binding contract in effect before April 12, 2005. Military pay chart 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. Military pay chart 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. Military pay chart 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. Military pay chart The placed in service date for your property is the date the property is ready and available for a specific use. Military pay chart It is therefore not necessarily the date it is first used. Military pay chart 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. Military pay chart See Placed in Service under When Does Depreciation Begin and End in chapter 1 for examples illustrating when property is placed in service. Military pay chart 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. Military pay chart 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 . Military pay chart Reduce that amount by any credits and deductions allocable to the property. Military pay chart The following are examples of some credits and deductions that reduce basis. Military pay chart Any deduction for section 179 property. Military pay chart Any deduction under section 179B of the Internal Revenue Code for capital costs to comply with Environmental Protection Agency sulfur regulations. Military pay chart 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. Military pay chart 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. Military pay chart 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 . Military pay chart Any deduction for removal of barriers to the disabled and the elderly. Military pay chart Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Military pay chart Any special depreciation allowance. Military pay chart Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. Military pay chart For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Military pay chart Enter the basis for depreciation under column (c) in Part III of Form 4562. Military pay chart 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 . Military pay chart Which Recovery Period Applies? The recovery period of property is the number of years over which you recover its cost or other basis. Military pay chart It is determined based on the depreciation system (GDS or ADS) used. Military pay chart Recovery Periods Under GDS Under GDS, property that is not qualified Indian reservation property is depreciated over one of the following recovery periods. Military pay chart 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. Military pay chart 5 years     Nonresidential real property   39 years 4   15 years for qualified rent-to-own property placed in service before August 6, 1997. Military pay chart 239 years for property that is a retail motor fuels outlet placed in service before August 20, 1996 (31. Military pay chart 5 years if placed in service before May 13, 1993), unless you elected to depreciate it over 15 years. Military pay chart 320 years for property placed in service before June 13, 1996, or under a binding contract in effect before June 10, 1996. Military pay chart 431. Military pay chart 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). Military pay chart The GDS recovery periods for property not listed above can be found in Appendix B, Table of Class Lives and Recovery Periods. Military pay chart Residential rental property and nonresidential real property are defined earlier under Which Depreciation System (GDS or ADS) Applies. Military pay chart 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). Military pay chart Office in the home. Military pay chart   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. Military pay chart 5 years if you began using it for business before May 13, 1993). Military pay chart 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. Military pay chart 5 years. Military pay chart See Publication 587 for a discussion of the tests you must meet to claim expenses, including depreciation, for the business use of your home. Military pay chart Home changed to rental use. Military pay chart   If you begin to rent a home that was your personal home before 1987, you depreciate it as residential rental property over 27. Military pay chart 5 years. Military pay chart 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. Military pay chart The following table shows these shorter recovery periods. Military pay chart 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 . Military pay chart Use this chart to find the correct percentage table to use for qualified Indian reservation property. Military pay chart 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. Military pay chart   Property eligible for the shorter recovery periods are 3-, 5-, 7-, 10-, 15-, and 20-year property and nonresidential real property. Military pay chart You must use this property predominantly in the active conduct of a trade or business within an Indian reservation. Military pay chart 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. Military pay chart   The following property is not qualified property. Military pay chart Property used or located outside an Indian reservation on a regular basis, other than qualified infrastructure property. Military pay chart Property acquired directly or indirectly from a related person. Military pay chart Property placed in service for purposes of conducting or housing class I, II, or III gaming activities. Military pay chart These activities are defined in section 4 of the Indian Regulatory Act (25 U. Military pay chart S. Military pay chart C. Military pay chart 2703). Military pay chart Any property you must depreciate under ADS. Military pay chart 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). Military pay chart Qualified infrastructure property. Military pay chart   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. Military pay chart Qualified infrastructure property is property that meets all the following rules. Military pay chart It is qualified property, as defined earlier, except that it is outside the reservation. Military pay chart It benefits the tribal infrastructure. Military pay chart It is available to the general public. Military pay chart It is placed in service in connection with the active conduct of a trade or business within a reservation. Military pay chart Infrastructure property includes, but is not limited to, roads, power lines, water systems, railroad spurs, and communications facilities. Military pay chart Related person. Military pay chart   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. Military pay chart Indian reservation. Military pay chart   The term Indian reservation means a reservation as defined in section 3(d) of the Indian Financing Act of 1974 (25 U. Military pay chart S. Military pay chart C. Military pay chart 1452(d)) or section 4(10) of the Indian Child Welfare Act of 1978 (25 U. Military pay chart S. Military pay chart C. Military pay chart 1903(10)). Military pay chart Section 3(d) of the Indian Financing Act of 1974 defines reservation to include former Indian reservations in Oklahoma. Military pay chart For a definition of the term “former Indian reservations in Oklahoma,” see Notice 98-45 in Internal Revenue Bulletin 1998-35. Military pay chart Recovery Periods Under ADS The recovery periods for most property generally are longer under ADS than they are under GDS. Military pay chart The following table shows some of the ADS recovery periods. Military pay chart 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. Military pay chart 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 . Military pay chart Tax-exempt use property subject to a lease. Military pay chart   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. Military pay chart Additions and Improvements An addition or improvement you make to depreciable property is treated as separate depreciable property. Military pay chart See How Do You Treat Repairs and Improvements in chapter 1 for a definition of improvements. Military pay chart 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. Military pay chart The recovery period begins on the later of the following dates. Military pay chart The date you place the addition or improvement in service. Military pay chart The date you place in service the property to which you made the addition or improvement. Military pay chart 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). Military pay chart Example. Military pay chart You own a rental home that you have been renting out since 1981. Military pay chart 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. Military pay chart Under GDS, the property class for the addition is residential rental property and its recovery period is 27. Military pay chart 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. Military pay chart Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. Military pay chart 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. Military pay chart The mid-month convention. Military pay chart   Use this convention for nonresidential real property, residential rental property, and any railroad grading or tunnel bore. Military pay chart   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. Military pay chart This means that a one-half month of depreciation is allowed for the month the property is placed in service or disposed of. Military pay chart   Your use of the mid-month convention is indicated by the “MM” already shown under column (e) in Part III of Form 4562. Military pay chart The mid-quarter convention. Military pay chart   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. Military pay chart   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. Military pay chart This means that 1½ months of depreciation is allowed for the quarter the property is placed in service or disposed of. Military pay chart   If you use this convention, enter “MQ” under column (e) in Part III of Form 4562. Military pay chart    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. Military pay chart However, it does not reflect any reduction in basis for any special depreciation allowance. Military pay chart The half-year convention. Military pay chart   Use this convention if neither the mid-quarter convention nor the mid-month convention applies. Military pay chart   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. Military pay chart This means that a one-half year of depreciation is allowed for the year the property is placed in service or disposed of. Military pay chart   If you use this convention, enter “HY” under column (e) in Part III of Form 4562. Military pay chart Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. Military pay chart The 200% declining balance method over a GDS recovery period. Military pay chart The 150% declining balance method over a GDS recovery period. Military pay chart The straight line method over a GDS recovery period. Military pay chart The straight line method over an ADS recovery period. Military pay chart 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. Military pay chart If you made this election, continue to use the same method and recovery period for that property. Military pay chart Table 4–1 lists the types of property you can depreciate under each method. Military pay chart It also gives a brief explanation of the method, including any benefits that may apply. Military pay chart 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. Military pay chart You can depreciate real property using the straight line method under either GDS or ADS. Military pay chart Fruit or nut trees and vines. Military pay chart   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a recovery period of 10 years. Military pay chart ADS required for some farmers. Military pay chart   If you elect not to apply the uniform capitalization rules to any plant produced in your farming business, you must use ADS. Military pay chart You must use ADS for all property you place in service in any year the election is in effect. Military pay chart See the regulations under section 263A of the Internal Revenue Code for information on the uniform capitalization rules that apply to farm property. Military pay chart Electing a Different Method As shown in Table 4–1 , you can elect a different method for depreciation for certain types of property. Military pay chart You must make the election by the due date of the return (including extensions) for the year you placed the property in service. Military pay chart 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). Military pay chart Attach the election to the amended return and write “Filed pursuant to section 301. Military pay chart 9100-2” on the election statement. Military pay chart File the amended return at the same address you filed the original return. Military pay chart Once you make the election, you cannot change it. Military pay chart 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. Military pay chart However, you can make the election on a property-by-property basis for nonresidential real and residential rental property. Military pay chart 150% election. Military pay chart   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. Military pay chart Make the election by entering “150 DB” under column (f) in Part III of Form 4562. Military pay chart Straight line election. Military pay chart   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. Military pay chart Make the election by entering  “S/L” under column (f) in Part III of Form 4562. Military pay chart Election of ADS. Military pay chart   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. Military pay chart ADS uses the straight line method of depreciation over fixed ADS recovery periods. Military pay chart Most ADS recovery periods are listed in Appendix B, or see the table under Recovery Periods Under ADS , earlier. Military pay chart   Make the election by completing line 20 in Part III of Form 4562. Military pay chart Farm property. Military pay chart   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. Military pay chart The straight line method over a GDS recovery period. Military pay chart The straight line method over an ADS recovery period. Military pay chart Table 4-1. Military pay chart Depreciation Methods Note. Military pay chart The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. Military pay chart 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. Military pay chart S. Military pay chart  • 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. Military pay chart 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. Military pay chart Then, you are ready to figure your depreciation deduction. Military pay chart You can figure it using a percentage table provided by the IRS, or you can figure it yourself without using the table. Military pay chart 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. Military pay chart These percentage tables are in Appendix A near the end of this publication. Military pay chart Which table to use. Military pay chart    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. Military pay chart The percentage tables immediately follow the guide. Military pay chart Rules Covering the Use of the Tables The following rules cover the use of the percentage tables. Military pay chart You must apply the rates in the percentage tables to your property's unadjusted basis. Military pay chart You cannot use the percentage tables for a short tax year. Military pay chart See Figuring the Deduction for a Short Tax Year, later, for information on the short tax year rules. Military pay chart 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. Military pay chart 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. Military pay chart 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. Military pay chart Basis adjustment due to recapture of clean-fuel vehicle deduction or credit. Military pay chart   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. Military pay chart 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. Military pay chart See Figuring the Deduction Without Using the Tables, later. Military pay chart Basis adjustment due to casualty loss. Military pay chart   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. Military pay chart 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. Military pay chart See Figuring the Deduction Without Using the Tables, later. Military pay chart Example. Military pay chart 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. Military pay chart It cost $39,000 and she elected a section 179 deduction of $24,000. Military pay chart She also took a special depreciation allowance of $7,500 [50% of $15,000 ($39,000 − $24,000)]. Military pay chart Her unadjusted basis after the section 179 deduction and special depreciation allowance was $7,500 ($15,000 − $7,500). Military pay chart She figured her MACRS depreciation deduction using the percentage tables. Military pay chart For 2012, her MACRS depreciation deduction was $268. Military pay chart In July 2013, the property was vandalized and Sandra had a deductible casualty loss of $3,000. Military pay chart She must adjust the property's basis for the casualty loss, so she can no longer use the percentage tables. Military pay chart Her adjusted basis at the end of 2013, before figuring her 2013 depreciation, is $4,232. Military pay chart 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. Military pay chart She must now figure her depreciation for 2013 without using the percentage tables. Military pay chart 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. Military pay chart 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. Military pay chart However, you do reduce your original basis by other amounts, including the following. Military pay chart Any amortization taken on the property. Military pay chart Any section 179 deduction claimed. Military pay chart Any special depreciation allowance taken on the property. Military pay chart For business property you purchase during the year, the unadjusted basis is its cost minus these and other applicable adjustments. Military pay chart 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. Military pay chart MACRS Worksheet You can use this worksheet to help you figure your depreciation deduction using the percentage tables. Military pay chart Use a separate worksheet for each item of property. Military pay chart Then, use the information from this worksheet to prepare Form 4562. Military pay chart Do not use this worksheet for automobiles. Military pay chart Use the Depreciation Worksheet for Passenger Automobiles in chapter 5. Military pay chart MACRS Worksheet Part I   1. Military pay chart MACRS system (GDS or ADS)   2. Military pay chart Property class   3. Military pay chart Date placed in service   4. Military pay chart Recovery period   5. Military pay chart Method and convention   6. Military pay chart Depreciation rate (from tables)   Part II   7. Military pay chart Cost or other basis* $     8. Military pay chart Business/investment use   %   9. Military pay chart Multiply line 7 by line 8   $ 10. Military pay chart Total claimed for section 179 deduction and other items   $ 11. Military pay chart Subtract line 10 from line 9. Military pay chart This is your tentative basis for depreciation   $ 12. Military pay chart Multiply line 11 by . Military pay chart 50 if the 50% special depreciation allowance applies. Military pay chart This is your special depreciation allowance. Military pay chart 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. Military pay chart Subtract line 12 from line 11. Military pay chart This is your basis for depreciation     14. Military pay chart Depreciation rate (from line 6)     15. Military pay chart Multiply line 13 by line 14. Military pay chart This is your MACRS depreciation deduction   $ *If real estate, do not include cost (basis) of land. Military pay chart The following example shows how to figure your MACRS depreciation deduction using the percentage tables and the MACRS worksheet. Military pay chart Example. Military pay chart You bought office furniture (7-year property) for $10,000 and placed it in service on August 11, 2013. Military pay chart You use the furniture only for business. Military pay chart This is the only property you placed in service this year. Military pay chart 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. Military pay chart You use GDS and the half-year convention to figure your depreciation. Military pay chart You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-1. Military pay chart Multiply your property's unadjusted basis each year by the percentage for 7-year property given in Table A-1. Military pay chart You figure your depreciation deduction using the MACRS worksheet as follows. Military pay chart MACRS Worksheet Part I 1. Military pay chart MACRS system (GDS or ADS) GDS 2. Military pay chart Property class 7-year 3. Military pay chart Date placed in service 8/11/13 4. Military pay chart Recovery period 7-Year 5. Military pay chart Method and convention 200%DB/Half-Year 6. Military pay chart Depreciation rate (from tables) . Military pay chart 1429 Part II 7. Military pay chart Cost or other basis* $10,000     8. Military pay chart Business/investment use 100 %   9. Military pay chart Multiply line 7 by line 8   $10,000 10. Military pay chart Total claimed for section 179 deduction and other items   -0- 11. Military pay chart Subtract line 10 from line 9. Military pay chart This is your tentative basis for depreciation   $10,000 12. Military pay chart Multiply line 11 by . Military pay chart 50 if the 50% special depreciation allowance applies. Military pay chart This is your special depreciation allowance. Military pay chart 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. Military pay chart Subtract line 12 from line 11. Military pay chart This is your basis for depreciation   $10,000 14. Military pay chart Depreciation rate (from line 6)   . Military pay chart 1429 15. Military pay chart Multiply line 13 by line 14. Military pay chart This is your MACRS depreciation deduction   $1,429 *If real estate, do not include cost (basis) of land. Military pay chart 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. Military pay chart Year   Basis Percentage Deduction 2014 $ 10,000 24. Military pay chart 49%   $2,449   2015   10,000 17. Military pay chart 49   1,749   2016   10,000 12. Military pay chart 49   1,249   2017   10,000 8. Military pay chart 93   893   2018   10,000 8. Military pay chart 92   892   2019   10,000 8. Military pay chart 93   893   2020   10,000 4. Military pay chart 46   446   Examples The following examples are provided to show you how to use the percentage tables. Military pay chart In both examples, assume the following. Military pay chart You use the property only for business. Military pay chart You use the calendar year as your tax year. Military pay chart You use GDS for all the properties. Military pay chart Example 1. Military pay chart You bought a building and land for $120,000 and placed it in service on March 8. Military pay chart The sales contract showed that the building cost $100,000 and the land cost $20,000. Military pay chart It is nonresidential real property. Military pay chart The building's unadjusted basis is its original cost, $100,000. Military pay chart You refer to the MACRS Percentage Table Guide in Appendix A and find that you should use Table A-7a. Military pay chart 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. Military pay chart Your depreciation deduction for each of the first 3 years is as follows: Year   Basis Percentage Deduction 1st $ 100,000 2. Military pay chart 033%   $2,033   2nd   100,000 2. Military pay chart 564   2,564   3rd   100,000 2. Military pay chart 564   2,564   Example 2. Military pay chart 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. Military pay chart You placed the machine in service in January, the furniture in September, and the computer in October. Military pay chart You do not elect a section 179 deduction and none of these items is qualified property for purposes of claiming a special depreciation allowance. Military pay chart 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. Military pay chart The total bases of all property you placed in service during the year is $10,000. Military pay chart 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. Military pay chart Therefore, you must use the mid-quarter convention for all three items. Military pay chart You refer to the MACRS Percentage Table Guide in Appendix A to determine which table you should use under the mid-quarter convention. Military pay chart The machine is 7-year property placed in service in the first quarter, so you use Table A-2. Military pay chart The furniture is 7-year property placed in service in the third quarter, so you use Table A-4. Military pay chart Finally, because the computer is 5-year property placed in service in the fourth quarter, you use Table A-6. Military pay chart Knowing what table to use for each property, you figure the depreciation for the first 2 years as follows. Military pay chart Year Property Basis Percentage Deduction 1st Machine $4,000 25. Military pay chart 00 $1,000   2nd Machine 4,000 21. Military pay chart 43 857   1st Furniture 1,000 10. Military pay chart 71 107   2nd Furniture 1,000 25. Military pay chart 51 255   1st Computer 5,000 5. Military pay chart 00 250   2nd Computer 5,000 38. Military pay chart 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. Military pay chart 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. Military pay chart After you figure the full-year depreciation amount, figure the deductible part using the convention that applies to the property. Military pay chart Half-year convention used. Military pay chart   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. Military pay chart Mid-quarter convention used. Military pay chart   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. Military pay chart Quarter Percentage First 12. Military pay chart 5% Second 37. Military pay chart 5 Third 62. Military pay chart 5 Fourth 87. Military pay chart 5 Example. Military pay chart On December 2, 2010, you placed in service an item of 5-year property costing $10,000. Military pay chart You did not claim a section 179 deduction and the property does not qualify for a special depreciation allowance. Military pay chart Your unadjusted basis for the property was $10,000. Military pay chart 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. Military pay chart Your property is in the 5-year property class, so you used Table A-5 to figure your depreciation deduction. Military pay chart Your deductions for 2010, 2011, and 2012 were $500 (5% of $10,000), $3,800 (38% of $10,000), and $2,280 (22. Military pay chart 80% of $10,000). Military pay chart You disposed of the property on April 6, 2013. Military pay chart To determine your depreciation deduction for 2013, first figure the deduction for the full year. Military pay chart This is $1,368 (13. Military pay chart 68% of $10,000). Military pay chart April is in the second quarter of the year, so you multiply $1,368 by 37. Military pay chart 5% to get your depreciation deduction of $513 for 2013. Military pay chart Mid-month convention used. Military pay chart   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. Military pay chart The numerator of the fraction is the number of months (including partial months) in the year that the property is considered in service. Military pay chart The denominator is 12. Military pay chart Example. Military pay chart On July 2, 2011, you purchased and placed in service residential rental property. Military pay chart The property cost $100,000, not including the cost of land. Military pay chart You used Table A-6 to figure your MACRS depreciation for this property. Military pay chart You sold the property on March 2, 2013. Military pay chart You file your tax return based on the calendar year. Military pay chart A full year of depreciation for 2013 is $3,636. Military pay chart This is $100,000 multiplied by . Military pay chart 03636 (the percentage for the seventh month of the third recovery year) from Table A-6 . Military pay chart You then apply the mid-month convention for the 2½ months of use in 2013. Military pay chart Treat the month of disposition as one-half month of use. Military pay chart Multiply $3,636 by the fraction, 2. Military pay chart 5 over 12, to get your 2013 depreciation deduction of $757. Military pay chart 50. Military pay chart 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. Military pay chart Before making the computation each year, you must reduce your adjusted basis in the property by the depreciation claimed the previous year. Military pay chart Figuring MACRS deductions without using the tables generally will result in a slightly different amount than using the tables. Military pay chart Declining Balance Method When using a declining balance method, you apply the same depreciation rate each year to the adjusted basis of your property. Military pay chart 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. Military pay chart The straight line method is explained later. Military pay chart You figure depreciation for the year you place property in service as follows. Military pay chart Multiply your adjusted basis in the property by the declining balance rate. Military pay chart Apply the applicable convention. Military pay chart You figure depreciation for all other years (before the year you switch to the straight line method) as follows. Military pay chart Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years. Military pay chart Multiply this new adjusted basis by the same declining balance rate used in earlier years. Military pay chart 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. Military pay chart Figuring depreciation under the declining balance method and switching to the straight line method is illustrated in Example 1 , later, under Examples. Military pay chart Declining balance rate. Military pay chart   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. Military pay chart For example, for 3-year property depreciated using the 200% declining balance method, divide 2. Military pay chart 00 (200%) by 3 to get 0. Military pay chart 6667, or a 66. Military pay chart 67% declining balance rate. Military pay chart For 15-year property depreciated using the 150% declining balance method, divide 1. Military pay chart 50 (150%) by 15 to get 0. Military pay chart 10, or a 10% declining balance rate. Military pay chart   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. Military pay chart Property Class Method Declining Balance Rate Year 3-year 200% DB 66. Military pay chart 667% 3rd 5-year 200% DB 40. Military pay chart 0 4th 7-year 200% DB 28. Military pay chart 571 5th 10-year 200% DB 20. Military pay chart 0 7th 15-year 150% DB 10. Military pay chart 0 7th 20-year 150% DB 7. Military pay chart 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. Military pay chart You must use the applicable convention in the year you place the property in service and the year you dispose of the property. Military pay chart You figure depreciation for the year you place property in service as follows. Military pay chart Multiply your adjusted basis in the property by the straight line rate. Military pay chart Apply the applicable convention. Military pay chart You figure depreciation for all other years (including the year you switch from the declining balance method to the straight line method) as follows. Military pay chart Reduce your adjusted basis in the property by the depreciation allowed or allowable in earlier years (under any method). Military pay chart Determine the depreciation rate for the year. Military pay chart Multiply the adjusted basis figured in (1) by the depreciation rate figured in (2). Military pay chart 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. Military pay chart Straight line rate. Military pay chart   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. Military pay chart When figuring the number of years remaining, you must take into account the convention used in the year you placed the property in service. Military pay chart If the number of years remaining is less than 1, the depreciation rate for that tax year is 1. Military pay chart 0 (100%). Military pay chart 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. Military pay chart 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. Military pay chart See Straight line rate in the previous discussion. Military pay chart Use the applicable convention as explained in the following discussions. Military pay chart Half-year convention. Military pay chart   If this convention applies, you deduct a half-year of depreciation for the first year and the last year that you depreciate the property. Military pay chart You deduct a full year of depreciation for any other year during the recovery period. Military pay chart   Figure your depreciation deduction for the year you place the property in service by dividing the depreciation for a full year by 2. Military pay chart 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. Military pay chart 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. Military pay chart Mid-quarter convention. Military pay chart   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. Military pay chart   A quarter of a full 12-month tax year is a period of 3 months. Military pay chart The first quarter in a year begins on the first day of the tax year. Military pay chart The second quarter begins on the first day of the fourth month of the tax year. Military pay chart The third quarter begins on the first day of the seventh month of the tax year. Military pay chart The fourth quarter begins on the first day of the tenth month of the tax year. Military pay chart A calendar year is divided into the following quarters. Military pay chart 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. Military pay chart Quarter Percentage First 87. Military pay chart 5% Second 62. Military pay chart 5 Third 37. Military pay chart 5 Fourth 12. Military pay chart 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. Military pay chart Quarter Percentage First 12. Military pay chart 5% Second 37. Military pay chart 5 Third 62. Military pay chart 5 Fourth 87. Military pay chart 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. Military pay chart Mid-month convention. Military pay chart   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. Military pay chart Figure your depreciation deduction for the year you place the property in service by multiplying the depreciation for a full year by a fraction. Military pay chart The numerator of the fraction is the number of full months in the year that the property is in service plus ½ (or 0. Military pay chart 5). Military pay chart The denominator is 12. Military pay chart   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. Military pay chart 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. Military pay chart Example. Military pay chart You use the calendar year and place nonresidential real property in service in August. Military pay chart The property is in service 4 full months (September, October, November, and December). Military pay chart Your numerator is 4. Military pay chart 5 (4 full months plus 0. Military pay chart 5). Military pay chart You multiply the depreciation for a full year by 4. Military pay chart 5/12, or 0. Military pay chart 375. Military pay chart Examples The following examples show how to figure depreciation under MACRS without using the percentage tables. Military pay chart Figures are rounded for purposes of the examples. Military pay chart Assume for all the examples that you use a calendar year as your tax year. Military pay chart Example 1—200% DB method and half-year convention. Military pay chart In February, you placed in service depreciable property with a 5-year recovery period and a basis of $1,000. Military pay chart You do not elect to take the section 179 deduction and the property does not qualify for a special depreciation allowance. Military pay chart You use GDS and the 200% declining balance (DB) method to figure your depreciation. Military pay chart When the straight line (SL) method results in an equal or larger deduction, you switch to the SL method. Military pay chart You did not place any property in service in the last 3 months of the year, so you must use the half-year convention. Military pay chart First year. Military pay chart You figure the depreciation rate under the 200% DB method by dividing 2 (200%) by 5 (the number of years in the recovery period). Military pay chart The result is 40%. Military pay chart You multiply the adjusted basis of the property ($1,000) by the 40% DB rate. Military pay chart You apply the half-year convention by dividing the result ($400) by 2. Military pay chart Depreciation for the first year under the 200% DB method is $200. Military pay chart You figure the depreciation rate under the straight line (SL) method by dividing 1 by 5, the number of years in the recovery period. Military pay chart The result is 20%. Military pay chart You multiply the adjusted basis of the property ($1,000) by the 20% SL rate. Military pay chart You apply the half-year convention by dividing the result ($200) by 2. Military pay chart Depreciation for the first year under the SL method is $100. Military pay chart The DB method provides a larger deduction, so you deduct the $200 figured under the 200% DB method. Military pay chart Second year. Military pay chart You reduce the adjusted basis ($1,000) by the depreciation claimed in the first year ($200). Military pay chart You multiply the result ($800) by the DB rate (40%). Military pay chart Depreciation for the second year under the 200% DB method is $320. Military pay chart You figure the SL depreciation rate by dividing 1 by 4. Military pay chart 5, the number of years remaining in the recovery period. Military pay chart (Based on the half-year convention, you used only half a year of the recovery period in the first year. Military pay chart ) You multiply the reduced adjusted basis ($800) by the result (22. Military pay chart 22%). Military pay chart Depreciation under the SL method for the second year is $178. Military pay chart The DB method provides a larger deduction, so you deduct the $320 figured under the 200% DB method. Military pay chart Third year. Military pay chart You reduce the adjusted basis ($800) by the depreciation claimed in the second year ($320). Military pay chart You multiply the result ($480) by the DB rate (40%). Military pay chart Depreciation for the third year under the 200% DB method is $192. Military pay chart You figure the SL depreciation rate by dividing 1 by 3. Military pay chart 5. Military pay chart You multiply the reduced adjusted basis ($480) by the result (28. Military pay chart 57%). Military pay chart Depreciation under the SL method for the third year is $137. Military pay chart The DB method provides a larger deduction, so you deduct the $192 figured under the 200% DB method. Military pay chart Fourth year. Military pay chart You reduce the adjusted basis ($480) by the de