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Need To File My 2011 Taxes

Need to file my 2011 taxes Publication 584 - Main Content Table of Contents LossesCost or other basis. Need to file my 2011 taxes Fair market value. Need to file my 2011 taxes Exception for personal-use real property. Need to file my 2011 taxes More information. Need to file my 2011 taxes Comments and SuggestionsOrdering forms and publications. Need to file my 2011 taxes Tax questions. Need to file my 2011 taxes How To Get Tax HelpLow Income Taxpayer Clinics (LITCs). Need to file my 2011 taxes Losses Generally, you may deduct losses to your home, household goods, and motor vehicles on your federal income tax return. Need to file my 2011 taxes However, you may not deduct a casualty or theft loss that is covered by insurance unless you filed a timely insurance claim for reimbursement. Need to file my 2011 taxes Any reimbursement you receive will reduce the loss. Need to file my 2011 taxes If you did not file an insurance claim, you may deduct only the part of the loss that was not covered by insurance. Need to file my 2011 taxes Amount of loss. Need to file my 2011 taxes   You figure the amount of your loss using the following steps. Need to file my 2011 taxes Determine your cost or other basis in the property before the casualty or theft. Need to file my 2011 taxes Determine the decrease in fair market value (FMV) of the property as a result of the casualty or theft. Need to file my 2011 taxes (The decrease in FMV is the difference between the property's value immediately before and immediately after the casualty or theft. Need to file my 2011 taxes ) From the smaller of the amounts you determined in (1) and (2), subtract any insurance or other reimbursement you received or expect to receive. Need to file my 2011 taxes Apply the deduction limits, discussed later, to determine the amount of your deductible loss. Need to file my 2011 taxes Cost or other basis. Need to file my 2011 taxes   Cost or other basis usually means original cost plus improvements. Need to file my 2011 taxes If you did not acquire the property by purchasing it, your basis is determined as discussed in Publication 551, Basis of Assets. Need to file my 2011 taxes If you inherited the property from someone who died in 2010, and the executor of the decedent's estate made the election to file Form 8939, refer to the information provided by the executor or see Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010. Need to file my 2011 taxes Fair market value. Need to file my 2011 taxes   FMV is the price for which you could sell your property to a willing buyer, when neither of you has to sell or buy and both of you know all the relevant facts. Need to file my 2011 taxes When filling out Schedules 1 through 20, you need to know the FMV of the property immediately before and immediately after the disaster, casualty, or theft. Need to file my 2011 taxes Separate computations. Need to file my 2011 taxes   Generally, if a single casualty or theft involves more than one item of property, you must figure the loss on each item separately. Need to file my 2011 taxes Then combine the losses to determine the total loss from that casualty or theft. Need to file my 2011 taxes Exception for personal-use real property. Need to file my 2011 taxes   In figuring a casualty loss on personal-use real property, the entire property (including any improvements, such as buildings, trees, and shrubs) is treated as one item. Need to file my 2011 taxes Figure the loss using the smaller of the following. Need to file my 2011 taxes The decrease in FMV of the entire property. Need to file my 2011 taxes The adjusted basis of the entire property. Need to file my 2011 taxes Deduction limits. Need to file my 2011 taxes   After you have figured the amount of your loss, as discussed earlier, you must figure how much of the loss you can deduct. Need to file my 2011 taxes You do this on Form 4684, section A. Need to file my 2011 taxes If the loss was to property for your personal use or your family's, there are two limits on the amount you can deduct for your casualty or theft loss. Need to file my 2011 taxes You must reduce each casualty or theft loss by $100 ($100 rule). Need to file my 2011 taxes You must further reduce the total of all your losses by 10% of your adjusted gross income (10% rule). Need to file my 2011 taxes More information. Need to file my 2011 taxes   For more information about the deduction limits, see Publication 547. Need to file my 2011 taxes When your loss is deductible. Need to file my 2011 taxes   You can generally deduct a casualty or disaster area loss only in the tax year in which the casualty or disaster occurred. Need to file my 2011 taxes You can generally deduct a theft loss only in the year you discovered your property was stolen. Need to file my 2011 taxes However, you can choose to deduct disaster area losses on your return for the year immediately before the year of the disaster if the President has declared your area a federal disaster area. Need to file my 2011 taxes For details, see Disaster Area Losses in Publication 547. Need to file my 2011 taxes Comments and Suggestions We welcome your comments about this publication and your suggestions for future editions. Need to file my 2011 taxes You can write to us at the following address: Internal Revenue Service Individual Forms and Publications Branch SE:W:CAR:MP:T:I 1111 Constitution Ave. Need to file my 2011 taxes NW, IR-6526 Washington, DC 20224 We respond to many letters by telephone. Need to file my 2011 taxes Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence. Need to file my 2011 taxes You can email us at taxforms@irs. Need to file my 2011 taxes gov. Need to file my 2011 taxes Please put “Publications Comment” on the subject line. Need to file my 2011 taxes You can also send us comments from www. Need to file my 2011 taxes irs. Need to file my 2011 taxes gov/formspubs. Need to file my 2011 taxes Select “Comment on Tax Forms and Publications” under “Information about. Need to file my 2011 taxes ” Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products. Need to file my 2011 taxes Ordering forms and publications. Need to file my 2011 taxes   Visit www. Need to file my 2011 taxes irs. Need to file my 2011 taxes gov/formspubs/ to download forms and publications, call 1-800-829-3676, or write to the address below and receive a response within 10 days after your request is received. Need to file my 2011 taxes Internal Revenue Service 1201 N. Need to file my 2011 taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Tax questions. Need to file my 2011 taxes   If you have a tax question, check the information available on IRS. Need to file my 2011 taxes gov or call 1-800-829-1040. Need to file my 2011 taxes We cannot answer tax questions sent to either of the above addresses. Need to file my 2011 taxes How To Get Tax Help You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get information from the IRS in several ways. Need to file my 2011 taxes By selecting the method that is best for you, you will have quick and easy access to tax help. Need to file my 2011 taxes Free help with your return. Need to file my 2011 taxes   Free help in preparing your return is available nationwide from IRS-certified volunteers. Need to file my 2011 taxes The Volunteer Income Tax Assistance (VITA) program is designed to help low-moderate income taxpayers and the Tax Counseling for the Elderly (TCE) program is designed to assist taxpayers age 60 and older with their tax returns. Need to file my 2011 taxes Most VITA and TCE sites offer free electronic filing and all volunteers will let you know about credits and deductions you may be entitled to claim. Need to file my 2011 taxes To find the nearest VITA or TCE site, visit IRS. Need to file my 2011 taxes gov or call 1-800-906-9887 or 1-800-829-1040. Need to file my 2011 taxes   As part of the TCE program, AARP offers the Tax-Aide counseling program. Need to file my 2011 taxes To find the nearest AARP Tax-Aide site, call 1-888-227-7669 or visit AARP's website at www. Need to file my 2011 taxes aarp. Need to file my 2011 taxes org/money/taxaide. Need to file my 2011 taxes   For more information on these programs, go to IRS. Need to file my 2011 taxes gov and enter keyword “VITA” in the upper right-hand corner. Need to file my 2011 taxes Internet. Need to file my 2011 taxes You can access the IRS website at IRS. Need to file my 2011 taxes gov 24 hours a day, 7 days a week to: E-file your return. Need to file my 2011 taxes Find out about commercial tax preparation and e-file services available free to eligible taxpayers. Need to file my 2011 taxes Check the status of your 2011 refund. Need to file my 2011 taxes Go to IRS. Need to file my 2011 taxes gov and click on Where's My Refund. Need to file my 2011 taxes Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Need to file my 2011 taxes If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Need to file my 2011 taxes Have your 2011 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Need to file my 2011 taxes Download forms, including talking tax forms, instructions, and publications. Need to file my 2011 taxes Order IRS products online. Need to file my 2011 taxes Research your tax questions online. Need to file my 2011 taxes Search publications online by topic or keyword. Need to file my 2011 taxes Use the online Internal Revenue Code, regulations, or other official guidance. Need to file my 2011 taxes View Internal Revenue Bulletins (IRBs) published in the last few years. Need to file my 2011 taxes Figure your withholding allowances using the withholding calculator online at www. Need to file my 2011 taxes irs. Need to file my 2011 taxes gov/individuals. Need to file my 2011 taxes Determine if Form 6251 must be filed by using our Alternative Minimum Tax (AMT) Assistant available online at www. Need to file my 2011 taxes irs. Need to file my 2011 taxes gov/individuals. Need to file my 2011 taxes Sign up to receive local and national tax news by email. Need to file my 2011 taxes Get information on starting and operating a small business. Need to file my 2011 taxes Phone. Need to file my 2011 taxes Many services are available by phone. Need to file my 2011 taxes   Ordering forms, instructions, and publications. Need to file my 2011 taxes Call 1-800-TAX -FORM (1-800-829-3676) to order current-year forms, instructions, and publications, and prior-year forms and instructions. Need to file my 2011 taxes You should receive your order within 10 days. Need to file my 2011 taxes Asking tax questions. Need to file my 2011 taxes Call the IRS with your tax questions at 1-800-829-1040. Need to file my 2011 taxes Solving problems. Need to file my 2011 taxes You can get face-to-face help solving tax problems every business day in IRS Taxpayer Assistance Centers. Need to file my 2011 taxes An employee can explain IRS letters, request adjustments to your account, or help you set up a payment plan. Need to file my 2011 taxes Call your local Taxpayer Assistance Center for an appointment. Need to file my 2011 taxes To find the number, go to www. Need to file my 2011 taxes irs. Need to file my 2011 taxes gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Need to file my 2011 taxes TTY/TDD equipment. Need to file my 2011 taxes If you have access to TTY/TDD equipment, call 1-800-829-4059 to ask tax questions or to order forms and publications. Need to file my 2011 taxes TeleTax topics. Need to file my 2011 taxes Call 1-800-829-4477 to listen to pre-recorded messages covering various tax topics. Need to file my 2011 taxes Refund information. Need to file my 2011 taxes To check the status of your 2011 refund, call 1-800-829-1954 or 1-800-829-4477 (automated refund information 24 hours a day, 7 days a week). Need to file my 2011 taxes Wait at least 72 hours after the IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after mailing a paper return. Need to file my 2011 taxes If you filed Form 8379 with your return, wait 14 weeks (11 weeks if you filed electronically). Need to file my 2011 taxes Have your 2011 tax return available so you can provide your social security number, your filing status, and the exact whole dollar amount of your refund. Need to file my 2011 taxes If you check the status of your refund and are not given the date it will be issued, please wait until the next week before checking back. Need to file my 2011 taxes Other refund information. Need to file my 2011 taxes To check the status of a prior-year refund or amended return refund, call 1-800-829-1040. Need to file my 2011 taxes Evaluating the quality of our telephone services. Need to file my 2011 taxes To ensure IRS representatives give accurate, courteous, and professional answers, we use several methods to evaluate the quality of our telephone services. Need to file my 2011 taxes One method is for a second IRS representative to listen in on or record random telephone calls. Need to file my 2011 taxes Another is to ask some callers to complete a short survey at the end of the call. Need to file my 2011 taxes Walk-in. Need to file my 2011 taxes Many products and services are available on a walk-in basis. Need to file my 2011 taxes   Products. Need to file my 2011 taxes You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and publications. Need to file my 2011 taxes Some IRS offices, libraries, grocery stores, copy centers, city and county government offices, credit unions, and office supply stores have a collection of products available to print from a CD or photocopy from reproducible proofs. Need to file my 2011 taxes Also, some IRS offices and libraries have the Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes. Need to file my 2011 taxes Services. Need to file my 2011 taxes You can walk in to your local Taxpayer Assistance Center every business day for personal, face-to-face tax help. Need to file my 2011 taxes An employee can explain IRS letters, request adjustments to your tax account, or help you set up a payment plan. Need to file my 2011 taxes If you need to resolve a tax problem, have questions about how the tax law applies to your individual tax return, or you are more comfortable talking with someone in person, visit your local Taxpayer Assistance Center where you can spread out your records and talk with an IRS representative face-to-face. Need to file my 2011 taxes No appointment is necessary—just walk in. Need to file my 2011 taxes If you prefer, you can call your local Center and leave a message requesting an appointment to resolve a tax account issue. Need to file my 2011 taxes A representative will call you back within 2 business days to schedule an in-person appointment at your convenience. Need to file my 2011 taxes If you have an ongoing, complex tax account problem or a special need, such as a disability, an appointment can be requested. Need to file my 2011 taxes All other issues will be handled without an appointment. Need to file my 2011 taxes To find the number of your local office, go to  www. Need to file my 2011 taxes irs. Need to file my 2011 taxes gov/localcontacts or look in the phone book under United States Government, Internal Revenue Service. Need to file my 2011 taxes Mail. Need to file my 2011 taxes You can send your order for forms, instructions, and publications to the address below. Need to file my 2011 taxes You should receive a response within 10 days after your request is received. Need to file my 2011 taxes  Internal Revenue Service 1201 N. Need to file my 2011 taxes Mitsubishi Motorway Bloomington, IL 61705-6613 Taxpayer Advocate Service. Need to file my 2011 taxes   The Taxpayer Advocate Service (TAS) is your voice at the IRS. Need to file my 2011 taxes Our job is to ensure that every taxpayer is treated fairly, and that you know and understand your rights. Need to file my 2011 taxes We offer free help to guide you through the often-confusing process of resolving tax problems that you haven’t been able to solve on your own. Need to file my 2011 taxes Remember, the worst thing you can do is nothing at all. Need to file my 2011 taxes   TAS can help if you can’t resolve your problem with the IRS and: Your problem is causing financial difficulties for you, your family, or your business. Need to file my 2011 taxes You face (or your business is facing) an immediate threat of adverse action. Need to file my 2011 taxes You have tried repeatedly to contact the IRS but no one has responded, or the IRS has not responded to you by the date promised. Need to file my 2011 taxes   If you qualify for our help, we’ll do everything we can to get your problem resolved. Need to file my 2011 taxes You will be assigned to one advocate who will be with you at every turn. Need to file my 2011 taxes We have offices in every state, the District of Columbia, and Puerto Rico. Need to file my 2011 taxes Although TAS is independent within the IRS, our advocates know how to work with the IRS to get your problems resolved. Need to file my 2011 taxes And our services are always free. Need to file my 2011 taxes   As a taxpayer, you have rights that the IRS must abide by in its dealings with you. Need to file my 2011 taxes Our tax toolkit at www. Need to file my 2011 taxes TaxpayerAdvocate. Need to file my 2011 taxes irs. Need to file my 2011 taxes gov can help you understand these rights. Need to file my 2011 taxes   If you think TAS might be able to help you, call your local advocate, whose number is in your phone book and on our website at www. Need to file my 2011 taxes irs. Need to file my 2011 taxes gov/advocate. Need to file my 2011 taxes You can also call our toll-free number at 1-877-777-4778 or TTY/TDD 1-800-829-4059. Need to file my 2011 taxes   TAS also handles large-scale or systemic problems that affect many taxpayers. Need to file my 2011 taxes If you know of one of these broad issues, please report it to us through our Systemic Advocacy Management System at www. Need to file my 2011 taxes irs. Need to file my 2011 taxes gov/advocate. Need to file my 2011 taxes Low Income Taxpayer Clinics (LITCs). Need to file my 2011 taxes   Low Income Taxpayer Clinics (LITCs) are independent from the IRS. Need to file my 2011 taxes Some clinics serve individuals whose income is below a certain level and who need to resolve a tax problem. Need to file my 2011 taxes These clinics provide professional representation before the IRS or in court on audits, appeals, tax collection disputes, and other issues for free or for a small fee. Need to file my 2011 taxes Some clinics can provide information about taxpayer rights and responsibilities in many different languages for individuals who speak English as a second language. Need to file my 2011 taxes For more information and to find a clinic near you, see the LITC page on www. Need to file my 2011 taxes irs. Need to file my 2011 taxes gov/advocate or IRS Publication 4134, Low Income Taxpayer Clinic List. Need to file my 2011 taxes This publication is also available by calling 1-800-829-3676 or at your local IRS office. Need to file my 2011 taxes Free tax services. Need to file my 2011 taxes   Publication 910, IRS Guide to Free Tax Services, is your guide to IRS services and resources. Need to file my 2011 taxes Learn about free tax information from the IRS, including publications, services, and education and assistance programs. Need to file my 2011 taxes The publication also has an index of over 100 TeleTax topics (recorded tax information) you can listen to on the telephone. Need to file my 2011 taxes The majority of the information and services listed in this publication are available to you free of charge. Need to file my 2011 taxes If there is a fee associated with a resource or service, it is listed in the publication. Need to file my 2011 taxes   Accessible versions of IRS published products are available on request in a variety of alternative formats for people with disabilities. Need to file my 2011 taxes DVD for tax products. Need to file my 2011 taxes You can order Publication 1796, IRS Tax Products DVD, and obtain: Current-year forms, instructions, and publications. Need to file my 2011 taxes Prior-year forms, instructions, and publications. Need to file my 2011 taxes Tax Map: an electronic research tool and finding aid. Need to file my 2011 taxes Tax law frequently asked questions. Need to file my 2011 taxes Tax Topics from the IRS telephone response system. Need to file my 2011 taxes Internal Revenue Code—Title 26 of the U. Need to file my 2011 taxes S. Need to file my 2011 taxes Code. Need to file my 2011 taxes Links to other Internet based Tax Research Materials. Need to file my 2011 taxes Fill-in, print, and save features for most tax forms. Need to file my 2011 taxes Internal Revenue Bulletins. Need to file my 2011 taxes Toll-free and email technical support. Need to file my 2011 taxes Two releases during the year. Need to file my 2011 taxes  – The first release will ship the beginning of January 2012. Need to file my 2011 taxes  – The final release will ship the beginning of March 2012. Need to file my 2011 taxes Purchase the DVD from National Technical Information Service (NTIS) at www. Need to file my 2011 taxes irs. 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The Need To File My 2011 Taxes

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