How should I choose the right MACRS table in a CPA REG question?
I can do the arithmetic once I know the table, but I keep choosing the wrong property class or convention.
Choose the lane before choosing the percentage. First remove land or other nondepreciable basis. Then decide whether the depreciable asset is real property or personal property. Real property leads to residential rental or nonresidential real property recovery periods and the mid-month convention. Personal property leads to a class life such as five-year or seven-year property, usually with half-year convention unless the mid-quarter test is triggered.
Once the lane is clear, use the placed-in-service date, recovery year, and any disposition facts to select the percentage. Most wrong answers come from skipping classification and grabbing a familiar table too early.
- Related article:
cpa-macrs-property-class-convention-map - Related question-bank items:
five-year-versus-seven-year-property,form-4562-macrs-reporting
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