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I. Pre Start-up/Assessing Your Business Idea II. Starting Your Business/Keeping Records III. Guidance for Special Types of Businesses IV. Hiring Employees V. Preparing Your Tax Return(s) and Information Returns VI. Filing Your Returns and Paying Taxes - Including Electronic Options VII. Post-Filing Issues VIII. Other Tax Issues of Interest IX. Index of Business Forms and Publications Including: Highlights of the New Tax Law Changes X. Changing Your Business or Getting Out of Business XI. Alerts and Tutorials XII. Directory of Internet and Other Resources
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Introduction

This chapter discusses the Modified Accelerated Cost RecoverySystem (MACRS). It contains the following sections.

  • MACRS Defined. This section defines MACRS. Itdiscusses both MACRS systems, the General Depreciation System (GDS)and the Alternative Depreciation System (ADS).
  • What Can Be Depreciated Under MACRS. This sectionidentifies what you can depreciate under MACRS, when to use GDS, andwhen to use ADS.
  • What Cannot Be Depreciated Under MACRS. Thissection identifies property that you cannot depreciate underMACRS.
  • Election to Exclude Property From MACRS. Thissection explains how you make an election to exclude certain propertyfrom MACRS.
  • How To Figure the Deduction Using Percentage Tables.This section discusses how to figure your MACRS deduction usingthe MACRS percentage tables. It explains basis, property classes andrecovery periods, placed-in-service date, conventions, depreciationmethods, and the MACRS percentage tables. It provides examples andcontains a MACRS Worksheet to help you prepare Form4562.
  • How To Figure the Deduction Without Using the Tables.This section explains how you can figure your MACRS deductionwithout using the rates in the percentage tables. It discusses thevarious depreciation methods you can use. Further, it discussesconventions and how to apply them. This section contains numerousexamples employing different depreciation methods. Lastly, itdiscusses how you can take a MACRS deduction in a short taxyear.
  • Dispositions. This section discusses how youdepreciate property in the year of disposition if you dispose of itbefore the end of the recovery period. It discusses the different waysof figuring depreciation depending on the convention you used. Thissection also briefly discusses depreciation recapture.
  • General Asset Account. This section discusses howyou depreciate property in a general asset account. It also tells youhow to group assets that you place in a general asset account. Alsoincluded in this section is a discussion on how you treat property ina general asset account when you transfer ownership or permanentlywithdraw it from use in your trade or business or from the productionof income. Finally, this section discusses how you make the electionto use a general asset account.

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