Variations on MACRS
The normal MACRS depreciation tables are the most commonly used and generally the most favorable to taxpayers, because they provide for the largest possible deductions in the earliest years. However, you do have the option of using slower depreciation methods.
While normal MACRS uses a 200 percent declining balance method for 3-, 5-, 7- and 10- year property, there is also a 150 percent declining balance method that is available as an option for most business owners, and that must be used for all farm property, and for all nonfarm property in the 15- and 20-year property classes. Most often the 150 percent declining balance method is used for the same recovery periods as normal MACRS, but you do have the option of using the longer ADS recovery periods as described below.
Normal MACRS uses a straight-line method for real estate, which is property in the 27.5- or 39-year class. However, you can also choose to use straight-line depreciation for any other property, if you wish.
Generally, if you exercise your option to use any of the variations of MACRS you must use it for all assets of the same class that you placed in service during the year. Once you make the election you cannot change it.
For more information on using any of these alternative MACRS methods, and for the tables showing the applicable depreciation percentages, see the IRS's free publication 946, How to Depreciate Property, available on the Internet at http://www.irs.gov or by calling I-800-TAX-FORM.