Depreciation Methods

The Fixed Assets form offers four methods that are specifically MACRS methods within the General Depreciation System (GDS) or Alternative Depreciation System (ADS) for assets placed in service after 1986.

  • 200DB
  • 150DB
  • SL/GDS
  • SL/ADS

When you select one of the methods below with the appropriate convention, the Fixed Assets form is calculating the depreciation using MACRS table percentages unless the asset is placed in service in a short year.

  • 200DB with HY or MQ
  • 150 HY or MQ
  • SL/GDS HY, MQ or MM
  • SL/ADS HY, MQ or MM

If placed in service in a short tax year, the MACRS table percentages are not used, but the Fixed Assets form will calculate the yearly depreciation based on the months in service and the convention. The simplified method is used to calculate depreciation in the years following a short tax year (see IRS Publication 946 for a full explanation).

  • SL - The straight line method can be selected for pre or post 1986 assets. When the SL method is selected a field is available to enter salvage value.
  • A18 - 18 year property placed in service 3/16/1984 – 6/22/1984 (assets fully depreciated by 2004)
  • A18b - 18-yr real property placed in service 6/23/1984 – 5/8/1985 (assets fully depreciated by 2005)
  • A19 - 19-yr real property placed in service 5/9/1985 – 12/31/1986 (assets fully depreciated 2006)

The Fixed Assets form does not currently support the alternate periods for 18 and 19 year property.

  • SYD - sum-of-the-years-digits - This method originated for pre-1981 assets but can be used for a current asset if you elect out of using MACRS. The depreciation is determined by multiplying the cost by a fraction (numerator is the remaining life and the denominator is the sum of the digits (years) in the useful life.
  • PRE - PRE method can be used for property placed in service before 1987 (Pre-MACRS or ACRS). This method does not calculate so enter any depreciation manually.
  • Other - assets are assigned to this method when they are imported from other software and the Fixed Assets form does not have the same method. In order to calculate future depreciation after importing, you will need to assign a method supported by the ATX tax program.
  • None - used for land and other non-depreciable assets.

See Also:

Depreciation