REG CPA Exam: How to Calculate Depreciation Using MACRS, Including Identifying the Recovery Period and Convention

Introduction

Overview of MACRS (Modified Accelerated Cost Recovery System)

Definition and Purpose

In this article, we’ll cover how to calculate depreciation using MACRS, including identifying the recovery period and convention. The Modified Accelerated Cost Recovery System (MACRS) is the current method of depreciation required by the United States Internal Revenue Service (IRS) for depreciating assets. Depreciation is the process of allocating the cost of tangible property over its useful life. MACRS allows for the accelerated depreciation of assets, meaning higher depreciation expenses are recorded in the earlier years of an asset’s life, which can provide tax benefits by reducing taxable income in those early years.

The primary purpose of MACRS is to provide a systematic and rational method for businesses to recover the cost of capital investments through annual deductions. This method incentivizes investment by allowing businesses to write off the cost of their investments more quickly than through other methods such as straight-line depreciation.

Importance in Tax Calculations and Compliance

MACRS plays a crucial role in tax calculations and compliance. By using MACRS, businesses can accurately calculate the depreciation deductions they are entitled to each year. These deductions reduce the taxable income, thereby lowering the tax liability. Compliance with MACRS guidelines ensures that businesses are adhering to the IRS regulations, which helps avoid potential penalties and audits.

For individuals preparing for the REG CPA exam, understanding MACRS is essential. It is a significant topic within the exam’s content outline, and mastery of this system is critical for accurate tax preparation and planning.

Brief History and Legislative Background

The MACRS system was introduced as part of the Tax Reform Act of 1986. This Act was a significant overhaul of the United States tax code, aimed at simplifying the tax system and making it more equitable. Prior to MACRS, the Accelerated Cost Recovery System (ACRS) was used, which was itself introduced by the Economic Recovery Tax Act of 1981.

The introduction of MACRS marked a shift towards a more structured and uniform method of depreciation. It established clear guidelines and classifications for different types of property, standardizing the recovery periods and conventions used in depreciation calculations. This system was designed to provide a more predictable and reliable framework for businesses to recover their investment costs over time.

Since its introduction, MACRS has undergone several updates and modifications to address changes in the economic environment and tax policy. However, its fundamental principles have remained consistent, continuing to serve as the cornerstone of depreciation accounting for tax purposes in the United States.

Understanding MACRS

Basic Concepts

What is Depreciation?

Depreciation is an accounting method used to allocate the cost of a tangible asset over its useful life. This process reflects the reduction in the value of the asset as it is used in business operations over time. Depreciation allows businesses to match the expense of using an asset with the revenue it generates, providing a more accurate picture of profitability. For tax purposes, depreciation is essential because it reduces taxable income, thus lowering the tax liability.

Why MACRS is Used Over Other Methods (e.g., Straight-Line Depreciation)

The Modified Accelerated Cost Recovery System (MACRS) is preferred over other depreciation methods, such as straight-line depreciation, due to its accelerated nature. Under MACRS, higher depreciation expenses are recorded in the initial years of an asset’s life, which can lead to significant tax benefits:

1. Immediate Tax Savings: By front-loading depreciation expenses, businesses can reduce their taxable income more substantially in the early years of an asset’s life, resulting in lower tax payments during those years.
2. Cash Flow Benefits: The tax savings from accelerated depreciation improve cash flow, enabling businesses to reinvest the savings back into their operations sooner.

While straight-line depreciation spreads the cost evenly over the asset’s useful life, MACRS provides a more advantageous tax treatment by allowing greater deductions in the initial years.

General Benefits of Using MACRS

The benefits of using MACRS include:

1. Tax Deferral: Accelerated depreciation defers tax liabilities to later years, which can be beneficial for businesses looking to optimize their cash flow.
2. Investment Incentives: By allowing quicker recovery of capital investments, MACRS encourages businesses to invest in new equipment and property, fostering growth and modernization.
3. Compliance and Standardization: MACRS provides a clear, standardized method for calculating depreciation, which simplifies compliance with IRS regulations and reduces the risk of errors in tax reporting.

Property Classification

Types of Property Eligible for MACRS

MACRS applies to most tangible depreciable property used in a trade or business or for the production of income. Eligible properties include:

1. Residential Rental Property: Buildings or structures where 80% or more of the gross rental income is from dwelling units.
2. Nonresidential Real Property: Commercial buildings and other non-residential structures.
3. Tangible Personal Property: Machinery, vehicles, furniture, equipment, and other movable assets.

Tangible vs. Intangible Property

• Tangible Property: This includes physical assets such as machinery, buildings, vehicles, and equipment. Tangible property is generally eligible for MACRS depreciation.
• Intangible Property: This includes non-physical assets such as patents, trademarks, and goodwill. While some intangible assets can be amortized, they are not eligible for MACRS depreciation.

Personal Property vs. Real Property

• Personal Property: Refers to movable items used in business, such as computers, machinery, and office equipment. Personal property typically has shorter recovery periods under MACRS.
• Real Property: Refers to immovable property, including land and buildings. Real property generally has longer recovery periods, with residential rental property depreciated over 27.5 years and nonresidential real property over 39 years.

Understanding the classification of property is crucial for applying MACRS correctly, as it determines the applicable recovery period and convention used for depreciation calculations.

Determining the Recovery Period

Classification of Property Types and Their Recovery Periods

Residential Rental Property

Residential rental property is defined as real property that derives at least 80% of its gross rental income from dwelling units. The recovery period for residential rental property under MACRS is 27.5 years. This means the cost of the property is depreciated over 27.5 years using the straight-line method and the mid-month convention.

Nonresidential Real Property

Nonresidential real property includes commercial buildings and other structures that are not used for residential purposes. Under MACRS, the recovery period for nonresidential real property is 39 years. Like residential rental property, this property is depreciated using the straight-line method and the mid-month convention.

Tangible Personal Property

Tangible personal property includes machinery, equipment, vehicles, furniture, and other assets that are not permanently affixed to a building. These assets have shorter recovery periods under MACRS, which are classified based on their specific use and nature:

• 5-Year Property: Includes automobiles, computers, office equipment, and appliances. These assets are depreciated over 5 years.
• 7-Year Property: Includes office furniture, fixtures, and equipment not classified as 5-year property. These assets are depreciated over 7 years.
• 15-Year Property: Includes certain improvements made to nonresidential real property, such as landscaping and parking lots. These assets are depreciated over 15 years.

Specific Examples

• 5-Year Property: A business purchases a new delivery truck for $50,000. The recovery period for this truck is 5 years under MACRS, and the depreciation expense will be calculated accordingly.
• 7-Year Property: An office purchases new desks and chairs for $10,000. The recovery period for these furniture items is 7 years.
• 27.5-Year Property: A rental property owner buys a residential rental property for $200,000. The recovery period for this property is 27.5 years.
• 39-Year Property: A company constructs a new office building costing $1,000,000. The recovery period for this nonresidential real property is 39 years.

IRS Guidelines and Tables

How to Use IRS Tables to Determine Recovery Periods

The IRS provides detailed tables in Publication 946, “How to Depreciate Property,” which outline the recovery periods for various types of property. These tables help taxpayers determine the correct recovery period based on the property’s classification and use.

1. Identify the Property Type: Determine whether the asset is residential rental property, nonresidential real property, or tangible personal property.
2. Refer to IRS Tables: Use the IRS tables to find the appropriate recovery period for the specific type of property. The tables provide a clear breakdown of recovery periods based on asset classes and categories.
3. Apply the Correct Method: Depending on the property type, apply the straight-line method or the declining balance method as specified by the IRS for that asset class.

Examples and Case Studies

Example 1: Residential Rental Property

A taxpayer purchases a residential rental property for $300,000. According to the IRS tables, the recovery period for residential rental property is 27.5 years. Using the straight-line method and the mid-month convention, the annual depreciation expense is calculated as follows:

\(\text{Annual Depreciation} = \frac{\$300,000}{27.5} = \$10,909.09 \)

Example 2: Tangible Personal Property

A company buys office equipment for $20,000, classified as 5-year property. According to the IRS tables, the 5-year property uses the 200% declining balance method, switching to the straight-line method when it maximizes the deduction. The first-year depreciation percentage is 20%.

First-Year Depreciation = $20,000 x 20% = $4,000

Case Study: Office Building

A business constructs a nonresidential real property (office building) for $500,000. According to the IRS tables, the recovery period for nonresidential real property is 39 years. Using the straight-line method and the mid-month convention, the annual depreciation expense is:

\(\text{Annual Depreciation} = \frac{\$500,000}{39} = \$12,820.51 \)

These examples illustrate how to use the IRS tables to determine the correct recovery periods and calculate the annual depreciation expense for various types of property under MACRS.

Identifying the Convention

Conventions in MACRS

Definition and Purpose of Conventions in Depreciation

In the context of MACRS, conventions are rules established by the IRS to determine how depreciation is applied within the year an asset is placed in service or disposed of. These conventions simplify the depreciation process by providing a standard approach to apportioning depreciation deductions for the first and last years of the asset’s useful life.

The purpose of these conventions is to ensure consistency and fairness in the application of depreciation, accounting for the fact that assets are not always acquired or disposed of at the beginning or end of a fiscal year.

Types of Conventions: Half-Year Convention, Mid-Quarter Convention, and Mid-Month Convention

1. Half-Year Convention The Half-Year Convention assumes that all property placed in service or disposed of during a tax year is placed in service or disposed of at the midpoint of that year. This means that for the first year, only half of the annual depreciation is allowed, and the same applies to the year of disposal.
2. Mid-Quarter Convention The Mid-Quarter Convention applies if more than 40% of the total depreciable basis of property is placed in service during the last three months of the tax year. Under this convention, assets are assumed to be placed in service or disposed of at the midpoint of the quarter in which they were acquired or disposed of.
3. Mid-Month Convention The Mid-Month Convention is used for real property, including residential rental and nonresidential real property. This convention assumes that property is placed in service or disposed of at the midpoint of the month. As a result, a half-month’s depreciation is allowed for the month the property is placed in service or disposed of.

Application of Conventions

When and How Each Convention is Applied

1. Half-Year Convention The Half-Year Convention is the default convention for most tangible personal property. It is applied unless the Mid-Quarter Convention is triggered.
   Application:
   • Used when less than 40% of the total basis of property is placed in service in the last quarter of the tax year.
2. Mid-Quarter Convention The Mid-Quarter Convention is applied when more than 40% of the total basis of depreciable personal property is placed in service during the last three months of the tax year.
   Application:
   • Triggered automatically if the 40% threshold is met.
   • Requires specific calculations for each quarter to determine the appropriate depreciation amount.
3. Mid-Month Convention The Mid-Month Convention is mandatory for all real property, regardless of when it is placed in service during the year.
   Application:
   • Automatically applied to residential rental property and nonresidential real property.
   • Depreciation is calculated assuming the property is placed in service or disposed of at the midpoint of the month.

Impact on Depreciation Calculations

1. Half-Year Convention Under the Half-Year Convention, only half of the first year’s depreciation is allowed, spreading the remaining depreciation evenly over the recovery period.
   Impact:
   • Simplifies calculations by assuming all assets are acquired at the midpoint of the year.
   • Reduces the first and last year’s depreciation deductions.
2. Mid-Quarter Convention The Mid-Quarter Convention requires calculating depreciation based on the quarter the property is placed in service, resulting in varying first-year depreciation amounts depending on the quarter of acquisition.
   Impact:
   • More complex calculations as each quarter’s acquisition must be tracked separately.
   • Prevents significant end-of-year purchases to maximize first-year depreciation.
3. Mid-Month Convention For the Mid-Month Convention, depreciation is calculated from the midpoint of the month of acquisition, resulting in a half-month’s depreciation for the first and last months.
   Impact:
   • Provides a more precise calculation for real property depreciation.
   • Results in slightly less first-year depreciation compared to the Half-Year Convention.

Examples Illustrating Each Convention

1. Half-Year Convention Example A business purchases office equipment (5-year property) for $10,000 on July 1st. Using the Half-Year Convention, only half of the first year’s depreciation is allowed:
   First-Year Depreciation = $10,000 x 20% x 0.5 = $1,000
2. Mid-Quarter Convention Example A business buys machinery (7-year property) for $50,000 on November 15th. Since more than 40% of the total basis was placed in service in the last quarter, the Mid-Quarter Convention applies:
   First-Year Depreciation (Q4) = $50,000 x 10.71% = $5,355
3. Mid-Month Convention Example A company constructs a nonresidential building for $300,000, placed in service on March 20th. Using the Mid-Month Convention:
   \(First-Year Depreciation} = \frac{\$300,000}{39} \times \frac{9.5}{12} = \$6,058.97 \)

Understanding and correctly applying these conventions is crucial for accurate MACRS depreciation calculations and ensuring compliance with IRS regulations.

Calculating Depreciation Using MACRS

Steps to Calculate Depreciation

Determine the Property’s Basis

The basis of the property is generally its cost, including purchase price, sales tax, freight, installation, and any other expenses necessary to acquire the property and prepare it for use. It is essential to establish the correct basis because all depreciation calculations will be based on this amount.

Identify the Property Class and Recovery Period

Determine the classification of the property to identify the correct recovery period. The IRS provides specific guidelines and tables to classify property types and their associated recovery periods:

• Residential Rental Property: 27.5 years
• Nonresidential Real Property: 39 years
• Tangible Personal Property: Varies (e.g., 5-year, 7-year, 15-year property)

Apply the Appropriate Convention

Select the appropriate convention based on the type and timing of the property placed in service:

• Half-Year Convention: Default for most personal property.
• Mid-Quarter Convention: Applies if more than 40% of the property is placed in service in the last quarter.
• Mid-Month Convention: Used for all real property.

Use the IRS MACRS Tables to Find the Depreciation Percentage

Utilize the IRS MACRS tables to determine the annual depreciation percentage. These tables specify the percentage of the asset’s basis that can be depreciated each year, based on the property class, recovery period, and applicable convention.

Example Calculations

Step-by-Step Calculations for Different Types of Property

1. 5-Year Property (Half-Year Convention) Scenario: A company purchases computer equipment for $20,000 on March 1st.
   Steps:
   • Determine the basis: $20,000
   • Identify property class and recovery period: 5-year property
   • Apply the convention: Half-Year Convention
   • Use the IRS MACRS table for 5-year property under the Half-Year Convention to find the first-year depreciation percentage: 20% Calculation:
     First-Year Depreciation = $20,000 x 20% = $4,000
2. 7-Year Property (Mid-Quarter Convention) Scenario: A business buys office furniture for $15,000 on October 15th. More than 40% of the total basis of the property was placed in service in the last quarter.
   Steps:
   • Determine the basis: $15,000
   • Identify property class and recovery period: 7-year property
   • Apply the convention: Mid-Quarter Convention (Q4)
   • Use the IRS MACRS table for 7-year property under the Mid-Quarter Convention to find the first-year depreciation percentage for Q4: 3.57%
     Calculation:
     First-Year Depreciation = $15,000 x 3.57% = $535.50
3. Nonresidential Real Property (Mid-Month Convention) Scenario: A company constructs a new office building for $500,000, placed in service on July 20th.
   Steps:
   • Determine the basis: $500,000
   • Identify property class and recovery period: Nonresidential real property, 39 years
   • Apply the convention: Mid-Month Convention
   • Use the IRS MACRS table for nonresidential real property under the Mid-Month Convention to calculate the first-year depreciation (using straight-line method):
     Calculation:
     \(\text{Annual Depreciation} = \frac{\$500,000}{39} = \$12,820.51 \)
     \(\text{First-Year Depreciation} = \$12,820.51 \times \frac{5.5}{12} = \$5,875.23 \)

Comparison with Other Depreciation Methods

Straight-Line Depreciation:

• Example: A company purchases equipment for $20,000 with a useful life of 5 years.
• Calculation:
  \(\text{Annual Depreciation} = \frac{\$20,000}{5} = \$4,000 \)

Comparison:

• MACRS (Half-Year Convention): Accelerates depreciation in the earlier years.
  First-Year Depreciation = $20,000 x 20% = $4,000
• Straight-Line: Spreads the cost evenly over the asset’s useful life.
  Annual Depreciation = $4,000

MACRS provides greater tax benefits in the initial years due to accelerated depreciation, while the straight-line method offers consistent deductions throughout the asset’s useful life.

These examples and comparisons illustrate how to apply MACRS to different types of property, highlighting the benefits of accelerated depreciation over other methods.

Special Rules and Considerations

Bonus Depreciation

Definition and Eligibility

Bonus depreciation is an additional depreciation allowance that taxpayers can claim in the first year that qualifying property is placed in service. It allows for a substantial percentage of the property’s cost to be deducted immediately, providing significant tax savings.

• Definition: Bonus depreciation permits taxpayers to depreciate a large percentage of the cost of eligible property in the year it is placed in service. As of recent legislation, this percentage can be up to 100%.
• Eligibility: Property must generally meet the following criteria to qualify:
• The property must have a recovery period of 20 years or less.
• It must be new or used property acquired and placed in service after September 27, 2017.
• It must be used predominantly in the United States.
• Certain property types, such as qualified improvement property, may also qualify.

How It Interacts with MACRS

Bonus depreciation is taken before calculating the regular MACRS depreciation deduction. The remaining basis of the property, after applying bonus depreciation, is then depreciated using the MACRS method over the property’s recovery period.

Example:
A business purchases equipment for $100,000, qualifying for 100% bonus depreciation.

1. Bonus Depreciation:
   Bonus Depreciation = $100,000 x 100% = $100,000
2. Remaining Basis for MACRS:
   Remaining Basis = $100,000 – $100,000 = $0

In this case, no further MACRS depreciation is calculated because the entire cost was written off as bonus depreciation.

Section 179 Deduction

Overview and Limits

The Section 179 deduction allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year, up to certain limits.

• Overview: Section 179 enables businesses to deduct the cost of certain types of property as an expense rather than depreciating it over time. This deduction is particularly beneficial for small and medium-sized businesses.
• Limits:
• For the 2023 tax year, the maximum Section 179 deduction is $1,160,000.
• The deduction begins to phase out dollar-for-dollar when total equipment purchases exceed $2,890,000.
• The total amount of Section 179 deduction and bonus depreciation cannot exceed the business’s total taxable income for the year.

Coordination with MACRS

When both Section 179 and MACRS apply, Section 179 is taken first. After applying the Section 179 deduction, any remaining basis is eligible for bonus depreciation (if applicable), followed by regular MACRS depreciation on the remaining basis.

Example:
A company purchases machinery for $1,200,000.

1. Section 179 Deduction:
   Section 179 Deduction = $1,160,000
2. Remaining Basis for Bonus Depreciation and MACRS:
   Remaining Basis = $1,200,000 – $1,160,000 = $40,000

If bonus depreciation applies, it would be taken on the remaining $40,000 basis before calculating MACRS depreciation.

Changes and Adjustments

Handling Changes in Use

When the use of a property changes, such as converting personal property to business use or vice versa, adjustments must be made to the depreciation calculations.

• Conversion to Business Use: If personal property is converted to business use, depreciation is calculated based on the lesser of the property’s fair market value or its adjusted basis at the time of conversion.
• Conversion to Personal Use: When business property is converted to personal use, depreciation deductions cease, but previously claimed depreciation is not recaptured until the property is sold or disposed of.

Accounting for Improvements and Repairs

• Improvements: Significant improvements or additions to a property increase its basis and are depreciated separately over the appropriate recovery period using the applicable convention. For example, an addition to a building would be depreciated over 39 years as nonresidential real property.
• Repairs: Ordinary repairs and maintenance that do not significantly increase the value or extend the life of the property are expensed in the year incurred and do not affect the depreciation basis.

Example:
A business makes a significant improvement to an office building costing $50,000.

1. Determine the Basis and Recovery Period:
   Improvement Basis = $50,000
   Recovery Period = 39 years (nonresidential real property)
2. Depreciation Calculation Using MACRS:
   • Apply the Mid-Month Convention.
   • Calculate annual depreciation:
     \(\text{Annual Depreciation} = \frac{\$50,000}{39} \times \frac{11.5}{12} = \$1,235.04 \)

By understanding and applying these special rules and considerations, businesses can optimize their depreciation deductions and ensure compliance with IRS regulations, while maximizing tax benefits.

Compliance and Reporting

Tax Forms and Reporting Requirements

Forms Used to Report Depreciation (e.g., Form 4562)

To report depreciation deductions, taxpayers must use specific IRS forms. The primary form for reporting depreciation is Form 4562, Depreciation and Amortization.

• Form 4562: This form is used to:
  • Report depreciation and amortization.
  • Claim a Section 179 deduction.
  • Report information on the use of listed property (e.g., vehicles, computers).
  • Calculate depreciation for assets placed in service during the tax year.

Key sections of Form 4562 include:

• Part I: Election to Expense Certain Property Under Section 179.
• Part II: Special Depreciation Allowance and Other Depreciation.
• Part III: MACRS Depreciation.
• Part V: Listed Property.

Record-Keeping Requirements

Maintaining accurate and detailed records is crucial for compliance with IRS regulations. Good record-keeping helps support depreciation deductions and ensures readiness in case of an audit.

• Property Records: Keep records of the cost, date of acquisition, and detailed descriptions of each asset.
• Depreciation Schedules: Maintain schedules that show the annual depreciation deductions for each asset, including the method and conventions used.
• Supporting Documentation: Keep receipts, invoices, and any other documents that support the acquisition and cost of the property.
• Use and Disposition Records: Record information about how and when property is used and disposed of, including any changes in use.

Common Mistakes and How to Avoid Them

Typical Errors in MACRS Calculations

Errors in MACRS calculations can lead to inaccurate tax reporting and potential penalties. Common mistakes include:

1. Incorrect Property Classification: Misclassifying property types and recovery periods can lead to incorrect depreciation calculations.
2. Ignoring Conventions: Failing to apply the correct convention (Half-Year, Mid-Quarter, Mid-Month) can result in over- or under-depreciation.
3. Incorrect Basis Calculation: Not properly determining the basis of the property, including additional costs like installation and freight.
4. Missing Bonus Depreciation and Section 179: Overlooking the opportunities for bonus depreciation or Section 179 deductions.
5. Inconsistent Record-Keeping: Inadequate or inconsistent records can make it difficult to support depreciation claims during an audit.

Best Practices for Ensuring Compliance

To ensure compliance and avoid common mistakes, follow these best practices:

1. Accurate Classification: Properly classify property to determine the correct recovery period and depreciation method.
2. Apply Conventions Correctly: Understand and apply the appropriate convention based on when the property was placed in service.
3. Verify Property Basis: Carefully calculate the basis of the property, including all associated costs.
4. Leverage Tax Benefits: Utilize bonus depreciation and Section 179 deductions where applicable to maximize tax benefits.
5. Maintain Detailed Records: Keep thorough and organized records for all assets, including acquisition costs, depreciation schedules, and supporting documents.
6. Use IRS Resources: Refer to IRS publications, such as Publication 946, for guidance on depreciation rules and calculations.
7. Consult Professionals: When in doubt, consult with tax professionals or accountants who are knowledgeable in MACRS and depreciation rules to ensure accurate reporting.

By following these guidelines and best practices, taxpayers can ensure accurate MACRS calculations, optimize their tax benefits, and maintain compliance with IRS regulations.

Conclusion

Recap of Key Points

Importance of Understanding MACRS for Tax Compliance

Understanding the Modified Accelerated Cost Recovery System (MACRS) is crucial for tax compliance and financial planning. MACRS provides a systematic approach to depreciating assets, allowing businesses to recover the cost of their investments through annual tax deductions. Mastering MACRS ensures accurate tax reporting, maximizes tax benefits, and helps avoid penalties and audits.

Summary of Steps to Calculate Depreciation

1. Determine the Property’s Basis: Establish the cost of the property, including all associated acquisition expenses.
2. Identify the Property Class and Recovery Period: Classify the property to determine the applicable recovery period using IRS guidelines.
3. Apply the Appropriate Convention: Use the correct convention (Half-Year, Mid-Quarter, Mid-Month) based on the type and timing of the property acquisition.
4. Use the IRS MACRS Tables to Find the Depreciation Percentage: Refer to the IRS MACRS tables to determine the annual depreciation percentage and calculate the depreciation expense.

Final Tips for Exam Preparation

Tips and Strategies for Mastering MACRS for the REG CPA Exam

1. Understand Key Concepts: Focus on the fundamental principles of MACRS, including property classification, recovery periods, and depreciation conventions.
2. Practice Calculations: Work through multiple examples and practice problems to become comfortable with the steps and calculations involved in applying MACRS.
3. Memorize Key Tables and Figures: Familiarize yourself with the IRS MACRS tables and important recovery periods for different property classes.
4. Use Mnemonics and Memory Aids: Develop mnemonic devices to remember the conventions and classification rules.
5. Review IRS Publications: Study IRS Publication 946, “How to Depreciate Property,” for detailed guidance and examples directly from the source.

Additional Resources for Further Study

1. IRS Publications:
   • Publication 946, “How to Depreciate Property”
   • Form 4562 Instructions
2. CPA Review Courses: Enroll in CPA review courses that cover MACRS and other tax topics in detail.
3. Online Tutorials and Videos: Utilize online tutorials, webinars, and video lectures that explain MACRS concepts and calculations.
4. Practice Exams: Take practice exams to test your knowledge and identify areas that need further review.
5. Study Groups: Join or form study groups to discuss MACRS topics and solve practice problems collaboratively.

By following these tips and utilizing available resources, you can effectively prepare for the REG CPA exam and gain a comprehensive understanding of MACRS. Mastery of this topic will not only help you pass the exam but also enhance your skills in tax compliance and financial management.