What is the Modified Accelerated Cost Recovery System (MACRS)?
The Modified Accelerated Cost Recovery System (or MACRS) is required for some property but is elective for others. Calculated by the General Depreciation System (GDS) or by the Alternative Depreciation System (ADS), the MACRS is a form of accelerated depreciation. More depreciation expense is claimed early in the depreciable life, and less is claimed later. Here are some common assets and their approved depreciation schedule: • Computer Equipment: Computers fall under the 5-year MACRS class. A 60-month depreciable life is spread across 6 fiscal years (usually at the midpoint of the first year). • Computer Software: Software is considered an intangible asset and, as a general rule, is exempt from the 15-year amortization. Software usually depreciates using the straight-line method with a useful life of 36 months, beginning on the first day of the month that it’s placed into service. • Office Furniture: Furniture falls into the 7-year MACRS class. This is considered property with a class
