ACRS Table Short-Year Calculation

The short-year calculation for assets using the ACRS table method differs for personal and real property.

Personal Property

The amount of ACRS deduction for a short tax year is prorated on a 12-month basis. The ACRS deduction is computed by determining the recovery deduction for a full year and multiplying it by the short-year fraction. The numerator for this equation is the number of months in the short tax year; the denominator is 12. Recovery allowances for years in a recovery period following a short tax year are determined without regard to the short tax year.

The unrecovered short-year allowance is the difference between the recovery allowance permitted for the short tax year and the recovery allowance which would have been allowed if the year were not a short tax year. It is claimed in the tax year following the last tax year of the recovery period.

Real Property

The half-rate rule for short tax years does not apply to 15-, 18-, or 19-year real property in the year of acquisition or disposition. The deduction is based on the number of months in which the property was in service during the short tax year.

When a short year occurs in a year other than the acquisition year or disposal year, the table amount for the short year is prorated according to the number of months in the short year. The remainder of the table factor is taken as unrecovered short-year amounts in the post-recovery period.