Custom Depreciation Method Example

A calendar year-end company places a $17,000 truck in service on June 1, 2020, subject to a 3-year recovery period and using a custom averaging convention.

Assume that the company set up a custom depreciation method based on the following years and percentages:

Year	Percentage
1	14.58%
2	38.00%
3	37.00%
4	10.42%
Total	100.00%

 

If you multiply the depreciable basis ($17,000) by the percentage for each year, the results are:

Year	Calculation	Depreciation
2020	$17,000 x 14.58%	$ 2,478.60
2021	$17,000 x 38%	6,460.00
2022	$17,000 x 37%	6,290.00
2023	$17,000 x 10.42%	1,771.40
	Total	$17,000.00