AA Depreciation

The calculation for ADS Straight-Line MACRS Plus 168 depreciation (method AA) is similar to the calculation of ADS Straight-Line MACRS (method AD). The difference is that an additional 168 Allowance % depreciation allowance is taken in the first year for method AA.

Note: The 168 Extra feature allows you to use a 168 Allowance % not valid for federal purposes for assets placed in service in years 2023 and later.

Note: 100% bonus is available for qualified assets placed in service:
- between 9/28/2017 and 12/31/2022
- on or after 1/20/2025

First, the 168 Allowance is calculated:

Depreciable Basis X 30% = 168 Allowance

Then, the 168 Allowance is subtracted from the depreciable basis to calculate the annual depreciation for the first year:

Depr. Basis - 168 Allowance
Estimated Life in Years

1 *
2

Annual Depr.

* In the placed-in-service year, MACRS personal property uses the half-year averaging convention, which allows a half-year's depreciation in the year of acquisition (provided that the midquarter convention does not apply).

Year 2 and later:

Depr. Basis *
Estimated Life

Annual Depr.

* In the second year, the calculation begins with the asset’s depreciable basis after the 168 Allowance is deducted.

Here is an example:

Acquired Value:	$16,000
Placed-in-Service Date:	11/01/2001
Estimated Life	10 Years
Salvage Value:	$1,000

Year 1:

First, the 168 Allowance is calculated:

$16,000 X .30

$4,800

Then, the 168 Allowance is subtracted from the $16,000 to calculate the depreciable basis:

$16,000 - $4,800

$11,200

Here is the calculation for the first-year depreciation:

$11,200
10

1
2

$560

Years 2 through 10:

$11,200
10

$1,120

Year 11:

$11,200
10

1
2

$560