MR200 Depreciation

The calculation for MACRS Indian Reservation 200 Plus 168 depreciation (method MR200) is similar to the calculation for MACRS Indian 200 (method MI200). The difference is that for MR200 an additional 168% depreciation allowance can be taken in the placed-in-service year. See MACRS Method MR for more information.

First, the system calculates the 168 Allowance:

Depreciable Basis X 30% = 168 Allowance

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

Depr. Basis - 168 Allowance Estimated Life in Years

X

2

X

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 (until the switch to straight-line):

Depr. Basis - Accum. Depr. Estimated Life

X

2

=

Annual Depr.

 

Example:

Acquired Value:	$16,000
Recovery Period:	4 Years
Salvage Value:	$1,000
Placed-in-Service Date:	11/01/2001

 

Year 1:

First, the system calculates the 168 Allowance:

$16,000 X 30% = $4,800

Then, it subtracts the 168 Allowance from the $16,000 to calculate the depreciable basis:

$16,000 - 4,800 = $11,200

$11,200 4

X

2

X

1 2

=

$2,800

 

Year 2:

$11,200 - $2,800 4

X

2

=

$4,200

 

Year 3:

$11,200 - $7,000 4

X

2

=

$2,100

 

Year 4:

$11,200 - $9,100 1.5

=

$1,400

 

Notice that in year 4 the calculation switches to straight-line depreciation, using the following formula:

Acquisition Cost - Accumulated Depr. Remaining Life

=

Annual Depr.

 

Because you have already taken 2.5 years of depreciation, the remaining life is 1.5 years.

Year 5:

$11,200 - $10,500 0.5

X

1 2

=

$700

 

Year 5 is the last year of the asset's life. The asset receives only a half-year of depreciation because of the half-year averaging convention.

Note: When using the MACRS Indian Reservation depreciation method, you recover the asset's full acquisition value, unlike declining-balance depreciation, which does not recover the salvage value.