This MACRS depreciation calculator template is designed to help accountants and other financial professionals calculate tax depreciation for assets that fall under modified accelerated cost recovery system (MACRS) rules. The MACRS depreciation template calculates both 5-year depreciation and 7-year depreciation.
What is Modified Accelerated Cost Recovery System (MACRS) ?
The modified accelerated cost recovery system (MACRS) is a depreciation system used for tax purposes in the U.S. MACRS depreciation allows the capitalized cost of an asset to be recovered over a specified period via annual deductions. The MACRS system puts fixed assets into classes that have set depreciation periods.
Understanding the Modified Accelerated Cost Recovery System (MACRS)
As defined by the Internal Revenue Service (IRS), depreciation is an income tax deduction that allows a business to recover the cost basis of certain property. Deprecation is an annual allowance for the wear and tear, deterioration, or obsolescence of property. Most tangible assets are depreciable. Likewise, certain intangible assets, such as patents and copyrights, are depreciable.