Modified Accelerated Cost Recovery System
Modified Accelerated Cost Recovery System (MACRS) is a depreciation system that went into effect for tangible property placed in service after 1986. It is composed of 2 systems: a basic system, called the General Depreciation System (GDS), and an alternate system, called the Alternative Depreciation System (ADS). The difference between the 2 systems is the recovery period over which you claim depreciation and the method for calculating depreciation. You use the basic system unless the alternative system is required or you make a special election to use the alternative system. You cannot use either system for certain property: intangible property (patents, copyrights, etc.), motion picture films or videotapes, sound recordings, and property you elect to exclude from MACRS so that you can use a depreciation method based on some other measuring rod than a term of years (these other methods are not discussed in this book).
You can use the basic system (GDS) to depreciate any tangible property unless you are required to use the alternative system, elect to use the alternate system, or are required to use some other depreciation method. To calculate your depreciation deduction, you need to know: