Exhibit 8.3 MACRS Accelerated Depreciation for Personal Property Assuming Half-Year Convention (Percentage Rates) For Property Placed in Service after December 31, 1986 Recovery Year 1 3.750 3 4 5 6 7 8 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year (200% DB) (200% DB) (200% DB) (200% DB) (150% DB) (150% DB) 33.33 20.00 14.29 10.00 5.00 44.45 32.00 24.49 18.00 9.50 7.219 14.81 19.20 17.49 14.40 8.55 6.677 7.41 11.52 12.49 11.52 7.70 6.177 11.52 8.939 9.22 6.93 5.713 5.76 8.92 7.37 6.23 5.285 8.93 6.55" 5.90 4.888 4.46 6.55 5.90 4.522 6.56 5.91 4.462 5.90 4.461 3.28 5.91 4.462 5.90 4.461 5.91 4.462 5.90 4.461 5.91 4.462 2.95 4.461 4.462 4.461 6.55 10 11 12 13 14 15 16 17 18 19 20 21 4.462 4.461 2.231 *Switch over to straight-line depreciation. Exhibit 8.4 MACRS Accelerated Depreciation for Personal Property Assuming Mid-Quarter Convention (Percentage Rates) For Property Placed in Service after December 31, 1986 (Partial Table * ) 3-Year Recovery Year First Quarter Second Quarter Third Quarter Fourth Quarter 58.33 41.67 25.00 8.33 38.89 50.00 61.11 1 2 27.78 5-Year Recovery Year Second Quarter Third Quarter Fourth Quarter First Quarter 35.00 1 25.00 15.00 5.00 2 26.00 30.00 34.00 38.00 7-Year Recovery Year First Quarter Second Quarter Third Quarter Fourth Quarter 1 25.00 17.85 10.71 3.57 2 21.43 23.47 25.51 27.55 Exhibit 8.5 MACRS Straight-Line Depreciation for Personal Property Assuming Half-Year Convention * For Property Placed in Service after December 31, 1986 Other Recovery Years Last Recovery Year MACRS Class % First Recovery Years % Year Year 3-year 16.67 2-3 33.33 16.67 % 5-year 10.00 2-5 20.00 6 10.00 7-year 7.14 2-7 14.29 8 7.14 10-year 5.00 2-10 10.00 11 5.00 15-year 3.33 2-15 6.67 16 3.33 20-year 2.50 2-20 5.00 21 2.50 Note: The last two rows of this table are used for qualified improvement property (15-year normal MACRS; 20-year ADS) Exhibit 8.6 Alternative Minimum Tax: 150% Declining-Balance Assuming Half-Year Convention (Percentage Rates) For Property Placed in Service after December 31, 1986 (Partial Table") Recovery Year 7-Year 150% 9.5-Year 150% 10-Year 150% 12-Year 1504 3-Year 150% 25.00 37.50 25,00** 12.50 5-Year 150% 15.00 25.50 17.85 16.66 16.66 8.33 1 2 3 4 5 6 7 9 10 11 12 13 10.71 19.13 15.03 12.25" 1225 1225 12.25 6.13 7.89 14.54 12.25 10.31 9.17 9.17 9.17 9.17 9.17 9.16 7.50 13.88 11.79 10.02 8.74" 8.74 8.74 8.74 8.74 8.74 4.37 6.25 11.72 10.25 8.97 7.85 7.33 7.33 7.33 7.33 7.33 7.32 7.33 3.66 *The figures in this table are taken from the official table that appears in Rev.Proc. 87-57, 1987-2 C.B. 687. Because of its length, the complete table is not presented. **Switch over to straight-line depreciation. Exhibit 8.7 ADS Straight-Line for Personal Property Assuming Half-Year Convention (Percentage Rates) For Property Placed in Service after December 31, 1986 (Partial Table) * Recovery Year 10-Year 3-Year 5-Year 7-Year 12-Year 1 16.67 10.00 7.14 5.00 4.17 2 33.33 20.00 14.29 10.00 8.33 3 33.33 20.00 14.29 10.00 8.33 4 16.67 20.00 14.29 10.00 8.33 5 20.00 14.29 10.00 8.33 6 10.00 14.29 10.00 8.33 7 14.29 10.00 8.34 8 7.14 10.00 8.33 9 10.00 8.34 10 10.00 8.33 11 5.00 8.34 12 8.33 13 4.17 Exhibit 8.8 MACRS Straight-Line Depreciation for Real Property Assuming Mid-Month Convention* (Percentage Rates) *The official tables contain a separate row for each year. For ease of presentation, certain years are grouped in these tables. In some instances, this will produce a difference of .001 for the last digit when compared with the official tables. 0.000 00 For Property Placed in Service after December 31, 1986: 27.5-Year Residential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property is placed in Service): 1 2 3 4 5 7 9 10 11 12 1 3485 3.182 2899 2.576 2.273 1.970 1667 1.364 1,061 0.758 0455 0.152 3.636 3636 3.636 3636 3.636 3636 3636 19-27 3.636 3636 3.637 3.636 3.6373637 3.637 3,637 3.637 3637 3637 3.637 3.637 3,637 3.637 28 1.900 2.273 2576 2.879 3.182 3.485 3.636 3.636 3.636 3.636 3.636 3.636 29 0.000 0.000 0.000 0.000 0.152 0455 1051 1.364 1667 For Property Placed in Service after December 31, 1986, and before May 13, 1993: 31.5-Year Nonresidential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service): Years 1 2 4 5 7 10 11 12 1 3.042 2778 2513 2.249 1.584 1.720 1.455 1.190 0.926 0.661 0.397 0.132 2-19 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 20-31 3.174 3.174 3.174 3174 3.174 3.174 3.174 3.174 3174 3.174 2174 1.720 1.984 2.240 2.513 2.778 9.042 3.175 3.175 3.175 3.175 3.175 3.175 33 0.000 0.000 0.000 0.000 0.000 0.000 0.132 0.397 0.651 1.190 1.455 For Property Placed in Service after May 12, 1993: 39-Year Nonresidential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property is placed in Service): Year(s) 2 5 7 9 10 12 1 2.461 22472033 1.819 1605 1.391 1.177 0.963 0.7490535 0.321 0.107 2-39 2.564 2.554 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 40 0.107 0.321 0535 0.749 0963 1.177 1.391 1.605 1.819 2033 2.247 2461 114 0:36 2564 Exhibit 8.9 ADS Straight-Line for Real Property Assuming Mid-Month Convention (Percentage Rates) 10 For Property Placed in Service after December 31, 2017; 30-Year Residential Rental Property Recovery Month Placed in Service 5 7 9 1 3.194 2917 2699 2.561 1.806 1528 1.250 0.972 2-30 3.33% 3.3333333 3.333 3.3333.333 3.333 31 0.139 0.417 0.694 0.972 1.250 1.528 18062033 2.361 11 0417 0.694 333 2.639 12 0.139 3.333 3.194 2.917 For Property Placed in Service after December 31, 1986: 40-Year Nonresidential Real Property Recovery Month Placed in Service Year 7 9 1 2.396 2.188 1979 1.771 1.563 1.354 1.146 0938 0.729 2-40 2.500 2.500 2500 2.500 2.500 2.500 2.500 2.500 2.500 41 0.104 0.312 0521 0.729 0917 1.146 1.354 1.771 10 0.521 2.500 1.979 11 0.313 2.500 2.187 12 0.104 2.500 2.196 *Also used for residential rental property placed in service before 2018. On April 3, 2021, Terry purchased and placed in service a building that cost $2,000,000. An appraisal determined that 25% of the total cost was attributed to the value of the land. The bottom floor of the building is leased to a retail business for $32,000. The other floors of the building are rental apartments with an annual rent of $150,000. If required, round your answers to the nearest dollar. Click here to access the depreciation table to use for this problem. a. How is the property classified for MACRS? b. What is the life of the asset for MACRS? c. Determine Terry's cost recovery deduction for 2021. Exhibit 8.3 MACRS Accelerated Depreciation for Personal Property Assuming Half-Year Convention (Percentage Rates) For Property Placed in Service after December 31, 1986 Recovery Year 1 3.750 3 4 5 6 7 8 3-Year 5-Year 7-Year 10-Year 15-Year 20-Year (200% DB) (200% DB) (200% DB) (200% DB) (150% DB) (150% DB) 33.33 20.00 14.29 10.00 5.00 44.45 32.00 24.49 18.00 9.50 7.219 14.81 19.20 17.49 14.40 8.55 6.677 7.41 11.52 12.49 11.52 7.70 6.177 11.52 8.939 9.22 6.93 5.713 5.76 8.92 7.37 6.23 5.285 8.93 6.55" 5.90 4.888 4.46 6.55 5.90 4.522 6.56 5.91 4.462 5.90 4.461 3.28 5.91 4.462 5.90 4.461 5.91 4.462 5.90 4.461 5.91 4.462 2.95 4.461 4.462 4.461 6.55 10 11 12 13 14 15 16 17 18 19 20 21 4.462 4.461 2.231 *Switch over to straight-line depreciation. Exhibit 8.4 MACRS Accelerated Depreciation for Personal Property Assuming Mid-Quarter Convention (Percentage Rates) For Property Placed in Service after December 31, 1986 (Partial Table * ) 3-Year Recovery Year First Quarter Second Quarter Third Quarter Fourth Quarter 58.33 41.67 25.00 8.33 38.89 50.00 61.11 1 2 27.78 5-Year Recovery Year Second Quarter Third Quarter Fourth Quarter First Quarter 35.00 1 25.00 15.00 5.00 2 26.00 30.00 34.00 38.00 7-Year Recovery Year First Quarter Second Quarter Third Quarter Fourth Quarter 1 25.00 17.85 10.71 3.57 2 21.43 23.47 25.51 27.55 Exhibit 8.5 MACRS Straight-Line Depreciation for Personal Property Assuming Half-Year Convention * For Property Placed in Service after December 31, 1986 Other Recovery Years Last Recovery Year MACRS Class % First Recovery Years % Year Year 3-year 16.67 2-3 33.33 16.67 % 5-year 10.00 2-5 20.00 6 10.00 7-year 7.14 2-7 14.29 8 7.14 10-year 5.00 2-10 10.00 11 5.00 15-year 3.33 2-15 6.67 16 3.33 20-year 2.50 2-20 5.00 21 2.50 Note: The last two rows of this table are used for qualified improvement property (15-year normal MACRS; 20-year ADS) Exhibit 8.6 Alternative Minimum Tax: 150% Declining-Balance Assuming Half-Year Convention (Percentage Rates) For Property Placed in Service after December 31, 1986 (Partial Table") Recovery Year 7-Year 150% 9.5-Year 150% 10-Year 150% 12-Year 1504 3-Year 150% 25.00 37.50 25,00** 12.50 5-Year 150% 15.00 25.50 17.85 16.66 16.66 8.33 1 2 3 4 5 6 7 9 10 11 12 13 10.71 19.13 15.03 12.25" 1225 1225 12.25 6.13 7.89 14.54 12.25 10.31 9.17 9.17 9.17 9.17 9.17 9.16 7.50 13.88 11.79 10.02 8.74" 8.74 8.74 8.74 8.74 8.74 4.37 6.25 11.72 10.25 8.97 7.85 7.33 7.33 7.33 7.33 7.33 7.32 7.33 3.66 *The figures in this table are taken from the official table that appears in Rev.Proc. 87-57, 1987-2 C.B. 687. Because of its length, the complete table is not presented. **Switch over to straight-line depreciation. Exhibit 8.7 ADS Straight-Line for Personal Property Assuming Half-Year Convention (Percentage Rates) For Property Placed in Service after December 31, 1986 (Partial Table) * Recovery Year 10-Year 3-Year 5-Year 7-Year 12-Year 1 16.67 10.00 7.14 5.00 4.17 2 33.33 20.00 14.29 10.00 8.33 3 33.33 20.00 14.29 10.00 8.33 4 16.67 20.00 14.29 10.00 8.33 5 20.00 14.29 10.00 8.33 6 10.00 14.29 10.00 8.33 7 14.29 10.00 8.34 8 7.14 10.00 8.33 9 10.00 8.34 10 10.00 8.33 11 5.00 8.34 12 8.33 13 4.17 Exhibit 8.8 MACRS Straight-Line Depreciation for Real Property Assuming Mid-Month Convention* (Percentage Rates) *The official tables contain a separate row for each year. For ease of presentation, certain years are grouped in these tables. In some instances, this will produce a difference of .001 for the last digit when compared with the official tables. 0.000 00 For Property Placed in Service after December 31, 1986: 27.5-Year Residential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property is placed in Service): 1 2 3 4 5 7 9 10 11 12 1 3485 3.182 2899 2.576 2.273 1.970 1667 1.364 1,061 0.758 0455 0.152 3.636 3636 3.636 3636 3.636 3636 3636 19-27 3.636 3636 3.637 3.636 3.6373637 3.637 3,637 3.637 3637 3637 3.637 3.637 3,637 3.637 28 1.900 2.273 2576 2.879 3.182 3.485 3.636 3.636 3.636 3.636 3.636 3.636 29 0.000 0.000 0.000 0.000 0.152 0455 1051 1.364 1667 For Property Placed in Service after December 31, 1986, and before May 13, 1993: 31.5-Year Nonresidential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property Is Placed in Service): Years 1 2 4 5 7 10 11 12 1 3.042 2778 2513 2.249 1.584 1.720 1.455 1.190 0.926 0.661 0.397 0.132 2-19 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 3.175 20-31 3.174 3.174 3.174 3174 3.174 3.174 3.174 3.174 3174 3.174 2174 1.720 1.984 2.240 2.513 2.778 9.042 3.175 3.175 3.175 3.175 3.175 3.175 33 0.000 0.000 0.000 0.000 0.000 0.000 0.132 0.397 0.651 1.190 1.455 For Property Placed in Service after May 12, 1993: 39-Year Nonresidential Real Property Recovery The Applicable Percentage Is (Use the Column for the Month in the First Year the Property is placed in Service): Year(s) 2 5 7 9 10 12 1 2.461 22472033 1.819 1605 1.391 1.177 0.963 0.7490535 0.321 0.107 2-39 2.564 2.554 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 2.564 40 0.107 0.321 0535 0.749 0963 1.177 1.391 1.605 1.819 2033 2.247 2461 114 0:36 2564 Exhibit 8.9 ADS Straight-Line for Real Property Assuming Mid-Month Convention (Percentage Rates) 10 For Property Placed in Service after December 31, 2017; 30-Year Residential Rental Property Recovery Month Placed in Service 5 7 9 1 3.194 2917 2699 2.561 1.806 1528 1.250 0.972 2-30 3.33% 3.3333333 3.333 3.3333.333 3.333 31 0.139 0.417 0.694 0.972 1.250 1.528 18062033 2.361 11 0417 0.694 333 2.639 12 0.139 3.333 3.194 2.917 For Property Placed in Service after December 31, 1986: 40-Year Nonresidential Real Property Recovery Month Placed in Service Year 7 9 1 2.396 2.188 1979 1.771 1.563 1.354 1.146 0938 0.729 2-40 2.500 2.500 2500 2.500 2.500 2.500 2.500 2.500 2.500 41 0.104 0.312 0521 0.729 0917 1.146 1.354 1.771 10 0.521 2.500 1.979 11 0.313 2.500 2.187 12 0.104 2.500 2.196 *Also used for residential rental property placed in service before 2018. On April 3, 2021, Terry purchased and placed in service a building that cost $2,000,000. An appraisal determined that 25% of the total cost was attributed to the value of the land. The bottom floor of the building is leased to a retail business for $32,000. The other floors of the building are rental apartments with an annual rent of $150,000. If required, round your answers to the nearest dollar. Click here to access the depreciation table to use for this problem. a. How is the property classified for MACRS? b. What is the life of the asset for MACRS? c. Determine Terry's cost recovery deduction for 2021
