Use this worksheet to calculate the percentage depreciation if you bought an 27.5 year asset in December. Complete the attached spreadsheet using formulas only. Annual Depreciation, as a percentage of depreciable base Monthly Depreciation, as a percentage of depreciable base Half month Depreciation, as a percentage of depreciable base

However, you do reduce your oniginal basis by other amounts clamed on the property, including: - Any amortization, - Any scotion 179 doduction, and - Any special depreciation allowance. For more information, see chapter 4 of Pub. 946. Tables 2-2a, 2-2b, and 2-2c. The peroen. tages in these tables take inte account the half-year and mid-quarter oormentions. Use Ta. ble 2-2a for 5-year property, Table 2-2b for 7 -year property, and Table 2-2c for 15-year property. Use the percentage in the sooond column (hall-year convention) unless you are required to use the rid-quarter convention (oxplained earlier). If you must use the mid-quarter convention, use the column that corresponds to the calendar year quarter in which you placed the property in servioe. Example 1. You purchased a stove and refrigerator and placed them in service in June. Your besis in the stove is $600 and your besis Table 2-2. Optional MACRS GDS Percentage Tables a. MACRS 5-Year Prodertv (200\% DB) in the refrigerator is $1,000. Both are 5-year property. Using the hall-year convention column in Table 2-2a, the depreciation percentage for Year 1 is 20%. For that year, your depreciation deduction is $120($60020%(0.20)) for the stove and $200($1,00020%,(0.20)) for the retrigerator. For Year 2, the depreciation percentage is 32%. That yoar's depreciation doduction will be $192($60032%(0.32)) for the stowe and $320($1,00032%(0.32)) for the refrigerator. Example 2. Assume the same facts as in Exampie 1, exoept you buy the refrigerator in October instead of June. Because the retrigerator was placed in servioe in the last 3 months of the tax year, and its basis ($1,000) is more than 40% of the total basis of all property placed in service during the year ($1,60040%(0.40)= $640), you are required to use the mid-quarter convention to figure depreciation on both the stove and refrigerator. Because you placed the refrigerator in service in Ootober, you use the fourth quarter column of Table 2-2a and find the depreciation percentago for Year 1 is 5\%. Your dopreciation deduction for the refrigerator is $50 i\$1,000 x 5%(0.05)) Because you placed the stowe in service in June, you use the second quarter column of Ta. ble 2-2a and tind the depreciation percentage for Yoar 1 is 25%. For that year, your depreoia. tion deduction for the stove is $150 is600 x 25%(0.25)). Table 2-2d. Use this table when you are using the GDS 27.5-year option for residential rental property. Find the row for the month that you placed the property in servioe. Use the peroen: tages listed for that month to figure your depreciation deduction. The mid-manth oormention is taken into account in the percentages shown in the table. Continue to use the same row (month) under the column for the eppropriate yoar. Example. You purchased a single tamily rental house for $185,000 and placed it in sen. ice on February 8. The sales contract showed that the building oost $160,000 and the land cost \$25,000. Your basis for depreciation is its onginal cost, $160,000. This is the first yoar of service for your residential rental property and you decide to use GDS, which has a recovery period of 27.5 years. Using Table 2-2d, you tind that the deprociation peroentage for property placed in service in February of Year 1is 3.182%. That year's depreciation deduction is $5,091 (\$160,000 3.182%(0,03182)). Figuring MACRS Depreclation Under ADS Iable 2-1 shows the ADS reoovery periods for property used in rental activities. See Appendix B of Pub. 946 for other property. If your property isn't listed in Appondix B, it is considered to have no class Ife. Under ADS, personal property with no class life is depreciated using a recovery period of 12 years. Use the mid-month convention for residen: tial rental property and nonresidential real Chapter 2 Depreciation of Rental Property Page 11