MACRS Depreciation Method

MACRS stands for Modified Accelerated Cost Recovery System- It is a method of depreciation accepted by IRS (Internal Revenue Service of the U.S. Treasury Department). In MACRS, asset life is not an arbitrary number of years, but one of these six categories: 3, 5, 7, 10, 15 or 20. It is not the expected productive life of the asset but a "life class". For instance, 5-year property (life 5) is for items with expected life longer than 4 years but less than 10 years. For every life class, the MACRS method uses a different table of quotients which sum 1. Expense allocated in every period is obtained multiplying the expense by the quotient defined in the table for that period:

Year	Tangible 5-Yr MACRS	Tangible 7-Yr MACRS	Tangible 15-Yr MACRS	Capitalized Intangibles
1	0.2000	0.1429	0.0500	0.1
2	0.3200	0.2449	0.0950	0.2
3	0.1920	0.1749	0.0855	0.2
4	0.1152	0.1249	0.0770	0.2
5	0.1152	0.0893	0.0693	0.2
6	0.576	0.0892	0.0623	0.1
7		0.0893	0.0590
8		0.0446	0.0590
9			0.0591
10			0.0590
11			0.0591
12			0.0590
13			0.0591
14			0.0590
15			0.0591
16			0.0295

Compare the MACRS method as implemented using the Depreciation tool with the functionality provided by the FML function macrs: the former takes into account the day of the year an expense was incurred and calculates proportional depreciation for subsequent periods, while the latter applies depreciation to whole periods only.