Use this worksheet to select depreciation options, enter depreciation overrides for Section 179 calculations, and short year information.
Short Year Depreciation Information
In addition to calculating current year short year depreciation, the capability to enter two prior year short year dates is available. These dates will be utilized to determine the remaining life for assets that switch to straight line, or to determine the correct recovery period for ACRS assets.
Short year depreciation information on this worksheet includes the beginning and ending dates for prior year short year 1 and 2. A field has been provided to indicate that if the current year is a short year and the return qualifies for MACRS month calculations you may choose to count the partial month in the current year. In addition, Depreciation and Amortization (Form 4562) worksheet has a field to indicate the appropriate ACRS column (month number) to use in determining the current year ACRS depreciation.
The following assumptions will be followed in the calculation of current year short year depreciation and in the calculation of the remaining life for prior year short year assets:
Old Law
1) The number of months will be used in the calculation of the remaining life. A partial month will be included if the number of days held in that particular month is 15 or greater.
ACRS
1) The number of months will be calculated for the short year and only beginning partial months will be counted.
2) Each "year" (tax return filed) will be counted as a recovery period.
3) The "month column" will be calculated as the current tax year beginning month and the year acquired to calculate the start of the prior year. The column will be calculated from this date. In the event that the asset was placed in service based on an "Intent Month" or the automatic calculation is unsatisfactory the column may be overridden by entering a number 1 through 12 on Depreciation and Amortization (Form 4562) worksheet in the ACRS Short year Column.
4) If one set of prior year short year dates are present on this worksheet, then 1 recovery period will be added to the recovery period to be used to calculate the current year deduction.
5) If two sets of prior year short year dates are present on this worksheet, then the number of months in each short year will be added together. If this result is less than 12 then 2 recovery periods will be added, otherwise 1 recovery period will be added.
6) We will NOT automatically calculate the ACRS depreciation past the useful "Recovery Periods". You must force the depreciation after the recovery period is entirely used in order to recoup the total allowable ACRS depreciation.
MACRS:
1) Considering the entries on Basic Data worksheet for the current year and the entry (or lack thereof) on this worksheet, the appropriate life will be calculated based on "MACRS Month" calculations and will be used in the current year.
2) Considering the entries on this worksheet for prior year short years, each asset will have a portion of the life attributed to the prior year short years. If a prior year asset was acquired under the Mid-Quarter convention, it is IMPERATIVE, that the Quarter be entered on Depreciation and Amortization (Form 4562) worksheet so that the appropriate life can be calculated for this asset. If the Depreciation and Amortization (Form 4562) worksheet "Quarter Number" is blank, it is assumed that this asset was depreciated under "Half-Year" convention for the entire life, whereas when the "Quarter Number" is present, the appropriate value is attributed to that particular year.