About MACRS Depreciation

Fixed Asset Management supports the calculation of tax depreciation in accordance with MACRS (Modified Accelerated Cost Recovery System). For an explanation of the MACRS tax rules, see the official MACRS tax documentation. The legislation is not explained here.

Fixed Asset Management stores the IRS tables for calculating MACRS depreciation as custom metadata. The custom metadata types are MACRS Chart, MACRS Table and MACRS Rate. This metadata is maintained by Fixed Asset Management.

To calculate MACRS tax depreciation for a fixed asset, create a depreciation book of type Asset MACRS Tax for the asset. All the options for calculating MACRS tax depreciation are held on the book itself (applied depreciation methods are not required for MACRS tax books). Based on the options you choose, Fixed Asset Management determines which MACRS Rate to apply when generating depreciation schedules for the asset. You can also claim additional tax relief on asset depreciation in the form of Section 179 depreciation, and Bonus Depreciation amounts.

When you generate depreciation schedules for a MACRS tax book, depreciation is always calculated on a yearly basis for the entire life of the asset.

The MACRS Rate that was used to calculate depreciation is recorded on each depreciation schedule.

Note:

Fixed Asset Management uses the fiscal year on your Salesforce org when determining dates for the MACRS "Month or Quarter Placed in Service" and the Effective Depreciation Date of a depreciation schedule, and when calculating part period depreciation schedules upon asset disposal. Custom fiscal years are not supported.

Modifying a MACRS Tax Book

You cannot edit MACRS tax books that contain active depreciation schedules.

If you edit a MACRS tax book with pending depreciation schedules, all existing depreciation schedules are terminated. A message is displayed reminding you to regenerate the depreciation schedules.

Regenerating Depreciation Schedules for a MACRS Tax Book

If you decide to regenerate depreciation schedules for a MACRS tax book, note that:

  • Depreciation schedules are regenerated for the entire life of the asset from its date in service.
  • You cannot regenerate depreciation for MACRS tax books that contain active (exported) depreciation schedules. To regenerate, you must first deselect the Active checkbox on each active depreciation schedule.

Disposing of an Asset that has a MACRS Tax Book

Fixed Asset Management abides by the MACRS rules when calculating depreciation upon asset disposal. In particular, note that:

  • If you dispose of the asset in the same fiscal year that it was placed in service, all pending depreciation schedules are terminated and a partial depreciation schedule is not created.
  • If you dispose of an asset with the half-year convention in the final year of its recovery period, it is not classed as an early disposal. The final depreciation schedule for the asset is not terminated and no partial depreciation schedule is created.