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rakhi.v, Tax Attorney
Category: Tax
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Experience:  Have graduated in Law with specialization & emphasis in Financial Laws and has working experience of over a decade.
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Is there any tax limitation if I use "MACRS 200%

Customer Question

Is there any tax limitation if I use "MACRS 200% Declining Balance" in form 4562? Which one is allowed by IRS - "MACRS 200% Declining" or "Straight line"?Do you know "decoupling modification" for the state tax return? For example, I have $11,160 car depreciation in my federal tax return form - form 4562. But MD put $9,224 in "net decoupling modification" which will increase my profit. Are there any ways to avoid it?
Submitted: 1 year ago.
Category: Tax
Expert:  rakhi.v replied 1 year ago.

Dear Friend,

Hello and welcome. Thank you for providing an opportunity to assist you.

MACRS 200% is Declining and NOT "Straight line".

MACRS provides three depreciation methods under GDS and one depreciation method under ADS.

=>The 200% declining balance method over a GDS recovery period.

=>The 150% declining balance method over a GDS recovery period.

=>The straight line method over a GDS recovery period.

=>The straight line method over an ADS recovery period.

Please refer the following IRS document.

So far as decoupling modifications are concerned, I am sorry but there is nothing much you can do about this. MD has decoupled itself from federal tax provisions and has a upper cap as well. So, this will lead your income to increase by $1936 and there is nothing much we can do about this.

I am sure this would help.

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Warm Regards,