MACRS Depreciation Calculator

Inspectable records

Ledger state

The current ledger marks this instrument verified clean within the source-bound verification corpus.

Area

Finance, Economics & Business (educational only — never individualized investment, tax, or legal advice)

Tranche

tranche-7

Evidence ID

t7-089

Ledger rows

1

No ledger note is attached.

Review findings

The core multiplication formula is standard for a correctly selected MACRS table, but the instrument specification is incomplete for its stated inputs and property classes. Verdict is NEEDS_REVIEW because it does not define mid-quarter table selection, omits the required mid-month convention for common 27.5-year and 39-year property, and does not fully define depreciable basis or book-value adjustments.

Formula and scope findings

• The formula year_dep = cost × MACRS_table_percent[class][year] is correct only after selecting the correct IRS table for property class, recovery period, convention, and—where applicable—quarter or month placed in service.
• The specification lists half-year and mid-quarter conventions but omits the mid-quarter table-selection rule. For mid-quarter convention, the placed-in-service date must determine Q1, Q2, Q3, or Q4, and the applicable class-specific quarterly table must be used.
• The 27.5-year and 39-year classes generally require the mid-month convention, but mid-month is not listed as an available convention or described in the formula.
• The specification does not define whether cost means depreciable tax basis after exclusions, Section 179 deductions, and any other basis adjustments. Bonus depreciation and Section 179 are acknowledged as omitted, but the calculation must explicitly require an unadjusted depreciable basis.
• Book value is not fully defined. A simple cost minus cumulative MACRS depreciation calculation is valid only when there are no Section 179 deductions, bonus depreciation, disposals, basis changes, or other adjustments.
• The specification does not state the required year-indexing, treatment after the final recovery year, or whether currency outputs are rounded to whole dollars or cents. Tables containing rounded percentages can also create a small residual unless the final year is constrained to bring cumulative depreciation to the depreciable basis.

Unit assumptions

• Cost is a nonnegative amount in U.S. dollars and is the depreciable tax basis; no salvage value is modeled.
• MACRS percentages in reference_data are percentages, so 20% is used as 0.20 in arithmetic.
• Year 1 is the first tax year after the placed-in-service date; the examples use the half-year convention, so the exact calendar date does not alter the selected half-year table.
• Cumulative depreciation is the sum of annual depreciation amounts, and simple book value is cost minus cumulative depreciation.
• The worked outputs retain cents where applicable; IRS filing amounts may require additional rounding conventions.

Boundary hardening

BREAK_CLAIMED · SELF_FLAGGED

The specification leaves critical input validation unspecified: non-finite or extreme costs and negative costs can produce Infinity, NaN, or nonsensical negative depreciation unless explicitly rejected. Convention selection also changes the lookup branch and must not be silently inferred or conflated.

Errata and corrections

No applied erratum is attached to this unique-name record.

Inspectable example

4 review vectors are recorded. One source-bound sample is shown below.

{
  "inputs": {
    "asset_cost_usd": 100000,
    "property_class_years": 5,
    "placed_in_service_date": "2025-03-15",
    "convention": "half-year"
  },
  "expected_outputs": {
    "annual_depreciation_usd": [
      20000,
      32000,
      19200,
      11520,
      11520,
      5760
    ],
    "cumulative_depreciation_usd": [
      20000,
      52000,
      71200,
      82720,
      94240,
      100000
    ],
    "book_value_usd": [
      80000,
      48000,
      28800,
      17280,
      5760,
      0
    ]
  },
  "reference_data": {
    "macrs_5_year_half_year_percent": [
      20,
      32,
      19.2,
      11.52,
      11.52,
      5.76
    ],
    "source_convention": "IRS Publication 946 (2023), Table A-1; standard IRS MACRS half-year convention table"
  },
  "working": "Year 1: $100,000 × 20.00% = $20,000. Year 2: $100,000 × 32.00% = $32,000. Year 3: $100,000 × 19.20% = $19,200. Year 4: $100,000 × 11.52% = $11,520. Year 5: $100,000 × 11.52% = $11,520. Year 6: $100,000 × 5.76% = $5,760. Cumulative amounts: $20,000; $20,000 + $32,000 = $52,000; $52,000 + $19,200 = $71,200; $71,200 + $11,520 = $82,720; $82,720 + $11,520 = $94,240; $94,240 + $5,760 = $100,000. Book value each year is $100,000 minus cumulative depreciation: $80,000; $48,000; $28,800; $17,280; $5,760; $0. The 20%, 32%, 19.2%, 11.52%, 11.52%, and 5.76% entries are exact standard 5-year MACRS table entries."
}

Related workflows

No source-defined multi-instrument workflow membership is recorded.

Sources and evidence

These pointers bind the page to evidence. They do not grant authority or collapse verification into deployment.

• VERIFIED_LEDGER.json · VERIFIED_CLEAN
• evidence-tranche7/tranche7-results.json
• BOUNDARY_HAZARD_CATALOG.json