Need help calculating straight-line depreciation for office furniture - 5 year period with zero salvage value

Thanks for the explanation! So does that mean I actually need to use a 7-year period instead of 5 years for office furniture specifically? I thought I could choose 5 years. Also, what's MACRS versus straight-line? I'm so confused about which method I should be using.

You're welcome! Office furniture is actually classified as 7-year property under the MACRS system, which is what the IRS requires by default. You can't just choose 5 years unless you elect to use the Alternative Depreciation System (ADS), which might not be advantageous. MACRS is the standard depreciation system required by the IRS, and it has its own built-in methods and recovery periods. Straight-line is one method of calculating depreciation (even amount each year), but under MACRS, you'd typically use the 200% declining balance method for 7-year property, which gives larger deductions in the earlier years. If you want simpler calculations, you can elect straight-line under MACRS, but you'd still use 7 years for office furniture.

Does it actually work with all kinds of business assets? I have a mix of computer equipment, furniture, and some leasehold improvements I did for my office space. Can it handle all these different categories?

I'm skeptical about these tax tools. How does it know which depreciation method is most beneficial for YOUR specific situation? Does it just default to MACRS or does it actually compare different scenarios?

Yes, it handles all kinds of business assets! I had a similar mix with office furniture, a new laptop, and some specialized equipment. The tool correctly identified each category and applied the proper recovery period (7 years for furniture, 5 years for computers, etc.). It even flagged when certain items qualified for Section 179 expensing instead of depreciation. It doesn't just default to one method - it actually analyzes your whole tax situation and compares different scenarios. For example, it showed me that for some of my assets, taking Section 179 was better than depreciating, while for others, regular depreciation made more sense based on my income projections for future years.

Wait, how does this actually work? Do they have some special backdoor to the IRS phone system? Seems too good to be true with how notoriously difficult it is to get through.

This sounds like a complete waste of money. Why would anyone pay for something like this when you can just call early in the morning and usually get through? And what stops them from just taking your money and not actually connecting you?

There's no special backdoor - they use an automated system that dials the IRS and navigates the phone tree for you, then holds your place in line. When an agent is about to pick up, their system calls your phone and connects you directly to the IRS agent. It's basically like having someone else sit on hold for you. I used to try the "call early" approach too but still wasted hours. What most people don't realize is that IRS call volume fluctuates unpredictably, and sometimes even calling right when they open means a 2+ hour wait. The service doesn't guarantee instant access, but it means you don't have to waste your own time sitting on hold. If they don't connect you, they don't charge you - it's only successful connections that get billed.

Oh that's something I hadn't considered at all! I bought the furniture back in October but didn't actually set it up and start using it until November. Does the "placed in service" date mean when I bought it or when I actually started using it? And what's this half-year convention thing?

The "placed in service" date is when the property is ready and available for its intended use - so that would be November when you set it up, not when you purchased it in October. The half-year convention is a simplification rule that assumes you placed assets in service halfway through the year, regardless of when you actually started using them. So for the first year of a 7-year property with straight-line depreciation, you'd take 1/14th of the cost (half of 1/7th). However, if you place more than 40% of your total assets for the year in service during the last 3 months, you have to use the mid-quarter convention instead, which is more complicated and bases your first-year depreciation on which quarter you placed the asset in service.

I use TurboTax Self-Employed and it handles depreciation pretty well. When you get to the business expenses section, there's a separate category for assets that need to be depreciated. Just follow the prompts and it'll ask for purchase date, cost, and business use percentage. It automatically applies the correct MACRS schedule for office furniture (7 years). Office furniture isn't "listed property" so you'd select "no" for that question.