Which method for calculating depreciation uses the property's placed-in-service date?

The Modified Accelerated Cost Recovery System (MACRS) is the correct method for calculating depreciation that utilizes the property's placed-in-service date. MACRS allows businesses to recover the cost of an asset over a specified life span through depreciation. The placed-in-service date is crucial because it marks the point when the asset is ready and available for its intended use, which determines the commencement of depreciation.

This system categorizes assets based on their class lives and assigns them specific depreciation rates. Depreciation begins in the month the asset is placed into service, ensuring that the asset’s useful life is properly accounted for from the time it begins generating income. Understanding this connection to the placed-in-service date is essential for accurate financial reporting and tax compliance.

In contrast, other methods mentioned, such as the Accelerated Cost Recovery System, Straight-line depreciation, and the Declining balance method, do not primarily focus on the placed-in-service date in the same way that MACRS does. These methods may have different approaches or conventions regarding how depreciation is calculated and when it starts, making MACRS the distinct method that explicitly incorporates the placed-in-service date in its calculations.