The RH and the RM methods are derivatives from the RV, but they apply the appropriate averaging convention as required by the IRS. These can be very effective tools to use in some situations.
Problem: Any first-year expensing taken on the asset such as authorized under Section 168 or 179, will be ignored by these methods. If the change to the depreciation method is made effective with the Current Thru Date, the beginning field amounts will include only that amount calculated by the formula and will ignore any first-year expensing.
The effect of this will result in the taxpayer receiving the bonus depreciation and/or the CED in the first year of the asset's life and again over the remaining life of the asset. Claiming these amounts 2x is not allowed by the iRS and could put the taxpayer in jeopardy if audited.
Robert McElroy
