What condition applies to the 50% reduction in MACRS for machinery and equipment?

The 50% reduction in MACRS (Modified Accelerated Cost Recovery System) depreciation for machinery and equipment specifically applies to new machinery placed in service during the first year. This provision allows businesses to accelerate their depreciation deductions, reflecting a substantial benefit for new capital investments made in their first operational year.

This approach is designed to incentivize businesses to invest in new equipment, providing immediate tax benefits and stimulating economic growth. By allowing for a larger deduction in the first year, businesses can recover a more significant portion of their investment sooner, which can improve cash flow and promote further investment.

In contrast, used machinery does not qualify for this accelerated benefit under the 50% reduction rule, nor does this provision apply to residential machinery, which is subject to a different set of depreciation rules. Hence, the focus on new machinery in the first year is crucial for understanding this aspect of MACRS rules.