If the qualified business use percentage falls to 50% or below in any year during the MACRS recovery period (7 years for arcade games), you must ‘recapture’ the excess depreciation previously claimed. This means you would need to report additional income equal to the difference between the bonus/MACRS depreciation you claimed and the amount you would have been entitled to under the Alternative Depreciation System (ADS) straight-line method. This recapture amount is reported as ordinary income on your tax return for that year. This is why maintaining consistent business use is critical.
