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p946 - PAGER/SGML Userid SD_NY3HB DTD tipx Leadpct 0 Fileid...

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Department of the Treasury Contents Internal Revenue Service What’s New . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Reminders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Publication 946 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Cat. No. 13081F 1. Overview of Depreciation . . . . . . . . . . . . . . . . . . 3 What Property Can Be Depreciated? . . . . . . . . . . . 4 How To What Property Cannot Be Depreciated? . . . . . . . . . 6 When Does Depreciation Begin and End? . . . . . . . 7 What Method Can You Use To Depreciate Depreciate Your Property? . . . . . . . . . . . . . . . . . . . . . . . 8 What Is the Basis of Your Depreciable Property? . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Property How Do You Treat Repairs and Improvements? . . . . . . . . . . . . . . . . . . . . . . 13 Do You Have To File Form 4562? . . . . . . . . . . . . . 13 Section 179 Deduction How Do You Correct Depreciation Deductions? . . . . . . . . . . . . . . . . . . . . . . . . . 14 Special Depreciation 2. Electing the Section 179 Deduction . . . . . . . . . . 16 Allowance What Property Qualifies? . . . . . . . . . . . . . . . . . . . 16 MACRS What Property Does Not Qualify? . . . . . . . . . . . . . 17 How Much Can You Deduct? . . . . . . . . . . . . . . . . 18 Listed Property How Do You Elect the Deduction? . . . . . . . . . . . . 24 When Must You Recapture the Deduction? . . . . . 24 For use in preparing 3. Claiming the Special Depreciation Allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 2008 Returns What Is Qualified Property? . . . . . . . . . . . . . . . . . 25 How Much Can You Deduct? . . . . . . . . . . . . . . . . 35 How Can You Elect Not To Claim an Allowance? . . . . . . . . . . . . . . . . . . . . . . . . . 36 When Must You Recapture an Allowance? . . . . . . 36 4. Figuring Depreciation Under MACRS . . . . . . . . 36 Which Depreciation System (GDS or ADS) Applies? . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Which Property Class Applies Under GDS? . . . . . 38 What Is the Placed in Service Date? . . . . . . . . . . . 41 What Is the Basis for Depreciation? . . . . . . . . . . . 41 Which Recovery Period Applies? . . . . . . . . . . . . . 41 Which Convention Applies? . . . . . . . . . . . . . . . . . 44 Which Depreciation Method Applies? . . . . . . . . . . 44 How Is the Depreciation Deduction Figured? . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 How Do You Use General Asset Accounts? . . . . . 56 When Do You Recapture MACRS Depreciation? . . . . . . . . . . . . . . . . . . . . . . . . 60 5. Additional Rules for Listed Property . . . . . . . . . 61 What Is Listed Property? . . . . . . . . . . . . . . . . . . . 61 Can Employees Claim a Deduction? . . . . . . . . . . . 63 What Is the Business-Use Requirement? . . . . . . . 64 Do the Passenger Automobile Limits Apply? . . . . . 68 What Records Must Be Kept? . . . . . . . . . . . . . . . . 72 How Is Listed Property Information Reported? . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Get forms and other information faster and easier by: 6. How To Get Tax Help . . . . . . . . . . . . . . . . . . . . . 75 Internet www.irs.gov Appendix A — MACRS Percentage Table Guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Jul 16, 2009
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Appendix B — Table of Class Lives and Qualified reuse and recycling property. A 50% addi- Recovery Periods . . . . . . . . . . . . . . . . . . . . . . . 106 tional first year depreciation deduction is available for qual- ified reuse and recycling property acquired after August Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 31, 2008. See Qualified Reuse and Recycling Property in chapter 3. Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119 Additional tax relief for businesses affected by feder- ally declared disasters. An increased section 179 de- What’s New duction and a special depreciation allowance are available for qualified disaster assistance property. See Disaster Increased section 179 deduction dollar limits. The Assistance Property under Dollar Limits in chapter 2, and maximum amount you can elect to deduct for most section Qualified Disaster Assistance Property in chapter 3. 179 property you placed in service in 2008 is $250,000 ($285,000 for qualified enterprise zone and renewal com- Election to accelerate certain credits in lieu of the munity property). This limit is reduced by the amount by special depreciation allowance. Generally, corpora- which the cost of the property placed in service during the tions and certain automotive partnerships can elect to tax year exceeds $800,000. See
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