2021 Publication 946 - IRS tax forms

1 Userid: CPMS chema: tipxLeadpct: 100%Pt. size: 10 Draft Ok to PrintAH XSL/XMLF ileid: .. tions/P946/2017/A/XML/Cycle03/source(Ini t. & Date) _____Page 1 of 115 15:20 - 28-Feb-2018 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before of the TreasuryInternal Revenue ServicePublication 946 Cat. No. 13081 FHow ToDepreciateProperty Section 179 Deduction Special DepreciationAllowance MACRS Listed PropertyFor use in preparing2017 ReturnsGet forms and other information faster and easier at: (English) (Espa ol) ( ) ( ) (Pусский) (Ti ngVi t) ContentsFuture 's New for 's New for 1. Overview of Property Can Be Depreciated?..4 What Property Cannot Be Depreciated?..6 When Does Depreciation Begin and End?..7 What Method Can You Use To Depreciate Your Property?

2 8 What Is the Basis of Your Depreciable Property?..11 How Do You Treat Repairs and Improvements?..13Do You Have To File form 4562?..13 How Do You Correct Depreciation Deductions?..13 Chapter 2. Electing the Section 179 Property Qualifies?..15 What Property Does Not Qualify?..18 How Much Can You Deduct?..19 How Do You Elect the Deduction?..23 When Must You Recapture the Deduction?..23 Chapter 3. Claiming the Special Depreciation Is Qualified Property?..24 Election To Accelerate Certain Credits in Lieu of the Special Depreciation Much Can You Deduct?..28 How Can You Elect Not To Claim an Allowance?..29 When Must You Recapture an Allowance?..29 Chapter 4. Figuring Depreciation Under Depreciation System (GDS or ADS) Applies?..30 Which Property Class Applies Under GDS?..31 What Is the Placed in Service Date?

3 34 What Is the Basis for Depreciation?..34 Which Recovery Period Applies?..35 Which Convention Applies?..37 Which Depreciation Method Applies?..38 How Is the Depreciation Deduction Figured?..40 How Do You Use General Asset Accounts?..50 When Do You Recapture MACRS Depreciation?..54 Feb 28, 2018 Page 2 of 115 Fileid: .. tions/P946/2017/A/XML/Cycle03/source15:2 0 - 28-Feb-2018 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before 5. Additional Rules for Listed Is Listed Property?..55 Can Employees Claim a Deduction?..57 What Is the Business-Use Requirement?..58Do the Passenger Automobile Limits Apply?..62 What Records Must Be Kept?..66 How Is Listed Property Information Reported?..67 Chapter 6. How To Get Tax DevelopmentsFor the latest information about developments related to Pub.

4 946, such as legislation enacted after this Publication was published, go to 's New for 2017 Increased section 179 deduction dollar limits. The maximum amount you can elect to deduct for most sec-tion 179 property you placed in service in tax years begin-ning in 2017 is $510,000 ($545,000 for qualified enter-prise zone property). This limit is reduced by the amount by which the cost of section 179 property placed in serv-ice during the tax year exceeds $2,030,000. See Dollar Limits in chapter depreciation allowance for certain property. You may be able to take a 50% special depreciation al-lowance for certain property acquired before September 28, 2017, and placed in service before January 1, 2018, and certain plants bearing fruits and nuts, planted or graf-ted before September 28, 2017.

5 The special allowance will be phased down to 40% for certain property acquired before September 28, 2017, and placed in service in 2018. Also, you may be able to take a 100% special de-preciation allowance for certain property and certain plants bearing fruits and nuts acquired or planted or graf-ted after September 27, 2017, and placed in service or planted or grafted after September 27, 2017, and placed in service or planted or grafted before January 1, 2023. You may elect to apply a 50% special depreciation allow-ance instead of the 100% allowance for the first tax year ending after September 27, 2017. See Certain qualified property acquired before September 28, 2017, Certain property acquired after September 27, 2017, and Certain plants bearing fruits and nuts, depreciation allowance for qualified second generation biofuel plant property.

6 The special depre-ciation allowance will not apply to qualified second generation biofuel plant property placed in service after December 31, 2017. See Qualified Second Generation Bi-ofuel Plant Property in chapter race horses. The 3-year recovery period for race horses two years old or younger will not apply to horses placed in service after December 31, 2017. See Which Property Class Applies Under GDS in chapter motor sports entertainment complexes. Qualified motor sports entertainment complex property placed in service after December 31, 2017, will not be treated as 7-year property under MACRS. See Which Property Class Applies Under GDS in chapter depreciation for qualified Indian reser-vation property. The accelerated depreciation of prop-erty on an Indian reservation will not apply to property placed in service after December 31, 2017, or, if you make an irrevocable election out of all property in a class of property that is placed in service in a tax year beginning after December 31, 2016.

7 See Indian Reservation Prop-erty in chapter limits on business vehicles. The total section 179 deduction and depreciation you can deduct for a passenger automobile (that is not a truck or van) you use in your business and first placed in service in 2017 is $3,160, if the special depreciation allowance does not ap-ply. The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2017 is $3,560, if the special depreciation allowance does not apply. See Maximum Depreciation Deduction in chap-ter 's New for 2018 Section 179 deduction dollar limits. The maximum amount you can elect to deduct for most section 179 prop-erty you placed in service in tax years beginning in 2018 is $1,000,000. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,500, 179 qualified real property.

8 For property placed in service in tax years beginning after December 31, 2017, section 179 qualified real property is qualified improvement property (as defined in section 168(e)(6)), and certain specified improvements to nonresidential real property placed in service after the nonresidential real property was first placed in and related peripheral equipment. Com-puters and related peripheral equipment placed in service after December 31, 2017, in tax years ending after De-cember 31, 2017, are not listed real property trade or business and electing farm business. An electing real property trade or busi-ness (as defined in section 163(j)(7)(B)) and electing farming business (as defined in section 163(j)(7)(C)) are required to use the alternative depreciation system for certain property to figure depreciation under MACRS for tax years beginning after December 31, 2 Publication 946 (2017)Page 3 of 115 Fileid.

9 Tions/P946/2017/A/XML/Cycle03/source15:2 0 - 28-Feb-2018 The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before of missing children. The Internal Reve-nue Service is a proud partner with the National Center for Missing & Exploited Children (NCMEC). Photographs of missing children selected by the Center may appear in this Publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a Publication explains how you can recover the cost of business or income-producing property through deduc-tions for depreciation (for example, the special deprecia-tion allowance and deductions under the Modified Accel-erated Cost Recovery System (MACRS)).

10 It also explains how you can elect to take a section 179 deduction, in-stead of depreciation deductions, for certain property, and the additional rules for listed depreciation methods discussed in this publi-cation generally do not apply to property placed in service before 1987. For more information, see Pub. 534, Depreciating Property Placed in Service Before Many of the terms used in this Publication are defined in the Glossary near the end of the publica-tion. Glossary terms used in each discussion under the major headings are listed before the beginning of each discussion throughout the you need a different Publication ? The following ta-ble shows where you can get more detailed information when depreciating certain types of informationon depreciating:See Publication :A car463, Travel, Entertainment, Gift, and Car ExpensesResidential rental property527, Residential Rental Property (Including Rental of Vacation Home)Office space in your home587, Business Use of Your Home (Including Use by Daycare Providers)Farm property225, Farmer's Tax GuideComments and suggestions.