What's New System 21 Accelerated Cost Recovery - IRS tax …

1 2017 Department of the Treasury Internal Revenue Service Instructions for Form 4562. Depreciation and Amortization (Including Information on Listed property ). Section references are to the Internal depreciation allowance will not apply Depreciation on any vehicle or Revenue Code unless otherwise noted. to qualified second generation biofuel other listed property (regardless of plant property placed in service after when it was placed in service). Future Developments December 31, 2017. A deduction for any vehicle For the latest information about reported on a form other than developments related to Form 4562 Recovery period for certain race horses. The 3-year Recovery period Schedule C (Form 1040), Profit or and its instructions, such as Loss From Business, or legislation enacted after this form and for race horses two years old or younger will not apply to horses Schedule C-EZ (Form 1040), Net instructions were published, go to Profit From Business.

2 Placed in service after December 31, Any depreciation on a corporate 2017. income tax return (other than Form What's New Recovery period for qualified mo- 1120S). tor sports entertainment com- Amortization of costs that begins Section 179 deduction dollar lim- plexes. Qualified motor sports during the 2017 tax year. its. For tax years beginning in 2017, entertainment complex property the maximum section 179 expense If you are an employee deducting placed in service after December 31, deduction is $510,000 ($545,000 for job-related vehicle expenses using 2017, will not be treated as 7-year qualified enterprise zone property ). either the standard mileage rate or property under MACRS. This limit is reduced by the amount by actual expenses, use Form 2106, which the cost of section 179 property Accelerated depreciation for quali- Employee Business Expenses, or placed in service during the tax year fied Indian reservation property .

3 Form 2106-EZ, Unreimbursed exceeds $2,030,000. See the For tax years beginning in 2017, you Employee Business Expenses, for instructions for Part I. can make an irrevocable election out this purpose. of the Accelerated depreciation for File a separate Form 4562 for each Special depreciation allowance for qualified Indian reservation property business or activity on your return for certain property . You may be able on a class-by-class basis. See Indian which Form 4562 is required. If you to take a 50% special depreciation reservation property under the need more space, attach additional allowance for certain property instructions for Column(d) Recovery sheets. However, complete only one acquired before September 28, 2017, period, later. Part I in its entirety when computing and placed in service before January 1, 2018, and certain plants bearing The Accelerated depreciation of your section 179 expense deduction.

4 Fruits and nuts planted or grafted property on an Indian reservation will See the instructions for line 12, later. before September 28, 2017. The not apply to property placed in service special allowance will be phased after December 31, 2017. Additional Information down to 40% for certain property For more information about acquired before September 28, 2017, General Instructions depreciation and amortization and placed in service in 2018. (including information on listed Also, you may be able to take a Purpose of Form property ), see the following. 100% special depreciation allowance Use Form 4562 to: Pub. 463, Travel, Entertainment, for certain property and certain plants Claim your deduction for Gift, and Car Expenses. bearing fruits and nuts acquired or depreciation and amortization, Pub. 534, Depreciating property planted or grafted after September 27, Make the election under section Placed in Service Before 1987.

5 2017, and placed in service before 179 to expense certain property , and Pub. 535, Business Expenses. January 1, 2023. You may elect to Provide information on the Pub. 551, Basis of Assets. apply a 50% special depreciation business/investment use of Pub. 946, How To Depreciate allowance instead of the 100% automobiles and other listed property . property . allowance for the first tax year ending after September 27, 2017. See Who Must File Definitions Certain qualified property acquired Except as otherwise noted, complete Depreciation before September 28, 2017, Certain and file Form 4562 if you are claiming qualified property acquired after Depreciation is the annual deduction any of the following. that allows you to recover the cost or September 27, 2017, and Certain Depreciation for property placed in plants bearing fruits and nuts, later. other basis of your business or service during the 2017 tax year.

6 Investment property over a certain Special depreciation allowance for A section 179 expense deduction number of years. Depreciation starts qualified second generation bio- (which may include a carryover from a when you first use the property in your fuel plant property . The special previous year). business or for the production of Feb 28, 2018 Cat. No. 12907Y. income. It ends when you either take active conduct of your trade or placed in service during the tax year the property out of service, deduct all business, and is one of the following. as section 179 property . See Election your depreciable cost or basis, or no Qualified section 179 real property . for certain qualified section 179 real longer use the property in your For more information, see Special property in Part I for information on business or for the production of rules for qualified section 179 real how to make this election.

7 If the income. property , later. election is made, the term "section Generally, you can depreciate: tangible personal property , 179 property " will include any qualified tangible property such as including cellular telephones, similar real property which is: buildings, machinery, vehicles, telecommunications equipment, and Qualified leasehold improvement furniture, and equipment; and air conditioning or heating units (for property as described in section Intangible property such as patents, example, portable air conditioners or 168(e)(6), as in effect before the copyrights, and computer software. heaters). enactment of Public Law 115-97, Other tangible property (except placed in service in tax years Exception. You cannot depreciate buildings and their structural beginning before January 1, 2018, land. components) used as: Qualified restaurant property as Accelerated Cost Recovery 1. An integral part of described in section 168(e)(7), as in manufacturing, production, or effect before the enactment of Public System Law 115-97, placed in service in tax extraction or of furnishing The Accelerated Cost Recovery years beginning before January 1, transportation, communications, System (ACRS) applies to property 2018, or electricity, gas, water, or sewage first used before 1987.

8 It is the name Qualified retail improvement disposal services;. given for the tax rules that allow a property as described in section taxpayer to recover through 2. A research facility used in 168(e)(8), as in effect before the depreciation deductions the cost of connection with any of the activities in enactment of Public Law 115-97, property used in a trade or business (1) above; or placed in service in tax years or to produce income. These rules are 3. A facility used in connection beginning before January 1, 2018. mandatory and generally apply to with any of the activities in (1) above This property is considered tangible property placed in service for the bulk storage of fungible "qualified section 179 real property .". after 1980 and before 1987. If you commodities. placed property in service during this Single purpose agricultural A deduction attributable to qualified period, you must continue to figure (livestock) or horticultural structures.

9 Section 179 real property which is your depreciation under ACRS. Storage facilities (except buildings disallowed under the trade or and their structural components) used business income limitation (see ACRS consists of Accelerated Business Income Limit in chapter 2 of depreciation methods and an in connection with distributing petroleum or any primary product of Pub. 946) for 2017 can be carried alternate ACRS method that could over to 2018. Thus, the amount of any have been elected. The alternate petroleum. 2017 disallowed section 179 expense ACRS method used a Recovery Off the shelf computer software. deduction attributable to qualified percentage based on a modified section 179 real property will be straight line method. See the Section 179 property does not include the following. reported on line 13 of Form 4562. instructions for line 16 for more information. For a complete property held for investment Amortization discussion of ACRS, see Pub.

10 534. (section 212 property ). property used mainly outside the Amortization is similar to the straight Modified Accelerated Cost United States (except for property line method of depreciation in that an annual deduction is allowed to Recovery System described in section 168(g)(4)). property used mainly to furnish recover certain costs over a fixed time The Modified Accelerated Cost period. You can amortize such items Recovery System (MACRS) is the lodging or in connection with the furnishing of lodging (except as as the costs of starting a business, current method of Accelerated asset goodwill, and certain other depreciation required by the tax code. provided in section 50(b)(2)). property used by a tax-exempt intangibles. See the instructions for Under MACRS, all assets are divided Part VI. into classes which dictate the number organization (other than a section 521. of years over which an asset's cost farmers' cooperative) unless the Listed property will be recovered.