Section 179 Deduction and Special Allowance - Form 4562

Section 179 Property  https://www.irs.gov/pub/irs-pdf/i4562.pdf?_ga=1.247664839.1715192775.1473785521  

Section 179 property is property that you acquire by purchase for use in the active conduct of your trade or business, and is one of the following.

Qualified section 179 real property. For more information, see Special rules for qualified section 179 real property, later.

Tangible personal property, including cellular telephones and similar telecommunications equipment.

Other tangible property (except buildings and their structural components) used as:

An integral part of manufacturing, production, or extraction or of furnishing transportation, communications, electricity, gas, water, or sewage disposal services;

A research facility used in connection with any of the activities in (1) above; or

A facility used in connection with any of the activities in (1) above for the bulk storage of fungible commodities.

Single purpose agricultural (livestock) or horticultural structures.

Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum.

Off the shelf computer software.

Section 179 property does not include the following.

Property held for investment (section 212 property).

Property used mainly outside the United States (except for property described in section 168(g)(4)).

Property used mainly to furnish lodging or in connection with the furnishing of lodging (except as provided in section 50(b)(2)).

Property used by a tax-exempt organization (other than a section 521 farmers' cooperative) unless the property is used mainly in a taxable unrelated trade or business.

Property used by a governmental unit or foreign person or entity (except for property used under a lease with a term of less than 6 months).

Air conditioning or heating units.

See the instructions for Part I and Pub. 946.

Special Depreciation Allowance and Other Depreciation

For qualified property (defined below) placed in service during the tax year, you may be able to take an additional 50% special depreciation allowance. The special depreciation allowance applies only for the first year the property is placed in service. The allowance is an additional deduction you can take after any section 179 expense deduction and before you figure regular depreciation under the modified accelerated cost recovery system (MACRS).

Qualified property. You can take the special depreciation allowance for certain qualified second generation biofuel plant property, certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2016, and qualified reuse and recycling property.

Qualified second generation biofuel plant property. Qualified second generation biofuel plant property is property used in the United States solely to produce second generation biofuel (as defined in section 40(b)(6)(E)).

The 50% special depreciation allowance applies to qualified second generation biofuel plant property. The property must also meet the following requirements.

The original use of the property must begin with you after December 20, 2006.

You must have acquired the property by purchase after December 20, 2006. If a binding contract to acquire the property existed before December 21, 2006, the property does not qualify.

Qualified second generation biofuel plant property must be placed in service for use in your trade or business or for the production of income before January 1, 2017.

For property you sold and leased back or for self-constructed property, special rules apply. See section 168(l) (4).

Certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2016. Certain qualified property (defined below) acquired after December 31, 2007, is eligible for a 50% special depreciation allowance. If a binding contract to acquire the property existed before January 1, 2008, the property does not qualify.

Qualified property is:

Tangible property depreciated under MACRS with a recovery period of 20 years or less.

Water utility property (see 25-year property, later).

Computer software defined in and depreciated under section 167(f)(1).

Qualified leasehold improvement property.

Qualified property must also be placed in service before September 9, 2010, or after December 31, 2011, and before January 1, 2016 (or before September 9, 2010, or after December 31, 2012, and before January 1, 2017, for certain property with a long production period and for certain aircraft). The original use of the property must begin with you after December 31, 2007.

For more information see IRS Instructions for Form 4562.