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Amend 2009 Taxes

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Amend 2009 Taxes

Amend 2009 taxes 7. Amend 2009 taxes   Depreciation, Depletion, and Amortization Table of Contents What's New for 2013 Introduction Topics - This chapter discusses: Useful Items - You may want to see: Overview of DepreciationWhat Property Can Be Depreciated? What Property Cannot Be Depreciated? When Does Depreciation Begin and End? Can You Use MACRS To Depreciate Your Property? What Is the Basis of Your Depreciable Property? How Do You Treat Repairs and Improvements? Do You Have To File Form 4562? How Do You Correct Depreciation Deductions? Section 179 Expense DeductionWhat Property Qualifies? What Property Does Not Qualify? How Much Can You Deduct? How Do You Elect the Deduction? When Must You Recapture the Deduction? Claiming the Special Depreciation AllowanceWhat is Qualified Property? How Can You Elect Not To Claim the Allowance? When Must You Recapture an Allowance Figuring Depreciation Under MACRSWhich Depreciation System (GDS or ADS) Applies? Which Property Class Applies Under GDS? What Is the Placed-in-Service Date? What Is the Basis for Depreciation? Which Recovery Period Applies? Which Convention Applies? Which Depreciation Method Applies? How Is the Depreciation Deduction Figured? How Do You Use General Asset Accounts? When Do You Recapture MACRS Depreciation? Additional Rules for Listed PropertyWhat Is Listed Property? What Is the Business-Use Requirement? Do the Passenger Automobile Limits Apply? Depletion Who Can Claim Depletion? Figuring Depletion AmortizationBusiness Start-Up Costs Reforestation Costs Section 197 Intangibles What's New for 2013 Increased section 179 expense deduction dollar limits. Amend 2009 taxes  The maximum amount you can elect to deduct for most section 179 property you placed in service in 2013 is $500,000. Amend 2009 taxes This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2 million. Amend 2009 taxes See Dollar Limits under Section 179 Expense Deduction , later. Amend 2009 taxes Extension of special depreciation allowance for certain qualified property acquired after December 31, 2007. Amend 2009 taxes . Amend 2009 taxes  You may be able to take a 50% special depreciation allowance for certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. Amend 2009 taxes See Claiming the Special Depreciation Allowance , later. Amend 2009 taxes Expiration of the 3- year recovery period for certain race horses. Amend 2009 taxes  The 3-year recovery period for race horses two years old or younger will expire for such horses placed in service after December 31, 2013. Amend 2009 taxes Introduction If you buy or make improvements to farm property such as machinery, equipment, livestock, or a structure with a useful life of more than a year, you generally cannot deduct its entire cost in one year. Amend 2009 taxes Instead, you must spread the cost over the time you use the property and deduct part of it each year. Amend 2009 taxes For most types of property, this is called depreciation. Amend 2009 taxes This chapter gives information on depreciation methods that generally apply to property placed in service after 1986. Amend 2009 taxes For information on depreciating pre-1987 property, see Publication 534, Depreciating Property Placed in Service Before 1987. Amend 2009 taxes Topics - This chapter discusses: Overview of depreciation Section 179 expense deduction Special depreciation allowance Modified Accelerated Cost Recovery System (MACRS) Listed property Basic information on cost depletion (including timber depletion) and percentage depletion Amortization of the costs of going into business, reforestation costs, the costs of pollution control facilities, and the costs of section 197 intangibles Useful Items - You may want to see: Publication 463 Travel, Entertainment, Gift, and Car Expenses 534 Depreciating Property Placed in Service Before 1987 535 Business Expenses 544 Sales and Other Dispositions of Assets 551 Basis of Assets 946 How To Depreciate Property Form (and Instructions) T (Timber), Forest Activities Schedule 3115 Application for Change in Accounting Method 4562 Depreciation and Amortization 4797 Sales of Business Property See chapter 16 for information about getting publications and forms. Amend 2009 taxes It is important to keep good records for property you depreciate. Amend 2009 taxes Do not file these records with your return. Amend 2009 taxes Instead, you should keep them as part of the permanent records of the depreciated property. Amend 2009 taxes They will help you verify the accuracy of the depreciation of assets placed in service in the current and previous tax years. Amend 2009 taxes For general information on recordkeeping, see Publication 583, Starting a Business and Keeping Records. Amend 2009 taxes For specific information on keeping records for section 179 property and listed property, see Publication 946, How To Depreciate Property. Amend 2009 taxes Overview of Depreciation This overview discusses basic information on the following. Amend 2009 taxes What property can be depreciated. Amend 2009 taxes What property cannot be depreciated. Amend 2009 taxes When depreciation begins and ends. Amend 2009 taxes Whether MACRS can be used to figure depreciation. Amend 2009 taxes What is the basis of your depreciable property. Amend 2009 taxes How to treat repairs and improvements. Amend 2009 taxes When you must file Form 4562. Amend 2009 taxes How you can correct depreciation claimed incorrectly. Amend 2009 taxes What Property Can Be Depreciated? You can depreciate most types of tangible property (except land), such as buildings, machinery, equipment, vehicles, certain livestock, and furniture. Amend 2009 taxes You can also depreciate certain intangible property, such as copyrights, patents, and computer software. Amend 2009 taxes To be depreciable, the property must meet all the following requirements. Amend 2009 taxes It must be property you own. Amend 2009 taxes It must be used in your business or income-producing activity. Amend 2009 taxes It must have a determinable useful life. Amend 2009 taxes It must have a useful life that extends substantially beyond the year you place it in service. Amend 2009 taxes Property You Own To claim depreciation, you usually must be the owner of the property. Amend 2009 taxes You are considered as owning property even if it is subject to a debt. Amend 2009 taxes Leased property. Amend 2009 taxes   You can depreciate leased property only if you retain the incidents of ownership in the property. Amend 2009 taxes This means you bear the burden of exhaustion of the capital investment in the property. Amend 2009 taxes Therefore, if you lease property from someone to use in your trade or business or for the production of income, you generally cannot depreciate its cost because you do not retain the incidents of ownership. Amend 2009 taxes You can, however, depreciate any capital improvements you make to the leased property. Amend 2009 taxes See Additions and Improvements under Which Recovery Period Applies in chapter 4 of Publication 946. Amend 2009 taxes   If you lease property to someone, you generally can depreciate its cost even if the lessee (the person leasing from you) has agreed to preserve, replace, renew, and maintain the property. Amend 2009 taxes However, you cannot depreciate the cost of the property if the lease provides that the lessee is to maintain the property and return to you the same property or its equivalent in value at the expiration of the lease in as good condition and value as when leased. Amend 2009 taxes Life tenant. Amend 2009 taxes   Generally, if you hold business or investment property as a life tenant, you can depreciate it as if you were the absolute owner of the property. Amend 2009 taxes See Certain term interests in property , later, for an exception. Amend 2009 taxes Property Used in Your Business or Income-Producing Activity To claim depreciation on property, you must use it in your business or income-producing activity. Amend 2009 taxes If you use property to produce income (investment use), the income must be taxable. Amend 2009 taxes You cannot depreciate property that you use solely for personal activities. Amend 2009 taxes However, if you use property for business or investment purposes and for personal purposes, you can deduct depreciation based only on the percentage of business or investment use. Amend 2009 taxes Example 1. Amend 2009 taxes   If you use your car for farm business, you can deduct depreciation based on its percentage of use in farming. Amend 2009 taxes If you also use it for investment purposes, you can depreciate it based on its percentage of investment use. Amend 2009 taxes Example 2. Amend 2009 taxes   If you use part of your home for business, you may be able to deduct depreciation on that part based on its business use. Amend 2009 taxes For more information, see Business Use of Your Home in chapter 4. Amend 2009 taxes Inventory. Amend 2009 taxes   You can never depreciate inventory because it is not held for use in your business. Amend 2009 taxes Inventory is any property you hold primarily for sale to customers in the ordinary course of your business. Amend 2009 taxes Livestock. Amend 2009 taxes   Livestock purchased for draft, breeding, or dairy purposes can be depreciated only if they are not kept in an inventory account. Amend 2009 taxes Livestock you raise usually has no depreciable basis because the costs of raising them are deducted and not added to their basis. Amend 2009 taxes However, see Immature livestock under When Does Depreciation Begin and End , later, for a special rule. Amend 2009 taxes Property Having a Determinable Useful Life To be depreciable, your property must have a determinable useful life. Amend 2009 taxes This means it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. Amend 2009 taxes Irrigation systems and water wells. Amend 2009 taxes   Irrigation systems and wells used in a trade or business can be depreciated if their useful life can be determined. Amend 2009 taxes You can depreciate irrigation systems and wells composed of masonry, concrete, tile, metal, or wood. Amend 2009 taxes In addition, you can depreciate costs for moving dirt to construct irrigation systems and water wells composed of these materials. Amend 2009 taxes However, land preparation costs for center pivot irrigation systems are not depreciable. Amend 2009 taxes Dams, ponds, and terraces. Amend 2009 taxes   In general, you cannot depreciate earthen dams, ponds, and terraces unless the structures have a determinable useful life. Amend 2009 taxes What Property Cannot Be Depreciated? Certain property cannot be depreciated, even if the requirements explained earlier are met. Amend 2009 taxes This includes the following. Amend 2009 taxes Land. Amend 2009 taxes You can never depreciate the cost of land because land does not wear out, become obsolete, or get used up. Amend 2009 taxes The cost of land generally includes the cost of clearing, grading, planting, and landscaping. Amend 2009 taxes Although you cannot depreciate land, you can depreciate certain costs incurred in preparing land for business use. Amend 2009 taxes See chapter 1 of Publication 946. Amend 2009 taxes Property placed in service and disposed of in the same year. Amend 2009 taxes Determining when property is placed in service is explained later. Amend 2009 taxes Equipment used to build capital improvements. Amend 2009 taxes You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. Amend 2009 taxes Intangible property such as section 197 intangibles. Amend 2009 taxes This property does not have a determinable useful life and generally cannot be depreciated. Amend 2009 taxes However, see Amortization , later. Amend 2009 taxes Special rules apply to computer software (discussed below). Amend 2009 taxes Certain term interests (discussed below). Amend 2009 taxes Computer software. Amend 2009 taxes   Computer software is generally not a section 197 intangible even if acquired in connection with the acquisition of a business, if it meets all of the following tests. Amend 2009 taxes It is readily available for purchase by the general public. Amend 2009 taxes It is subject to a nonexclusive license. Amend 2009 taxes It has not been substantially modified. Amend 2009 taxes   If the software meets the tests above, it can be depreciated and may qualify for the section 179 expense deduction and the special depreciation allowance (if applicable), discussed later. Amend 2009 taxes Certain term interests in property. Amend 2009 taxes   You cannot depreciate a term interest in property created or acquired after July 27, 1989, for any period during which the remainder interest is held, directly or indirectly, by a person related to you. Amend 2009 taxes This rule does not apply to the holder of a term interest in property acquired by gift, bequest, or inheritance. Amend 2009 taxes For more information, see chapter 1 of Publication 946. Amend 2009 taxes When Does Depreciation Begin and End? You begin to depreciate your property when you place it in service for use in your trade or business or for the production of income. Amend 2009 taxes You stop depreciating property either when you have fully recovered your cost or other basis or when you retire it from service, whichever happens first. Amend 2009 taxes Placed in Service Property is placed in service when it is ready and available for a specific use, whether in a business activity, an income-producing activity, a tax-exempt activity, or a personal activity. Amend 2009 taxes Even if you are not using the property, it is in service when it is ready and available for its specific use. Amend 2009 taxes Example. Amend 2009 taxes You bought a planter for use in your farm business. Amend 2009 taxes The planter was delivered in December 2012 after harvest was over. Amend 2009 taxes You begin to depreciate the planter for 2012 because it was ready and available for its specific use in 2012, even though it will not be used until the spring of 2013. Amend 2009 taxes If your planter comes unassembled in December 2012 and is put together in February 2013, it is not placed in service until 2013. Amend 2009 taxes You begin to depreciate it in 2013. Amend 2009 taxes If your planter was delivered and assembled in February 2013 but not used until April 2013, it is placed in service in February 2013, because this is when the planter was ready for its specified use. Amend 2009 taxes You begin to depreciate it in 2013. Amend 2009 taxes Fruit or nut trees and vines. Amend 2009 taxes   If you acquire an orchard, grove, or vineyard before the trees or vines have reached the income-producing stage, and they have a preproductive period of more than 2 years, you must capitalize the preproductive-period costs under the uniform capitalization rules (unless you elect not to use these rules). Amend 2009 taxes See chapter 6 for information about the uniform capitalization rules. Amend 2009 taxes Your depreciation begins when the trees and vines reach the income-producing stage (that is, when they bear fruit, nuts, or grapes in quantities sufficient to commercially warrant harvesting). Amend 2009 taxes Immature livestock. Amend 2009 taxes   Depreciation for livestock begins when the livestock reaches the age of maturity. Amend 2009 taxes If you bought immature livestock for drafting purposes, depreciation begins when they can be worked. Amend 2009 taxes If you bought immature livestock for dairy purposes, depreciation begins when they can be milked. Amend 2009 taxes If you bought immature livestock for breeding purposes, depreciation begins when they can be bred. Amend 2009 taxes Your basis for depreciation is your initial cost for the immature livestock. Amend 2009 taxes Idle Property Continue to claim a deduction for depreciation on property used in your business or for the production of income even if it is temporarily idle. Amend 2009 taxes For example, if you stop using a machine because there is a temporary lack of a market for a product made with that machine, continue to deduct depreciation on the machine. Amend 2009 taxes Cost or Other Basis Fully Recovered You stop depreciating property when you have fully recovered your cost or other basis. Amend 2009 taxes This happens when your section 179 and allowed or allowable depreciation deductions equal your cost or investment in the property. Amend 2009 taxes Retired From Service You stop depreciating property when you retire it from service, even if you have not fully recovered its cost or other basis. Amend 2009 taxes You retire property from service when you permanently withdraw it from use in a trade or business or from use in the production of income because of any of the following events. Amend 2009 taxes You sell or exchange the property. Amend 2009 taxes You convert the property to personal use. Amend 2009 taxes You abandon the property. Amend 2009 taxes You transfer the property to a supplies or scrap account. Amend 2009 taxes The property is destroyed. Amend 2009 taxes For information on abandonment of property, see chapter 8. Amend 2009 taxes For information on destroyed property, see chapter 11 and Publication 547, Casualties, Disasters, and Thefts. Amend 2009 taxes Can You Use MACRS To Depreciate Your Property? You must use the Modified Accelerated Cost Recovery System (MACRS) to depreciate most business and investment property placed in service after 1986. Amend 2009 taxes MACRS is explained later under Figuring Depreciation Under MACRS . Amend 2009 taxes You cannot use MACRS to depreciate the following property. Amend 2009 taxes Property you placed in service before 1987. Amend 2009 taxes Use the methods discussed in Publication 534. Amend 2009 taxes Certain property owned or used in 1986. Amend 2009 taxes See chapter 1 of Publication 946. Amend 2009 taxes Intangible property. Amend 2009 taxes Films, video tapes, and recordings. Amend 2009 taxes Certain corporate or partnership property acquired in a nontaxable transfer. Amend 2009 taxes Property you elected to exclude from MACRS. Amend 2009 taxes For more information, see chapter 1 of Publication 946. Amend 2009 taxes What Is the Basis of Your Depreciable Property? To figure your depreciation deduction, you must determine the basis of your property. Amend 2009 taxes To determine basis, you need to know the cost or other basis of your property. Amend 2009 taxes Cost or other basis. Amend 2009 taxes   The basis of property you buy is usually its cost plus amounts you paid for items such as sales tax, freight charges, and installation and testing fees. Amend 2009 taxes The cost includes the amount you pay in cash, debt obligations, other property, or services. Amend 2009 taxes   There are times when you cannot use cost as basis. Amend 2009 taxes In these situations, the fair market value (FMV) or the adjusted basis of the property may be used. Amend 2009 taxes Adjusted basis. Amend 2009 taxes   To find your property's basis for depreciation, you may have to make certain adjustments (increases and decreases) to the basis of the property for events occurring between the time you acquired the property and the time you placed it in service. Amend 2009 taxes Basis adjustment for depreciation allowed or allowable. Amend 2009 taxes   After you place your property in service, you must reduce the basis of the property by the depreciation allowed or allowable, whichever is greater. Amend 2009 taxes Depreciation allowed is depreciation you actually deducted (from which you received a tax benefit). Amend 2009 taxes Depreciation allowable is depreciation you are entitled to deduct. Amend 2009 taxes   If you do not claim depreciation you are entitled to deduct, you must still reduce the basis of the property by the full amount of depreciation allowable. Amend 2009 taxes   If you deduct more depreciation than you should, you must reduce your basis by any amount deducted from which you received a tax benefit (the depreciation allowed). Amend 2009 taxes   For more information, see chapter 6. Amend 2009 taxes How Do You Treat Repairs and Improvements? You generally deduct the cost of repairing business property in the same way as any other business expense. Amend 2009 taxes However, if a repair or replacement increases the value of your property, makes it more useful, or lengthens its life, you must treat it as an improvement and depreciate it. Amend 2009 taxes Treat improvements as separate depreciable property. Amend 2009 taxes See chapter 1 of Publication 946 for more information. Amend 2009 taxes Example. Amend 2009 taxes You repair a small section on a corner of the roof of a barn that you rent to others. Amend 2009 taxes You deduct the cost of the repair as a business expense. Amend 2009 taxes However, if you replace the entire roof, the new roof is considered to be an improvement because it increases the value and lengthens the life for the property. Amend 2009 taxes You depreciate the cost of the new roof. Amend 2009 taxes Improvements to rented property. Amend 2009 taxes   You can depreciate permanent improvements you make to business property you rent from someone else. Amend 2009 taxes Do You Have To File Form 4562? Use Form 4562 to claim your deduction for depreciation and amortization. Amend 2009 taxes You must complete and attach Form 4562 to your tax return if you are claiming any of the following. Amend 2009 taxes A section 179 expense deduction for the current year or a section 179 carryover from a prior year. Amend 2009 taxes Depreciation for property placed in service during the current year. Amend 2009 taxes Depreciation on any vehicle or other listed property, regardless of when it was placed in service. Amend 2009 taxes Amortization of costs that began in the current year. Amend 2009 taxes For more information, see the Instructions for Form 4562. Amend 2009 taxes How Do You Correct Depreciation Deductions? If you deducted an incorrect amount of depreciation in any year, you may be able to make a correction by filing an amended return for that year. Amend 2009 taxes You can file an amended return to correct the amount of depreciation claimed for any property in any of the following situations. Amend 2009 taxes You claimed the incorrect amount because of a mathematical error made in any year. Amend 2009 taxes You claimed the incorrect amount because of a posting error made in any year, for example, omitting an asset from the depreciation schedule. Amend 2009 taxes You have not adopted a method of accounting for the property placed in service by you in tax years ending after December 29, 2003. Amend 2009 taxes You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. Amend 2009 taxes Note. Amend 2009 taxes You have adopted a method of accounting if you used the same incorrect method of depreciation for two or more consecutively filed returns. Amend 2009 taxes If you are not allowed to make the correction on an amended return, you may be able to change your accounting method to claim the correct amount of depreciation. Amend 2009 taxes See the Instructions for Form 3115. Amend 2009 taxes Section 179 Expense Deduction You can elect to recover all or part of the cost of certain qualifying property, up to a limit, by deducting it in the year you place the property in service. Amend 2009 taxes This is the section 179 expense deduction. Amend 2009 taxes You can elect the section 179 expense deduction instead of recovering the cost by taking depreciation deductions. Amend 2009 taxes This part of the chapter explains the rules for the section 179 expense deduction. Amend 2009 taxes It explains what property qualifies for the deduction, what property does not qualify for the deduction, the limits that may apply, how to elect the deduction, and when you may have to recapture the deduction. Amend 2009 taxes For more information, see chapter 2 of Publication 946. Amend 2009 taxes What Property Qualifies? To qualify for the section 179 expense deduction, your property must meet all the following requirements. Amend 2009 taxes It must be eligible property. Amend 2009 taxes It must be acquired for business use. Amend 2009 taxes It must have been acquired by purchase. Amend 2009 taxes Eligible Property To qualify for the section 179 expense deduction, your property must be one of the following types of depreciable property. Amend 2009 taxes Tangible personal property. Amend 2009 taxes Qualified real property. Amend 2009 taxes (Special rules apply to qualified real property that you elect to treat as qualified section 179 real property. Amend 2009 taxes For more information, see chapter 2 of Publication 946 and section 179(f) of the Internal Revenue Code. Amend 2009 taxes ) 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 (a) above; or A facility used in connection with any of the activities in (a) for the bulk storage of fungible commodities. Amend 2009 taxes Single purpose agricultural (livestock) or horticultural structures. Amend 2009 taxes Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum. Amend 2009 taxes Off-the-shelf computer software that is readily available for purchase by the general public, is subject to a nonexclusive lease, and has not been substantially modified. Amend 2009 taxes Tangible personal property. Amend 2009 taxes   Tangible personal property is any tangible property that is not real property. Amend 2009 taxes It includes the following property. Amend 2009 taxes Machinery and equipment. Amend 2009 taxes Property contained in or attached to a building (other than structural components), such as milk tanks, automatic feeders, barn cleaners, and office equipment. Amend 2009 taxes Gasoline storage tanks and pumps at retail service stations. Amend 2009 taxes Livestock, including horses, cattle, hogs, sheep, goats, and mink and other fur-bearing animals. Amend 2009 taxes Facility used for the bulk storage of fungible commodities. Amend 2009 taxes   A facility used for the bulk storage of fungible commodities is qualifying property for purposes of the section 179 expense deduction if it is used in connection with any of the activities listed earlier in item (3)(a). Amend 2009 taxes Bulk storage means the storage of a commodity in a large mass before it is used. Amend 2009 taxes Grain bins. Amend 2009 taxes   A grain bin is an example of a storage facility that is qualifying section 179 property. Amend 2009 taxes It is a facility used in connection with the production of grain or livestock for the bulk storage of fungible commodities. Amend 2009 taxes Single purpose agricultural or horticultural structures. Amend 2009 taxes   A single purpose agricultural (livestock) or horticultural structure is qualifying property for purposes of the section 179 expense deduction. Amend 2009 taxes Agricultural structure. Amend 2009 taxes   A single purpose agricultural (livestock) structure is any building or enclosure specifically designed, constructed, and used for both the following reasons. Amend 2009 taxes To house, raise, and feed a particular type of livestock and its produce. Amend 2009 taxes To house the equipment, including any replacements, needed to house, raise, or feed the livestock. Amend 2009 taxes For this purpose, livestock includes poultry. Amend 2009 taxes   Single purpose structures are qualifying property if used, for example, to breed chickens or hogs, produce milk from dairy cattle, or produce feeder cattle or pigs, broiler chickens, or eggs. Amend 2009 taxes The facility must include, as an integral part of the structure or enclosure, equipment necessary to house, raise, and feed the livestock. Amend 2009 taxes Horticultural structure. Amend 2009 taxes   A single purpose horticultural structure is either of the following. Amend 2009 taxes A greenhouse specifically designed, constructed, and used for the commercial production of plants. Amend 2009 taxes A structure specifically designed, constructed, and used for the commercial production of mushrooms. Amend 2009 taxes Use of structure. Amend 2009 taxes   A structure must be used only for the purpose that qualified it. Amend 2009 taxes For example, a hog barn will not be qualifying property if you use it to house poultry. Amend 2009 taxes Similarly, using part of your greenhouse to sell plants will make the greenhouse nonqualifying property. Amend 2009 taxes   If a structure includes work space, the work space can be used only for the following activities. Amend 2009 taxes Stocking, caring for, or collecting livestock or plants or their produce. Amend 2009 taxes Maintaining the enclosure or structure. Amend 2009 taxes Maintaining or replacing the equipment or stock enclosed or housed in the structure. Amend 2009 taxes Property Acquired by Purchase To qualify for the section 179 expense deduction, your property must have been acquired by purchase. Amend 2009 taxes For example, property acquired by gift or inheritance does not qualify. Amend 2009 taxes Property acquired from a related person (that is, your spouse, ancestors, or lineal descendants) is not considered acquired by purchase. Amend 2009 taxes Example. Amend 2009 taxes Ken is a farmer. Amend 2009 taxes He purchased two tractors, one from his brother and one from his father. Amend 2009 taxes He placed both tractors in service in the same year he bought them. Amend 2009 taxes The tractor purchased from his father does not qualify for the section 179 expense deduction because he is a related person (as defined above). Amend 2009 taxes The tractor purchased from his brother does qualify for the deduction because Ken is not a related person (as defined above). Amend 2009 taxes What Property Does Not Qualify? Land and improvements. Amend 2009 taxes   Land and land improvements, do not qualify as section 179 property. Amend 2009 taxes Land improvements include nonagricultural fences, swimming pools, paved parking areas, wharves, docks, bridges, and fences. Amend 2009 taxes However, agricultural fences do qualify as section 179 property. Amend 2009 taxes Similarly, field drainage tile also qualifies as section 179 property. Amend 2009 taxes Excepted property. Amend 2009 taxes   Even if the requirements explained in the preceding discussions are met, farmers cannot elect the section 179 expense deduction for the following property. Amend 2009 taxes Certain property you lease to others (if you are a noncorporate lessor). Amend 2009 taxes Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging. Amend 2009 taxes Property used by a tax-exempt organization (other than a tax-exempt farmers' cooperative) unless the property is used mainly in a taxable unrelated trade or business. Amend 2009 taxes Property used by governmental units or foreign persons or entities (except property used under a lease with a term of less than 6 months). Amend 2009 taxes How Much Can You Deduct? Your section 179 expense deduction is generally the cost of the qualifying property. Amend 2009 taxes However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. Amend 2009 taxes These limits apply to each taxpayer, not to each business. Amend 2009 taxes However, see Married individuals under Dollar Limits , later. Amend 2009 taxes See also the special rules for applying the limits for partnerships and S corporations under Partnerships and S Corporations , later. Amend 2009 taxes If you deduct only part of the cost of qualifying property as a section 179 expense deduction, you can generally depreciate the cost you do not deduct. Amend 2009 taxes Use Part I of Form 4562 to figure your section 179 expense deduction. Amend 2009 taxes Partial business use. Amend 2009 taxes   When you use property for business and nonbusiness purposes, you can elect the section 179 expense deduction only if you use it more than 50% for business in the year you place it in service. Amend 2009 taxes If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. Amend 2009 taxes Use the resulting business cost to figure your section 179 expense deduction. Amend 2009 taxes Trade-in of other property. Amend 2009 taxes   If you buy qualifying property with cash and a trade-in, its cost for purposes of the section 179 expense deduction includes only the cash you paid. Amend 2009 taxes For example, if you buy (for cash and a trade-in) a new tractor for use in your business, your cost for the section 179 expense deduction is the cash you paid. Amend 2009 taxes It does not include the adjusted basis of the old tractor you trade for the new tractor. Amend 2009 taxes Example. Amend 2009 taxes J-Bar Farms traded two cultivators having a total adjusted basis of $6,800 for a new cultivator costing $13,200. Amend 2009 taxes They received an $8,000 trade-in allowance for the old cultivators and paid $5,200 cash for the new cultivator. Amend 2009 taxes J-Bar also traded a used pickup truck with an adjusted basis of $8,000 for a new pickup truck costing $35,000. Amend 2009 taxes They received a $5,000 trade-in allowance and paid $30,000 cash for the new pickup truck. Amend 2009 taxes Only the cash paid by J-Bar qualifies for the section 179 expense deduction. Amend 2009 taxes J-Bar's business costs that qualify for a section 179 expense deduction are $35,200 ($5,200 + $30,000). Amend 2009 taxes Dollar Limits The total amount you can elect to deduct under section 179 for most property placed in service in 2013 is $500,000. Amend 2009 taxes If you acquire and place in service more than one item of qualifying property during the year, you can allocate the section 179 expense deduction among the items in any way, as long as the total deduction is not more than $500,000. Amend 2009 taxes Qualified real property that you elect to treat as section 179 property is limited to $250,000 of the maximum section 179 deduction of $500,000 for 2013. Amend 2009 taxes You do not have to claim the full $500,000. Amend 2009 taxes For specific information on the section 179 dollar limits, see chapter 2 of Publication 946. Amend 2009 taxes Reduced dollar limit for cost exceeding $2 million. Amend 2009 taxes   If the cost of your qualifying section 179 property placed in service in 2013 is over $2 million, you must reduce the dollar limit (but not below zero) by the amount of cost over $2 million. Amend 2009 taxes If the cost of your section 179 property placed in service during 2013 is $2,500,000 or more, you cannot take a section 179 expense deduction and you cannot carry over the cost that is more than $2,500,000. Amend 2009 taxes Example. Amend 2009 taxes This year, James Smith placed in service machinery costing $2,050,000. Amend 2009 taxes Because this cost is $50,000 more than $2 million, he must reduce his dollar limit to $450,000 ($500,000 − $50,000). Amend 2009 taxes Limits for sport utility vehicles. Amend 2009 taxes   The total amount you can elect to deduct for certain sport utility vehicles and certain other vehicles placed in service in 2013 is $25,000. Amend 2009 taxes This rule applies to any 4-wheeled vehicle primarily designed or used to carry passengers over public streets, roads, and highways that is rated at more than 6,000 pounds gross vehicle weight and not more than 14,000 pounds gross vehicle weight. Amend 2009 taxes   For more information, see chapter 2 of Publication 946. Amend 2009 taxes Limits for passenger automobiles. Amend 2009 taxes   For a passenger automobile that is placed in service in 2013, the total section 179 and depreciation deduction is limited. Amend 2009 taxes See Do the Passenger Automobile Limits Apply , later. Amend 2009 taxes Married individuals. Amend 2009 taxes   If you are married, how you figure your section 179 expense deduction depends on whether you file jointly or separately. Amend 2009 taxes If you file a joint return, you and your spouse are treated as one taxpayer in determining any reduction to the dollar limit, regardless of which of you purchased the property or placed it in service. Amend 2009 taxes If you and your spouse file separate returns, you are treated as one taxpayer for the dollar limit, including the reduction for costs over $2 million. Amend 2009 taxes You must allocate the dollar limit (after any reduction) equally between you, unless you both elect a different allocation. Amend 2009 taxes If the percentages elected by each of you do not total 100%, 50% will be allocated to each of you. Amend 2009 taxes Joint return after separate returns. Amend 2009 taxes   If you and your spouse elect to amend your separate returns by filing a joint return after the due date for filing your return, the dollar limit on the joint return is the lesser of the following amounts. Amend 2009 taxes The dollar limit (after reduction for any cost of section 179 property over $2 million). Amend 2009 taxes The total cost of section 179 property you and your spouse elected to expense on your separate returns. Amend 2009 taxes Business Income Limit The total cost you can deduct each year after you apply the dollar limit is limited to the taxable income from the active conduct of any trade or business during the year. Amend 2009 taxes Generally, you are considered to actively conduct a trade or business if you meaningfully participate in the management or operations of the trade or business. Amend 2009 taxes Any cost not deductible in one year under section 179 because of this limit can be carried to the next year. Amend 2009 taxes See Carryover of disallowed deduction , later. Amend 2009 taxes Taxable income. Amend 2009 taxes   In general, figure taxable income for this purpose by totaling the net income and losses from all trades and businesses you actively conducted during the year. Amend 2009 taxes In addition to net income or loss from a sole proprietorship, partnership, or S corporation, net income or loss derived from a trade or business also includes the following items. Amend 2009 taxes Section 1231 gains (or losses) as discussed in chapter 9. Amend 2009 taxes Interest from working capital of your trade or business. Amend 2009 taxes Wages, salaries, tips, or other pay earned by you (or your spouse if you file a joint return) as an employee of any employer. Amend 2009 taxes   In addition, figure taxable income without regard to any of the following. Amend 2009 taxes The section 179 expense deduction. Amend 2009 taxes The self-employment tax deduction. Amend 2009 taxes Any net operating loss carryback or carryforward. Amend 2009 taxes Any unreimbursed employee business expenses. Amend 2009 taxes Two different taxable income limits. Amend 2009 taxes   In addition to the business income limit for your section 179 expense deduction, you may have a taxable income limit for some other deduction (for example, charitable contributions). Amend 2009 taxes You may have to figure the limit for this other deduction taking into account the section 179 expense deduction. Amend 2009 taxes If so, complete the following steps. Amend 2009 taxes Step Action 1 Figure taxable income without the section 179 expense deduction or the other deduction. Amend 2009 taxes 2 Figure a hypothetical section 179 expense deduction using the taxable income figured in Step 1. Amend 2009 taxes 3 Subtract the hypothetical section 179 expense deduction figured in Step 2 from the taxable income figured in Step 1. Amend 2009 taxes 4 Figure a hypothetical amount for the other deduction using the amount figured in Step 3 as taxable income. Amend 2009 taxes 5 Subtract the hypothetical other deduction figured in Step 4 from the taxable income figured in  Step 1. Amend 2009 taxes 6 Figure your actual section 179 expense deduction using the taxable income figured in Step 5. Amend 2009 taxes 7 Subtract your actual section 179 expense deduction figured in Step 6 from the taxable income figured in Step 1. Amend 2009 taxes 8 Figure your actual other deduction using the taxable income figured in Step 7. Amend 2009 taxes Example. Amend 2009 taxes On February 1, 2013, the XYZ farm corporation purchased and placed in service qualifying section 179 property that cost $500,000. Amend 2009 taxes It elects to expense the entire $500,000 cost under section 179. Amend 2009 taxes In June, the corporation gave a charitable contribution of $10,000. Amend 2009 taxes A corporation's limit on charitable contributions is figured after subtracting any section 179 expense deduction. Amend 2009 taxes The business income limit for the section 179 expense deduction is figured after subtracting any allowable charitable contributions. Amend 2009 taxes XYZ's taxable income figured without the section 179 expense deduction or the deduction for charitable contributions is $520,000. Amend 2009 taxes XYZ figures its section 179 expense deduction and its deduction for charitable contributions as follows. Amend 2009 taxes Step 1. Amend 2009 taxes Taxable income figured without either deduction is $520,000. Amend 2009 taxes Step 2. Amend 2009 taxes Using $520,000 as taxable income, XYZ's hypothetical section 179 expense deduction is $500,000. Amend 2009 taxes Step 3. Amend 2009 taxes $20,000 ($520,000 − $500,000). Amend 2009 taxes Step 4. Amend 2009 taxes Using $20,000 (from Step 3) as taxable income, XYZ's hypothetical charitable contribution (limited to 10% of taxable income) is $2,000. Amend 2009 taxes Step 5. Amend 2009 taxes $518,000 ($520,000 − $2,000). Amend 2009 taxes Step 6. Amend 2009 taxes Using $518,000 (from Step 5) as taxable income, XYZ figures the actual section 179 expense deduction. Amend 2009 taxes Because the taxable income is at least $500,000, XYZ can take a $500,000 section 179 expense deduction. Amend 2009 taxes Step 7. Amend 2009 taxes $20,000 ($520,000 − $500,000). Amend 2009 taxes Step 8. Amend 2009 taxes Using $20,000 (from Step 7) as taxable income, XYZ's actual charitable contribution (limited to 10% of taxable income) is $2,000. Amend 2009 taxes Carryover of disallowed deduction. Amend 2009 taxes   You can carry over for an unlimited number of years the cost of any section 179 property you elected to expense but were unable to because of the business income limit. Amend 2009 taxes   The amount you carry over is used in determining your section 179 expense deduction in the next year. Amend 2009 taxes However, it is subject to the limits in that year. Amend 2009 taxes If you place more than one property in service in a year, you can select the properties for which all or a part of the cost will be carried forward. Amend 2009 taxes Your selections must be shown in your books and records. Amend 2009 taxes Example. Amend 2009 taxes Last year, Joyce Jones placed in service a machine that cost $8,000 and elected to deduct all $8,000 under section 179. Amend 2009 taxes The taxable income from her business (determined without regard to both a section 179 expense deduction for the cost of the machine and the self-employment tax deduction) was $6,000. Amend 2009 taxes Her section 179 expense deduction was limited to $6,000. Amend 2009 taxes The $2,000 cost that was not allowed as a section 179 expense deduction (because of the business income limit) is carried to this year. Amend 2009 taxes This year, Joyce placed another machine in service that cost $9,000. Amend 2009 taxes Her taxable income from business (determined without regard to both a section 179 expense deduction for the cost of the machine and the self-employment tax deduction) is $10,000. Amend 2009 taxes Joyce can deduct the full cost of the machine ($9,000) but only $1,000 of the carryover from last year because of the business income limit. Amend 2009 taxes She can carry over the balance of $1,000 to next year. Amend 2009 taxes Partnerships and S Corporations The section 179 expense deduction limits apply both to the partnership or S corporation and to each partner or shareholder. Amend 2009 taxes The partnership or S corporation determines its section 179 expense deduction subject to the limits. Amend 2009 taxes It then allocates the deduction among its partners or shareholders. Amend 2009 taxes If you are a partner in a partnership or shareholder of an S corporation, you add the amount allocated from the partnership or S corporation to any section 179 costs not related to the partnership or S corporation and then apply the dollar limit to this total. Amend 2009 taxes To determine any reduction in the dollar limit for costs over $560,000, you do not include any of the cost of section 179 property placed in service by the partnership or S corporation. Amend 2009 taxes After you apply the dollar limit, you apply the business income limit to any remaining section 179 costs. Amend 2009 taxes For more information, see chapter 2 of Publication 946. Amend 2009 taxes Example. Amend 2009 taxes In 2013, Partnership P placed in service section 179 property with a total cost of $2,160,000. Amend 2009 taxes P must reduce its dollar limit by $160,000 ($2,160,000 − $2,000,000). Amend 2009 taxes Its maximum section 179 expense deduction is $340,000 ($500,000 − $160,000), and it elects to expense that amount. Amend 2009 taxes Because P's taxable income from the active conduct of all its trades or businesses for the year was $400,000, it can deduct the full $340,000. Amend 2009 taxes P allocates $100,000 of its section 179 expense deduction and $110,000 of its taxable income to John, one of its partners. Amend 2009 taxes John also conducts a business as a sole proprietor and in 2013, placed in service in that business, section 179 property costing $28,000. Amend 2009 taxes John's taxable income from that business was $10,000. Amend 2009 taxes In addition to the $100,000 allocated from P, he elects to expense the $28,000 of his sole proprietorship's section 179 costs. Amend 2009 taxes However, John's deduction is limited to his business taxable income of $120,000 ($110,000 from P plus $10,000 from his sole proprietorship). Amend 2009 taxes He carries over $8,000 ($128,000 − $120,000) of the elected section 179 costs to 2014. Amend 2009 taxes How Do You Elect the Deduction? You elect to take the section 179 expense deduction by completing Part I of Form 4562. Amend 2009 taxes If you elect the deduction for listed property, complete Part V of  Form 4562 before completing Part I. Amend 2009 taxes   File Form 4562 with either of the following: Your original tax return (whether or not you filed it timely), or An amended return filed within the time prescribed by law. Amend 2009 taxes An election made on an amended return must specify the item of section 179 property to which the election applies and the part of the cost of each such item to be taken into account. Amend 2009 taxes The amended return must also include any resulting adjustments to taxable income. Amend 2009 taxes Revoking an election. Amend 2009 taxes   An election (or any specification made in the election) to take a section 179 expense deduction for 2013 can be revoked without IRS approval by filing an amended return. Amend 2009 taxes The amended return must be filed within the time prescribed by law. Amend 2009 taxes The amended return must also include any resulting adjustments to taxable income (for example, allowable depreciation in that tax year for the item of section 179 property for which the election pertains. Amend 2009 taxes ) Once made, the revocation is irrevocable. Amend 2009 taxes When Must You Recapture the Deduction? You may have to recapture the section 179 expense deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. Amend 2009 taxes In the year the business use drops to 50% or less, you include the recapture amount as ordinary income. Amend 2009 taxes You also increase the basis of the property by the recapture amount. Amend 2009 taxes Recovery periods for property are discussed later. Amend 2009 taxes If you sell, exchange, or otherwise dispose of the property, do not figure the recapture amount under the rules explained in this discussion. Amend 2009 taxes Instead, use the rules for recapturing depreciation explained in  chapter 9 under Section 1245 Property. Amend 2009 taxes   If the property is listed property, do not figure the recapture amount under the rules explained in this discussion when the percentage of business use drops to 50% or less. Amend 2009 taxes Instead, use the rules for recapturing depreciation explained in chapter 5 of Publication 946 under Recapture of Excess Depreciation. Amend 2009 taxes Figuring the recapture amount. Amend 2009 taxes   To figure the amount to recapture, take the following steps. Amend 2009 taxes Figure the allowable depreciation for the section 179 expense deduction you claimed. Amend 2009 taxes Begin with the year you placed the property in service and include the year of recapture. Amend 2009 taxes Subtract the depreciation figured in (1) from the section 179 expense deduction you actually claimed. Amend 2009 taxes The result is the amount you must recapture. Amend 2009 taxes Example. Amend 2009 taxes In January 2011, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. Amend 2009 taxes The property is not listed property. Amend 2009 taxes He elected a $5,000 section 179 expense deduction for the property and also elected not to claim a special depreciation allowance. Amend 2009 taxes He used the property only for business in 2011 and 2012. Amend 2009 taxes During 2013, he used the property 40% for business and 60% for personal use. Amend 2009 taxes He figures his recapture amount as follows. Amend 2009 taxes Section 179 expense deduction claimed (2011) $5,000 Minus: Allowable depreciation (instead of section 179 expense deduction):   2011 $1,250   2012 1,875   2013 ($1,250 × 40% (business)) 500 3,625 2013 — Recapture amount $1,375     Paul must include $1,375 in income for 2013. Amend 2009 taxes Where to report recapture. Amend 2009 taxes   Report any recapture of the section 179 expense deduction as ordinary income in Part IV of Form 4797 and include it in income on Schedule F (Form 1040). Amend 2009 taxes Recapture for qualified section 179 GO Zone property. Amend 2009 taxes   If any qualified section 179 GO Zone property ceases to be used in the GO Zone in a later year, you must recapture the benefit of the increased section 179 expense deduction as “other income. Amend 2009 taxes ” Claiming the Special Depreciation Allowance For qualified property (defined below) placed in service in 2013, you can take an additional 50% special depreciation allowance. Amend 2009 taxes The allowance is an additional deduction you can take after any section 179 expense deduction and before you figure regular depreciation under MACRS. Amend 2009 taxes Figure the special depreciation allowance by multiplying the depreciable basis of the qualified property by 50%. Amend 2009 taxes What is Qualified Property? For farmers, qualified property generally is certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. Amend 2009 taxes Certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. Amend 2009 taxes   Certain qualified property (defined below) acquired after December 31, 2007, and before January 1, 2014, is eligible for a 50% special depreciation allowance. Amend 2009 taxes   Qualified property includes the following: Tangible property depreciated under the Modified Accelerated Cost Recovery System (MACRS) with a recovery period of 20 years or less. Amend 2009 taxes Water utility property. Amend 2009 taxes Off-the-shelf computer software. Amend 2009 taxes Qualified leasehold improvement property. Amend 2009 taxes   Qualified property must also meet all of the following tests: You must have acquired qualified property by purchase after December 31, 2007. Amend 2009 taxes If a binding contract to acquire the property existed before January 1, 2008, the property does not qualify. Amend 2009 taxes Qualified property must be placed in service after December 31, 2007 and placed in service before January 1, 2014 (before January 1, 2015 for certain property with a long production period and for certain aircraft). Amend 2009 taxes The original use of the property must begin with you after December 31, 2007. Amend 2009 taxes For more information, see chapter 3 of Publication 946. Amend 2009 taxes How Can You Elect Not To Claim the Allowance? You can elect, for any class of property, not to deduct the special depreciation allowance for all property in such class placed in service during the tax year. Amend 2009 taxes To make the election, attach a statement to your return indicating the class of property for which you are making the election. Amend 2009 taxes Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. Amend 2009 taxes However, if you timely filed your return for the year without making the election, you still can make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Amend 2009 taxes Attach the election statement to the amended return. Amend 2009 taxes On the amended return, write “Filed pursuant to section 301. Amend 2009 taxes 9100-2. Amend 2009 taxes ” Once made, the election may not be revoked without IRS consent. Amend 2009 taxes If you elect not to have the special depreciation allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. Amend 2009 taxes When Must You Recapture an Allowance When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. Amend 2009 taxes For more information, see chapter 3 of Publication 946. Amend 2009 taxes Figuring Depreciation Under MACRS The Modified Accelerated Cost Recovery System (MACRS) is used to recover the basis of most business and investment property placed in service after 1986. Amend 2009 taxes MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). Amend 2009 taxes Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. Amend 2009 taxes To be sure you can use MACRS to figure depreciation for your property, see Can You Use MACRS To Depreciate Your Property, earlier. Amend 2009 taxes This part explains how to determine which MACRS depreciation system applies to your property. Amend 2009 taxes It also discusses the following information that you need to know before you can figure depreciation under MACRS. Amend 2009 taxes Property's recovery class. Amend 2009 taxes Placed-in-service date. Amend 2009 taxes Basis for depreciation. Amend 2009 taxes Recovery period. Amend 2009 taxes Convention. Amend 2009 taxes Depreciation method. Amend 2009 taxes Finally, this part explains how to use this information to figure your depreciation deduction. Amend 2009 taxes Which Depreciation System (GDS or ADS) Applies? Your use of either the General Depreciation System (GDS) or the Alternative Depreciation System (ADS) to depreciate property under MACRS determines what depreciation method and recovery period you use. Amend 2009 taxes You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. Amend 2009 taxes Required use of ADS. Amend 2009 taxes   You must use ADS for the following property. Amend 2009 taxes All property used predominantly in a farming business and placed in service in any tax year during which an election not to apply the uniform capitalization rules to certain farming costs is in effect. Amend 2009 taxes Listed property used 50% or less in a qualified business use. Amend 2009 taxes See Additional Rules for Listed Property , later. Amend 2009 taxes Any tax-exempt use property. Amend 2009 taxes Any tax-exempt bond-financed property. Amend 2009 taxes Any property imported from a foreign country for which an Executive Order is in effect because the country maintains trade restrictions or engages in other discriminatory acts. Amend 2009 taxes Any tangible property used predominantly outside the United States during the year. Amend 2009 taxes If you are required to use ADS to depreciate your property, you cannot claim the special depreciation allowance. Amend 2009 taxes Electing ADS. Amend 2009 taxes   Although your property may qualify for GDS, you can elect to use ADS. Amend 2009 taxes The election generally must cover all property in the same property class you placed in service during the year. Amend 2009 taxes However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. Amend 2009 taxes Once you make this election, you can never revoke it. Amend 2009 taxes   You make the election by completing line 20 in Part III of Form 4562. Amend 2009 taxes Which Property Class Applies Under GDS? The following is a list of the nine property classes under GDS. Amend 2009 taxes 3-year property. Amend 2009 taxes 5-year property. Amend 2009 taxes 7-year property. Amend 2009 taxes 10-year property. Amend 2009 taxes 15-year property. Amend 2009 taxes 20-year property. Amend 2009 taxes 25-year property. Amend 2009 taxes Residential rental property. Amend 2009 taxes Nonresidential real property. Amend 2009 taxes See Which Property Class Applies Under GDS in chapter 4 of Publication 946 for examples of the types of property included in each class. Amend 2009 taxes What Is the Placed-in-Service Date? You begin to claim depreciation when your property is placed in service for use either in a trade or business or for the production of income. Amend 2009 taxes The placed-in-service date for your property is the date the property is ready and available for a specific use. Amend 2009 taxes It is therefore not necessarily the date it is first used. Amend 2009 taxes If you converted property held for personal use to use in a trade or business or for the production of income, treat the property as being placed in service on the conversion date. Amend 2009 taxes See Placed in Service under When Does Depreciation Begin and End , earlier, for examples illustrating when property is placed in service. Amend 2009 taxes What Is the Basis for Depreciation? The basis for depreciation of MACRS property is the property's cost or other basis multiplied by the percentage of business/investment use. Amend 2009 taxes Reduce that amount by any credits and deductions allocable to the property. Amend 2009 taxes The following are examples of some of the credits and deductions that reduce basis. Amend 2009 taxes Any deduction for section 179 property. Amend 2009 taxes Any deduction for removal of barriers to the disabled and the elderly. Amend 2009 taxes Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. Amend 2009 taxes Any special depreciation allowance. Amend 2009 taxes Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. Amend 2009 taxes For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property , earlier. Amend 2009 taxes Also, see chapter 6. Amend 2009 taxes For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. Amend 2009 taxes Which Recovery Period Applies? The recovery period of property is the number of years over which you recover its cost or other basis. Amend 2009 taxes It is determined based on the depreciation system (GDS or ADS) used. Amend 2009 taxes See Table 7-1 for recovery periods under both GDS and ADS for some commonly used assets. Amend 2009 taxes For a complete list of recovery periods, see the Table of Class Lives and Recovery Periods in Appendix B of Publication 946. Amend 2009 taxes House trailers for farm laborers. Amend 2009 taxes   To depreciate a house trailer you supply as housing for those who work on your farm, use one of the following recovery periods if the house trailer is mobile (it has wheels and a history of movement). Amend 2009 taxes A 7-year recovery period under GDS. Amend 2009 taxes A 10-year recovery period under ADS. Amend 2009 taxes   However, if the house trailer is not mobile (its wheels have been removed and permanent utilities and pipes attached to it), use one of the following recovery periods. Amend 2009 taxes A 20-year recovery period under GDS. Amend 2009 taxes A 25-year recovery period under ADS. Amend 2009 taxes Water wells. Amend 2009 taxes   Water wells used to provide water for raising poultry and livestock are land improvements. Amend 2009 taxes If they are depreciable, use one of the following recovery periods. Amend 2009 taxes A 15-year recovery period under GDS. Amend 2009 taxes A 20-year recovery period under ADS. Amend 2009 taxes   The types of water wells that can be depreciated were discussed earlier in Irrigation systems and water wells under Property Having a Determinable Useful Life . Amend 2009 taxes Table 7-1. Amend 2009 taxes Farm Property Recovery Periods   Recovery Period in Years Assets GDS ADS Agricultural structures (single purpose) 10 15 Automobiles 5 5 Calculators and copiers 5 6 Cattle (dairy or breeding) 5 7 Communication equipment1 7 10 Computer and peripheral equipment 5 5 Drainage facilities 15 20 Farm buildings2 20 25 Farm machinery and equipment 7 10 Fences (agricultural) 7 10 Goats and sheep (breeding) 5 5 Grain bin 7 10 Hogs (breeding) 3 3 Horses (age when placed in service)     Breeding and working (12 years or less) 7 10 Breeding and working (more than 12 years) 3 10 Racing horses 3 12 Horticultural structures (single purpose) 10 15 Logging machinery and equipment3 5 6 Nonresidential real property 394 40 Office furniture, fixtures, and equipment (not calculators, copiers, or typewriters) 7 10 Paved lots 15 20 Residential rental property 27. Amend 2009 taxes 5 40 Tractor units (over-the-road) 3 4 Trees or vines bearing fruit or nuts 10 20 Truck (heavy duty, unloaded weight 13,000 lbs. Amend 2009 taxes or more) 5 6 Truck (actual weight less than 13,000 lbs) 5 5 Water wells 15 20 1 Not including communication equipment listed in other classes. Amend 2009 taxes 2 Not including single purpose agricultural or horticultural structures. Amend 2009 taxes 3 Used by logging and sawmill operators for cutting of timber. Amend 2009 taxes 4 For property placed in service after May 12, 1993; for property placed in service before May 13, 1993,  the recovery period is 31. Amend 2009 taxes 5 years. Amend 2009 taxes Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. Amend 2009 taxes The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property. Amend 2009 taxes Use one of the following conventions. Amend 2009 taxes The half-year convention. Amend 2009 taxes The mid-month convention. Amend 2009 taxes The mid-quarter convention. Amend 2009 taxes For a detailed explanation of each convention, see Which Convention Applies in chapter 4 of Publication 946. Amend 2009 taxes Also, see the Instructions for Form 4562. Amend 2009 taxes Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. Amend 2009 taxes The 200% declining balance method over a GDS recovery period. Amend 2009 taxes The 150% declining balance method over a GDS recovery period. Amend 2009 taxes The straight line method over a GDS recovery period. Amend 2009 taxes The straight line method over an ADS recovery period. Amend 2009 taxes Depreciation Table. Amend 2009 taxes   The following table lists the types of property you can depreciate under each method. Amend 2009 taxes The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. Amend 2009 taxes Depreciation Table System/Method   Type of Property GDS using  150% DB • All property used in a farming business (except real property)   • All 15- and 20-year property   • Nonfarm 3-, 5-, 7-, and 10-year property1 GDS using SL • Nonresidential real property   • Residential rental property   • Trees or vines bearing fruit or nuts   • All 3-, 5-, 7-, 10-, 15-, and 20-year property1 ADS using SL • Property used predomi- nantly outside the United States   • Farm property used when an election not to apply the uniform capitalization rules is in effect   • Tax-exempt property   • Tax-exempt bond-financed property   • Imported property2   • Any property for which you elect to use this method1 GDS using  200% DB • Nonfarm 3-, 5-, 7-, and 10-year property 1Elective method 2See section 168(g)(6) of the Internal Revenue  Code Property used in farming business. Amend 2009 taxes   For personal property placed in service after 1988 in a farming business, you must use the 150% declining balance method over a GDS recovery period or you can elect one of the following methods. Amend 2009 taxes The straight line method over a GDS recovery period. Amend 2009 taxes The straight line method over an ADS recovery period. Amend 2009 taxes For property placed in service before 1999, you could have elected to use the 150% declining balance method using the ADS recovery periods for certain property classes. Amend 2009 taxes If you made this election, continue to use the same method and recovery period for that property. Amend 2009 taxes Real property. Amend 2009 taxes   You can depreciate real property using the straight line method under either GDS or ADS. Amend 2009 taxes Switching to straight line. Amend 2009 taxes   If you use a declining balance method, you switch to the straight line method in the year it provides an equal or greater deduction. Amend 2009 taxes If you use the MACRS percentage tables, discussed later under How Is the Depreciation Deduction Figured , you do not need to determine in which year your deduction is greater using the straight line method. Amend 2009 taxes The tables have the switch to the straight line method built into their rates. Amend 2009 taxes Fruit or nut trees and vines. Amend 2009 taxes   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a 10-year recovery period. Amend 2009 taxes ADS required for some farmers. Amend 2009 taxes   If you elect not to apply the uniform capitalization rules to any plant shown in Table 6-1 of chapter 6 and produced in your farming business, you must use ADS for all property you place in service in any year the election is in effect. Amend 2009 taxes See chapter 6 for a discussion of the application of the uniform capitalization rules to farm property. Amend 2009 taxes Electing a different method. Amend 2009 taxes   As shown in the Depreciation Table , you can elect a different method for depreciation for certain types of property. Amend 2009 taxes You must make the election by the due date of the return (including extensions) for the year you placed the property in service. Amend 2009 taxes However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of your return (excluding extensions). Amend 2009 taxes Attach the election to the amended return and write “Filed pursuant to section 301. Amend 2009 taxes 9100-2” on the election statement. Amend 2009 taxes File the amended return at the same address you filed the original return. Amend 2009 taxes Once you make the election, you cannot change it. Amend 2009 taxes    If you elect to use a different method for one item in a property class, you must apply the same method to all property in that class placed in service during the year of the election. Amend 2009 taxes However, you can make the election on a property-by-property basis for residential rental and nonresidential real property. Amend 2009 taxes Straight line election. Amend 2009 taxes   Instead of using the declining balance method, you can elect to use the straight line method over the GDS recovery period. Amend 2009 taxes Make the election by entering “S/L” under column (f) in Part III of Form 4562. Amend 2009 taxes ADS election. Amend 2009 taxes   As explained earlier under Which Depreciation System (GDS or ADS) Applies , you can elect to use ADS even though your property may come under GDS. Amend 2009 taxes ADS uses the straight line method of depreciation over the ADS recovery periods, which are generally longer than the GDS recovery periods. Amend 2009 taxes The ADS recovery periods for many assets used in the business of farming are listed in Table 7–1. Amend 2009 taxes Additional ADS recovery periods for other classes of property may be found in the Table of Class Lives and Recovery Periods in Appendix B of Publication 946. Amend 2009 taxes How Is the Depreciation Deduction Figured? To figure your depreciation deduction under MACRS, you first determine the depreciation system, property class, placed-in-service date, basis amount, recovery period, convention, and depreciation method that applies to your property. Amend 2009 taxes Then you are ready to figure your depreciation deduction. Amend 2009 taxes You can figure it in one of two ways. Amend 2009 taxes You can use the percentage tables provided by the IRS. Amend 2009 taxes You can figure your own deduction without using the tables. Amend 2009 taxes Figuring your own MACRS deduction will generally result in a slightly different amount than using the tables. Amend 2009 taxes Using the MACRS Percentage Tables To help you figure your deduction under MACRS, the IRS has established percentage tables that incorporate the applicable convention and depreciation method. Amend 2009 taxes These percentage tables are in Appendix A of Publication 946. Amend 2009 taxes Rules for using the tables. Amend 2009 taxes   The following rules cover the use of the percentage tables. Amend 2009 taxes You must apply the rates in the percentage tables to your property's unadjusted basis. Amend 2009 taxes Unadjusted basis is the same basis amount you would use to figure gain on a sale but figured without reducing your original basis by any MACRS depreciation taken in earlier years. Amend 2009 taxes You cannot use the percentage tables for a short tax year. Amend 2009 taxes See chapter 4 of Publication 946 for information on how to figure the deduction for a short tax year. Amend 2009 taxes You generally must continue to use them for the entire recovery period of the property. Amend 2009 taxes You must stop using the tables if you adjust the basis of the property for any reason other than— Depreciation allowed or allowable, or An addition or improvement to the property, which is depreciated as a separate property. Amend 2009 taxes Basis adjustment due to casualty loss. Amend 2009 taxes   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. Amend 2009 taxes For the year of the adjustment and the remaining recovery period, you must figure the depreciation yourself using the property's adjusted basis at the end of the year. Amend 2009 taxes See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. Amend 2009 taxes Figuring depreciation using the 150% DB method and half-year convention. Amend 2009 taxes    Table 7-2 has the percentages for 3-, 5-, 7-, and 20-year property. Amend 2009 taxes The percentages are based on the 150% declining balance method with a change to the straight line method. Amend 2009 taxes This table covers only the half-year convention and the first 8 years for 20-year property. Amend 2009 taxes See Appendix A in Publication 946 for complete MACRS tables, including tables for the mid-quarter and mid-month convention. Amend 2009 taxes   The following examples show how to figure depreciation under MACRS using the percentages in Table 7-2 . Amend 2009 taxes Example 1. Amend 2009 taxes During the year, you bought an item of 7-year property for $10,000 and placed it in service. Amend 2009 taxes You do not elect a section 179 expense deduction for this property. Amend 2009 taxes In addition, the property is not qualified property for purposes of the special depreciation allowance. Amend 2009 taxes The unadjusted basis of the property is $10,000. Amend 2009 taxes You use the percentages in Table 7-2 to figure your deduction. Amend 2009 taxes Since this is 7-year property, you multiply $10,000 by 10. Amend 2009 taxes 71% to get this year's depreciation of $1,071. Amend 2009 taxes For next year, your depreciation will be $1,913 ($10,000 × 19. Amend 2009 taxes 13%). Amend 2009 taxes Example 2. Amend 2009 taxes You had a barn constructed on your farm at a cost of $20,000. Amend 2009 taxes You placed the barn in service this year. Amend 2009 taxes You elect not to claim the special depreciation allowance. Amend 2009 taxes The barn is 20-year property and you use the table percentages to figure your deduction. Amend 2009 taxes You figure this year's depreciation by multiplying $20,000 (unadjusted basis) by 3. Amend 2009 taxes 75% to get $750. Amend 2009 taxes For next year, your depreciation will be $1,443. Amend 2009 taxes 80 ($20,000 × 7. Amend 2009 taxes 219%). Amend 2009 taxes Table 7-2. Amend 2009 taxes 150% Declining Balance Method (Half-Year Convention) Year 3-Year 5-Year 7-Year 20-Year 1 25. Amend 2009 taxes 0 % 15. Amend 2009 taxes 00 % 10. Amend 2009 taxes 71 % 3. Amend 2009 taxes 750 % 2 37. Amend 2009 taxes 5   25. Amend 2009 taxes 50   19. Amend 2009 taxes 13   7. Amend 2009 taxes 219   3 25. Amend 2009 taxes 0   17. Amend 2009 taxes 85   15. Amend 2009 taxes 03   6. Amend 2009 taxes 677   4 12. Amend 2009 taxes 5   16. Amend 2009 taxes 66   12. Amend 2009 taxes 25   6. Amend 2009 taxes 177   5     16. Amend 2009 taxes 66   12. Amend 2009 taxes 25   5. Amend 2009 taxes 713   6     8. Amend 2009 taxes 33   12. Amend 2009 taxes 25   5. Amend 2009 taxes 285   7         12. Amend 2009 taxes 25   4. Amend 2009 taxes 888   8         6. Amend 2009 taxes 13   4. Amend 2009 taxes 522   Figuring depreciation using the straight line method and half-year convention. Amend 2009 taxes   The following table has the straight line percentages for 3-, 5-, 7-, and 20-year property using the half-year convention. Amend 2009 taxes The table covers only the first 8 years for 20-year property. Amend 2009 taxes See Appendix A in Publication 946 for complete MACRS tables, including tables for the mid-quarter and mid-month convention. Amend 2009 taxes Table 7-3. Amend 2009 taxes Straight Line Method (Half-Year Convention) Year 3-Year 5-Year 7-Year 20-Year 1 16. Amend 2009 taxes 67 % 10 % 7. Amend 2009 taxes 14 % 2. Amend 2009 taxes 5 % 2 33. Amend 2009 taxes 33   20   14. Amend 2009 taxes 29   5. Amend 2009 taxes 0   3 33. Amend 2009 taxes 33   20   14. Amend 2009 taxes 29   5. Amend 2009 taxes 0   4 16. Amend 2009 taxes 67   20   14. Amend 2009 taxes 28   5. Amend 2009 taxes 0   5     20   14. Amend 2009 taxes 29   5. Amend 2009 taxes 0   6     10   14. Amend 2009 taxes 28   5. Amend 2009 taxes 0   7         14. Amend 2009 taxes 29   5. Amend 2009 taxes 0   8         7. Amend 2009 taxes 14   5. Amend 2009 taxes 0    
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The Amend 2009 Taxes

Amend 2009 taxes Publication 946 - Additional Material Table of Contents Appendix B — Table of Class Lives and Recovery PeriodsHow To Use the Tables This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Appendix A Please click here for the text description of the image. Amend 2009 taxes Table A-1 and A-2 Please click here for the text description of the image. Amend 2009 taxes Table A-3 and A-4 Please click here for the text description of the image. Amend 2009 taxes Table A-5 and A-6 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-7 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-8 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-8 (continued) This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-9 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-9 (continued) This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-10 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A–10 (continued) This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-11 Please click here for the text description of the image. Amend 2009 taxes Table A-11 (continued) This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-12 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-12 (continued) This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-13, A-14 and A-14 (continued. Amend 2009 taxes 1) Please click here for the text description of the image. Amend 2009 taxes Table A-14 (continued. Amend 2009 taxes 2) Please click here for the text description of the image. Amend 2009 taxes Table A-15 Please click here for the text description of the image. Amend 2009 taxes Table A-15 (continued) Please click here for the text description of the image. Amend 2009 taxes Table A-16 Please click here for the text description of the image. Amend 2009 taxes Table A-16 (continued) This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-17 Please click here for the text description of the image. Amend 2009 taxes Table A-17 (continued) Please click here for the text description of the image. Amend 2009 taxes Table A-18 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-18 (continued) This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table A-19 and Table A-20 Please click here for the text description of the image. Amend 2009 taxes Quality Indian Reservation Property Tables Please click here for the text description of the image. Amend 2009 taxes Qualified Indian Reservation Property Tables 2 Appendix B — Table of Class Lives and Recovery Periods The Table of Class Lives and Recovery Periods has two sections. Amend 2009 taxes The first section, Specific Depreciable Assets Used In All Business Activities, Except As Noted, generally lists assets used in all business activities. Amend 2009 taxes It is shown as Table B-1. Amend 2009 taxes The second section, Depreciable Assets Used In The Following Activities, describes assets used only in certain activities. Amend 2009 taxes It is shown as Table B-2. Amend 2009 taxes How To Use the Tables You will need to look at both Table B-1 and B-2 to find the correct recovery period. Amend 2009 taxes Generally, if the property is listed in Table B-1 you use the recovery period shown in that table. Amend 2009 taxes However, if the property is specifically listed in Table B-2 under the type of activity in which it is used, you use the recovery period listed under the activity in that table. Amend 2009 taxes Use the tables in the order shown below to determine the recovery period of your depreciable property. Amend 2009 taxes Table B-1. Amend 2009 taxes   Check Table B-1 for a description of the property. Amend 2009 taxes If it is described in Table B-1, also check Table B-2 to find the activity in which the property is being used. Amend 2009 taxes If the activity is described in Table B-2, read the text (if any) under the title to determine if the property is specifically included in that asset class. Amend 2009 taxes If it is, use the recovery period shown in the appropriate column of Table B-2 following the description of the activity. Amend 2009 taxes If the activity is not described in Table B-2 or if the activity is described but the property either is not specifically included in or is specifically excluded from that asset class, then use the recovery period shown in the appropriate column following the description of the property in Table B-1. Amend 2009 taxes Tax-exempt use property subject to a lease. Amend 2009 taxes   The recovery period for ADS cannot be less than 125 percent of the lease term for any property leased under a leasing arrangement to a tax-exempt organization, governmental unit, or foreign person or entity (other than a partnership). Amend 2009 taxes Table B-2. Amend 2009 taxes   If the property is not listed in Table B-1, check Table B-2 to find the activity in which the property is being used and use the recovery period shown in the appropriate column following the description. Amend 2009 taxes Property not in either table. Amend 2009 taxes   If the activity or the property is not included in either table, check the end of Table B-2 to find Certain Property for Which Recovery Periods Assigned. Amend 2009 taxes This property generally has a recovery period of 7 years for GDS or 12 years for ADS. Amend 2009 taxes See Which Property Class Applies Under GDS and Which Recovery Period Applies in chapter 4 for the class lives or the recovery periods for GDS and ADS for the following. Amend 2009 taxes Residential rental property and nonresidential real property (also see Appendix A, Chart 2). Amend 2009 taxes Qualified rent-to-own property. Amend 2009 taxes A motorsport entertainment complex placed in service before January 1, 2014. Amend 2009 taxes Any retail motor fuels outlet. Amend 2009 taxes Any qualified leasehold improvement property placed in service before January 1, 2014. Amend 2009 taxes Any qualified restaurant property placed in service before January 1, 2014. Amend 2009 taxes Initial clearing and grading land improvements for gas utility property and electric utility transmission and distribution plants. Amend 2009 taxes Any water utility property. Amend 2009 taxes Certain electric transmission property used in the transmission at 69 or more kilovolts of electricity for sale and placed in service after April 11, 2005. Amend 2009 taxes Natural gas gathering and distribution lines placed in service after April 11, 2005. Amend 2009 taxes Example 1. Amend 2009 taxes Richard Green is a paper manufacturer. Amend 2009 taxes During the year, he made substantial improvements to the land on which his paper plant is located. Amend 2009 taxes He checks Table B-1 and finds land improvements under asset class 00. Amend 2009 taxes 3. Amend 2009 taxes He then checks Table B-2 and finds his activity, paper manufacturing, under asset class 26. Amend 2009 taxes 1, Manufacture of Pulp and Paper. Amend 2009 taxes He uses the recovery period under this asset class because it specifically includes land improvements. Amend 2009 taxes The land improvements have a 13-year class life and a 7-year recovery period for GDS. Amend 2009 taxes If he elects to use ADS, the recovery period is 13 years. Amend 2009 taxes If Richard only looked at Table B-1, he would select asset class 00. Amend 2009 taxes 3, Land Improvements, and incorrectly use a recovery period of 15 years for GDS or 20 years for ADS. Amend 2009 taxes Example 2. Amend 2009 taxes Sam Plower produces rubber products. Amend 2009 taxes During the year, he made substantial improvements to the land on which his rubber plant is located. Amend 2009 taxes He checks Table B-1 and finds land improvements under asset class 00. Amend 2009 taxes 3. Amend 2009 taxes He then checks Table B-2 and finds his activity, producing rubber products, under asset class 30. Amend 2009 taxes 1, Manufacture of Rubber Products. Amend 2009 taxes Reading the headings and descriptions under asset class 30. Amend 2009 taxes 1, Sam finds that it does not include land improvements. Amend 2009 taxes Therefore, Sam uses the recovery period under asset class 00. Amend 2009 taxes 3. Amend 2009 taxes The land improvements have a 20-year class life and a 15-year recovery period for GDS. Amend 2009 taxes If he elects to use ADS, the recovery period is 20 years. Amend 2009 taxes Example 3. Amend 2009 taxes Pam Martin owns a retail clothing store. Amend 2009 taxes During the year, she purchased a desk and a cash register for use in her business. Amend 2009 taxes She checks Table B-1 and finds office furniture under asset class 00. Amend 2009 taxes 11. Amend 2009 taxes Cash registers are not listed in any of the asset classes in Table B-1. Amend 2009 taxes She then checks Table B-2 and finds her activity, retail store, under asset class 57. Amend 2009 taxes 0, Distributive Trades and Services, which includes assets used in wholesale and retail trade. Amend 2009 taxes This asset class does not specifically list office furniture or a cash register. Amend 2009 taxes She looks back at Table B-1 and uses asset class 00. Amend 2009 taxes 11 for the desk. Amend 2009 taxes The desk has a 10-year class life and a 7-year recovery period for GDS. Amend 2009 taxes If she elects to use ADS, the recovery period is 10 years. Amend 2009 taxes For the cash register, she uses asset class 57. Amend 2009 taxes 0 because cash registers are not listed in Table B-1 but it is an asset used in her retail business. Amend 2009 taxes The cash register has a 9-year class life and a 5-year recovery period for GDS. Amend 2009 taxes If she elects to use the ADS method, the recovery period is 9 years. Amend 2009 taxes This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table B-1 Please click here for the text description of the image. Amend 2009 taxes Table B-2 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table B-2 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table B-2 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table B-2 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table B-2 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table B-2 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table B-2 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. Amend 2009 taxes Table B-2 This image is too large to be displayed in the current screen. Amend 2009 taxes Please click the link to view the image. 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