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State Tax Return For Free

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State Tax Return For Free

State tax return for free 20. State tax return for free   Standard Deduction Table of Contents What's New Introduction Standard Deduction Amount Standard Deduction for Dependents Who Should ItemizeWhen to itemize. State tax return for free Married persons who filed separate returns. State tax return for free What's New Standard deduction increased. State tax return for free  The standard deduction for some taxpayers who do not itemize their deductions on Schedule A (Form 1040) is higher for 2013 than it was for 2012. State tax return for free The amount depends on your filing status. State tax return for free You can use the 2013 Standard Deduction Tables in this chapter to figure your standard deduction. State tax return for free Introduction This chapter discusses the following topics. State tax return for free How to figure the amount of your standard deduction. State tax return for free The standard deduction for dependents. State tax return for free Who should itemize deductions. State tax return for free Most taxpayers have a choice of either taking a standard deduction or itemizing their deductions. State tax return for free If you have a choice, you can use the method that gives you the lower tax. State tax return for free The standard deduction is a dollar amount that reduces your taxable income. State tax return for free It is a benefit that eliminates the need for many taxpayers to itemize actual deductions, such as medical expenses, charitable contributions, and taxes, on Schedule A (Form 1040). State tax return for free The standard deduction is higher for taxpayers who: Are 65 or older, or Are blind. State tax return for free You benefit from the standard deduction if your standard deduction is more than the total of your allowable itemized deductions. State tax return for free Persons not eligible for the standard deduction. State tax return for free   Your standard deduction is zero and you should itemize any deductions you have if: Your filing status is married filing separately, and your spouse itemizes deductions on his or her return, You are filing a tax return for a short tax year because of a change in your annual accounting period, or You are a nonresident or dual-status alien during the year. State tax return for free You are considered a dual-status alien if you were both a nonresident and resident alien during the year. State tax return for free Note. State tax return for free If you are a nonresident alien who is married to a U. State tax return for free S. State tax return for free citizen or resident alien at the end of the year, you can choose to be treated as a U. State tax return for free S. State tax return for free resident. State tax return for free (See Publication 519, U. State tax return for free S. State tax return for free Tax Guide for Aliens. State tax return for free ) If you make this choice, you can take the standard deduction. State tax return for free If an exemption for you can be claimed on another person's return (such as your parents' return), your standard deduction may be limited. State tax return for free See Standard Deduction for Dependents, later. State tax return for free Standard Deduction Amount The standard deduction amount depends on your filing status, whether you are 65 or older or blind, and whether an exemption can be claimed for you by another taxpayer. State tax return for free Generally, the standard deduction amounts are adjusted each year for inflation. State tax return for free The standard deduction amounts for most people are shown in Table 20-1. State tax return for free Decedent's final return. State tax return for free   The standard deduction for a decedent's final tax return is the same as it would have been had the decedent continued to live. State tax return for free However, if the decedent was not 65 or older at the time of death, the higher standard deduction for age cannot be claimed. State tax return for free Higher Standard Deduction for Age (65 or Older) If you are age 65 or older on the last day of the year and do not itemize deductions, you are entitled to a higher standard deduction. State tax return for free You are considered 65 on the day before your 65th birthday. State tax return for free Therefore, you can take a higher standard deduction for 2013 if you were born before January 2, 1949. State tax return for free Use Table 20-2 to figure the standard deduction amount. State tax return for free Higher Standard Deduction for Blindness If you are blind on the last day of the year and you do not itemize deductions, you are entitled to a higher standard deduction. State tax return for free Not totally blind. State tax return for free   If you are not totally blind, you must get a certified statement from an eye doctor (ophthalmologist or optometrist) that: You cannot see better than 20/200 in the better eye with glasses or contact lenses, or Your field of vision is 20 degrees or less. State tax return for free   If your eye condition is not likely to improve beyond these limits, the statement should include this fact. State tax return for free You must keep the statement in your records. State tax return for free   If your vision can be corrected beyond these limits only by contact lenses that you can wear only briefly because of pain, infection, or ulcers, you can take the higher standard deduction for blindness if you otherwise qualify. State tax return for free Spouse 65 or Older or Blind You can take the higher standard deduction if your spouse is age 65 or older or blind and: You file a joint return, or You file a separate return and can claim an exemption for your spouse because your spouse had no gross income and cannot be claimed as a dependent by another taxpayer. State tax return for free You cannot claim the higher standard deduction for an individual other than yourself and your spouse. State tax return for free Examples The following examples illustrate how to determine your standard deduction using Tables 20-1 and 20-2. State tax return for free Example 1. State tax return for free Larry, 46, and Donna, 33, are filing a joint return for 2013. State tax return for free Neither is blind, and neither can be claimed as a dependent. State tax return for free They decide not to itemize their deductions. State tax return for free They use Table 20-1. State tax return for free Their standard deduction is $12,200. State tax return for free Example 2. State tax return for free The facts are the same as in Example 1 except that Larry is blind at the end of 2013. State tax return for free Larry and Donna use Table 20-2. State tax return for free Their standard deduction is $13,400. State tax return for free Example 3. State tax return for free Bill and Lisa are filing a joint return for 2013. State tax return for free Both are over age 65. State tax return for free Neither is blind, and neither can be claimed as a dependent. State tax return for free If they do not itemize deductions, they use Table 20-2. State tax return for free Their standard deduction is $14,600. State tax return for free Standard Deduction for Dependents The standard deduction for an individual who can be claimed as a dependent on another person's tax return is generally limited to the greater of: $1,000, or The individual's earned income for the year plus $350 (but not more than the regular standard deduction amount, generally $6,100). State tax return for free However, if the individual is 65 or older or blind, the standard deduction may be higher. State tax return for free If you (or your spouse, if filing jointly) can be claimed as a dependent on someone else's return, use Table 20-3 to determine your standard deduction. State tax return for free Earned income defined. State tax return for free   Earned income is salaries, wages, tips, professional fees, and other amounts received as pay for work you actually perform. State tax return for free    For purposes of the standard deduction, earned income also includes any part of a scholarship or fellowship grant that you must include in your gross income. State tax return for free See Scholarships and fellowships in chapter 12 for more information on what qualifies as a scholarship or fellowship grant. State tax return for free Example 1. State tax return for free Michael is single. State tax return for free His parents can claim an exemption for him on their 2013 tax return. State tax return for free He has interest income of $780 and wages of $150. State tax return for free He has no itemized deductions. State tax return for free Michael uses Table 20-3 to find his standard deduction. State tax return for free He enters $150 (his earned income) on line 1, $500 ($150 + $350) on line 3, $1,000 (the larger of $500 and $1,000) on line 5, and $6,100 on line 6. State tax return for free His standard deduction, on line 7a, is $1,000 (the smaller of $1,000 and $6,100). State tax return for free Example 2. State tax return for free Joe, a 22-year-old full-time college student, can be claimed as a dependent on his parents' 2013 tax return. State tax return for free Joe is married and files a separate return. State tax return for free His wife does not itemize deductions on her separate return. State tax return for free Joe has $1,500 in interest income and wages of $3,800. State tax return for free He has no itemized deductions. State tax return for free Joe finds his standard deduction by using Table 20-3. State tax return for free He enters his earned income, $3,800 on line 1. State tax return for free He adds lines 1 and 2 and enters $4,150 on line 3. State tax return for free On line 5, he enters $4,150, the larger of lines 3 and 4. State tax return for free Because Joe is married filing a separate return, he enters $6,100 on line 6. State tax return for free On line 7a he enters $4,150 as his standard deduction because it is smaller than $6,100, the amount on line 6. State tax return for free Example 3. State tax return for free Amy, who is single, can be claimed as a dependent on her parents' 2013 tax return. State tax return for free She is 18 years old and blind. State tax return for free She has interest income of $1,300 and wages of $2,900. State tax return for free She has no itemized deductions. State tax return for free Amy uses Table 20-3 to find her standard deduction. State tax return for free She enters her wages of $2,900 on line 1. State tax return for free She adds lines 1 and 2 and enters $3,250 on line 3. State tax return for free On line 5, she enters $3,250, the larger of lines 3 and 4. State tax return for free Because she is single, Amy enters $6,100 on line 6. State tax return for free She enters $3,250 on line 7a. State tax return for free This is the smaller of the amounts on lines 5 and 6. State tax return for free Because she checked one box in the top part of the worksheet, she enters $1,500 on line 7b. State tax return for free She then adds the amounts on lines 7a and 7b and enters her standard deduction of $4,750 on line 7c. State tax return for free Example 4. State tax return for free Ed is single. State tax return for free His parents can claim an exemption for him on their 2013 tax return. State tax return for free He has wages of $7,000, interest income of $500, and a business loss of $3,000. State tax return for free He has no itemized deductions. State tax return for free Ed uses Table 20-3 to figure his standard deduction. State tax return for free He enters $4,000 ($7,000 - $3,000) on line 1. State tax return for free He adds lines 1 and 2 and enters $4,350 on line 3. State tax return for free On line 5 he enters $4,350, the larger of lines 3 and 4. State tax return for free Because he is single, Ed enters $6,100 on line 6. State tax return for free On line 7a he enters $4,350 as his standard deduction because it is smaller than $6,100, the amount on line 6. State tax return for free Who Should Itemize You should itemize deductions if your total deductions are more than the standard deduction amount. State tax return for free Also, you should itemize if you do not qualify for the standard deduction, as discussed earlier under Persons not eligible for the standard deduction . State tax return for free You should first figure your itemized deductions and compare that amount to your standard deduction to make sure you are using the method that gives you the greater benefit. State tax return for free You may be subject to a limit on some of your itemized deductions if your adjusted gross income is more than: $250,000 if single ($275,000 if head of household, $300,000 if married filing jointly or qualifying widow(er); or $150,000 if married filing separately). State tax return for free See chapter 29 or the instructions for Schedule A (Form 1040) for more information on figuring the correct amount of your itemized deductions. State tax return for free When to itemize. State tax return for free   You may benefit from itemizing your deductions on Schedule A (Form 1040) if you: Do not qualify for the standard deduction, or the amount you can claim is limited, Had large uninsured medical and dental expenses during the year, Paid interest and taxes on your home, Had large unreimbursed employee business expenses or other miscellaneous deductions, Had large uninsured casualty or theft losses, Made large contributions to qualified charities, or Have total itemized deductions that are more than the standard deduction to which you otherwise are entitled. State tax return for free These deductions are explained in chapters 21–28. State tax return for free    If you decide to itemize your deductions, complete Schedule A and attach it to your Form 1040. State tax return for free Enter the amount from Schedule A, line 29, on Form 1040, line 40. State tax return for free Electing to itemize for state tax or other purposes. State tax return for free   Even if your itemized deductions are less than your standard deduction, you can elect to itemize deductions on your federal return rather than take the standard deduction. State tax return for free You may want to do this if, for example, the tax benefit of itemizing your deductions on your state tax return is greater than the tax benefit you lose on your federal return by not taking the standard deduction. State tax return for free To make this election, you must check the box on line 30 of Schedule A. State tax return for free Changing your mind. State tax return for free   If you do not itemize your deductions and later find that you should have itemized — or if you itemize your deductions and later find you should not have — you can change your return by filing Form 1040X, Amended U. State tax return for free S. State tax return for free Individual Income Tax Return. State tax return for free See Amended Returns and Claims for Refund in chapter 1 for more information on amended returns. State tax return for free Married persons who filed separate returns. State tax return for free   You can change methods of taking deductions only if you and your spouse both make the same changes. State tax return for free Both of you must file a consent to assessment for any additional tax either one may owe as a result of the change. State tax return for free    You and your spouse can use the method that gives you the lower total tax, even though one of you may pay more tax than you would have paid by using the other method. State tax return for free You both must use the same method of claiming deductions. State tax return for free If one itemizes deductions, the other should itemize because he or she will not qualify for the standard deduction. State tax return for free See Persons not eligible for the standard deduction , earlier. State tax return for free 2013 Standard Deduction Tables If you are married filing a separate return and your spouse itemizes deductions, or if you are a dual-status alien, you cannot take the standard deduction even if you were born before January 2, 1949, or are blind. State tax return for free Table 20-1. State tax return for free Standard Deduction Chart for Most People* If your filing status is. State tax return for free . State tax return for free . State tax return for free Your standard deduction is: Single or Married filing separately $6,100 Married filing jointly or Qualifying widow(er) with dependent child 12,200 Head of household 8,950 *Do not use this chart if you were born before January 2, 1949, are blind, or if someone else can claim you (or your spouse if filing jointly) as a dependent. State tax return for free Use Table 20-2 or 20-3 instead. State tax return for free Table 20-2. State tax return for free Standard Deduction Chart for People Born Before January 2, 1949, or Who are Blind Check the correct number of boxes below. State tax return for free Then go to the chart. State tax return for free You: Born before January 2, 1949 □ Blind □ Your spouse, if claiming spouse's exemption: Born before January 2, 1949 □ Blind □ Total number of boxes checked   IF  your filing status is. State tax return for free . State tax return for free . State tax return for free AND the number in the box above is. State tax return for free . State tax return for free . State tax return for free THEN your standard deduction is. State tax return for free . State tax return for free . State tax return for free Single 1 $7,600   2 9,100 Married filing jointly 1 $13,400 or Qualifying 2 14,600 widow(er) with 3 15,800 dependent child 4 17,000 Married filing 1 $7,300 separately 2 8,500   3 9,700   4 10,900 Head of household 1 $10,450   2 11,950 *If someone else can claim you (or your spouse if filing jointly) as a dependent, use Table 20-3 instead. State tax return for free Table 20-3. State tax return for free Standard Deduction Worksheet for Dependents Use this worksheet only if someone else can claim you (or your spouse if filing jointly) as a dependent. State tax return for free Check the correct number of boxes below. State tax return for free Then go to the worksheet. State tax return for free You:   Born before January 2, 1949 □ Blind □ Your spouse, if claiming spouse's exemption: Born before January 2, 1949 □ Blind □ Total number of boxes checked 1. State tax return for free Enter your earned income (defined below). State tax return for free If none, enter -0-. State tax return for free 1. State tax return for free   2. State tax return for free Additional amount. State tax return for free 2. State tax return for free $350 3. State tax return for free Add lines 1 and 2. State tax return for free 3. State tax return for free   4. State tax return for free Minimum standard deduction. State tax return for free 4. State tax return for free $1,000 5. State tax return for free Enter the larger of line 3 or line 4. State tax return for free 5. State tax return for free   6. State tax return for free Enter the amount shown below for your filing status. State tax return for free Single or Married filing separately—$6,100 Married filing jointly—$12,200 Head of household—$8,950 6. State tax return for free   7. State tax return for free Standard deduction. State tax return for free         a. State tax return for free Enter the smaller of line 5 or line 6. State tax return for free If born after January 1, 1949, and not blind, stop here. State tax return for free This is your standard deduction. State tax return for free Otherwise, go on to line 7b. State tax return for free 7a. State tax return for free     b. State tax return for free If born before January 2, 1949, or blind, multiply $1,500 ($1,200 if married) by the number in the box above. State tax return for free 7b. State tax return for free     c. State tax return for free Add lines 7a and 7b. State tax return for free This is your standard deduction for 2013. State tax return for free 7c. State tax return for free   Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services you performed. State tax return for free It also includes any amount received as a scholarship that you must include in your income. State tax return for free Prev  Up  Next   Home   More Online Publications
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SOI Tax Stats - Corporate Foreign Tax Credit Statistics

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Corporate Foreign Tax Credit, Tax Year 2010 One Sheet
 

What is the Corporate Foreign Tax Credit?

The corporate foreign tax credit is a set of provisions designed by Congress to eliminate potential double taxation on the foreign-source income of U.S. corporations. Double taxation occurs when an item of income is taxed by both the United States, as the corporation's country of residence, as well as by the country where the income was generated. The current provisions allow U.S. businesses to credit their foreign taxes paid, accrued, or deemed paid against their U.S. income tax liability, subject to limitations that prevent taxpayers from using taxes paid in a country with a higher tax rate than the U.S. to offset their tax liability on U.S. income. Corporations are required to calculate this credit separately for different income categories to prevent taxpayers from combining income that is traditionally taxed at low rates, such as dividend or interest income, with income that is typically taxed at higher rates, such as active business income. The corporate foreign tax credit is reported on Form 1118, Foreign Tax Credit - Corporations.

For information about selected terms and concepts and a description of the data sources and limitations, please visit Corporate Foreign Tax Credit Study Metadata.

Statistical Tables      SOI Bulletin Articles      Archive
 


Statistical Tables

The following tables are available as Microsoft Excel®  files.  A free Excel viewer is available for download, if needed.

U.S. Corporation Income Tax Returns with a Foreign Tax Credit: Total Assets, Income, Taxes, and Credits, and Foreign Income, Deductions, and Taxes 
Shown by major and selected minor industry.

U.S. Corporation Income Tax Returns with a Foreign Tax Credit: Returns with Income in Excess Credit Position: Foreign Income, Deductions, and Taxes 
Shown by major and selected minor industry.

U.S. Corporation Income Tax Returns with a Foreign Tax Credit: Returns with Income in Excess Limitation Position: Foreign Income, Deductions, and Taxes 
Shown by major and selected minor industry.

U.S. Corporation Income Tax Returns with a Foreign Tax Credit: Foreign Income, Deductions, and Taxes
Shown by industrial sector and by type of foreign income for which separate credit was computed. (Tax Year 2006 is the last year published for this table.)

U.S. Corporation Income Tax Returns with a Foreign Tax Credit: Foreign Income, Deductions, and Taxes Reported on Form 1118
Shown by selected country to which foreign taxes were paid.
 


SOI Bulletin Articles

The following are available as PDF files. A free Adobe® Reader is available for download, if needed.


Archives

Foreign Tax Credit, Claimed on Corporation Income Tax Returns

 


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The State Tax Return For Free

State tax return for free 7. State tax return for free   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. State tax return for free  The maximum amount you can elect to deduct for most section 179 property you placed in service in 2013 is $500,000. State tax return for free This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2 million. State tax return for free See Dollar Limits under Section 179 Expense Deduction , later. State tax return for free Extension of special depreciation allowance for certain qualified property acquired after December 31, 2007. State tax return for free . State tax return for free  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. State tax return for free See Claiming the Special Depreciation Allowance , later. State tax return for free Expiration of the 3- year recovery period for certain race horses. State tax return for free  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. State tax return for free 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. State tax return for free Instead, you must spread the cost over the time you use the property and deduct part of it each year. State tax return for free For most types of property, this is called depreciation. State tax return for free This chapter gives information on depreciation methods that generally apply to property placed in service after 1986. State tax return for free For information on depreciating pre-1987 property, see Publication 534, Depreciating Property Placed in Service Before 1987. State tax return for free 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. State tax return for free It is important to keep good records for property you depreciate. State tax return for free Do not file these records with your return. State tax return for free Instead, you should keep them as part of the permanent records of the depreciated property. State tax return for free They will help you verify the accuracy of the depreciation of assets placed in service in the current and previous tax years. State tax return for free For general information on recordkeeping, see Publication 583, Starting a Business and Keeping Records. State tax return for free For specific information on keeping records for section 179 property and listed property, see Publication 946, How To Depreciate Property. State tax return for free Overview of Depreciation This overview discusses basic information on the following. State tax return for free What property can be depreciated. State tax return for free What property cannot be depreciated. State tax return for free When depreciation begins and ends. State tax return for free Whether MACRS can be used to figure depreciation. State tax return for free What is the basis of your depreciable property. State tax return for free How to treat repairs and improvements. State tax return for free When you must file Form 4562. State tax return for free How you can correct depreciation claimed incorrectly. State tax return for free 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. State tax return for free You can also depreciate certain intangible property, such as copyrights, patents, and computer software. State tax return for free To be depreciable, the property must meet all the following requirements. State tax return for free It must be property you own. State tax return for free It must be used in your business or income-producing activity. State tax return for free It must have a determinable useful life. State tax return for free It must have a useful life that extends substantially beyond the year you place it in service. State tax return for free Property You Own To claim depreciation, you usually must be the owner of the property. State tax return for free You are considered as owning property even if it is subject to a debt. State tax return for free Leased property. State tax return for free   You can depreciate leased property only if you retain the incidents of ownership in the property. State tax return for free This means you bear the burden of exhaustion of the capital investment in the property. State tax return for free 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. State tax return for free You can, however, depreciate any capital improvements you make to the leased property. State tax return for free See Additions and Improvements under Which Recovery Period Applies in chapter 4 of Publication 946. State tax return for free   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. State tax return for free 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. State tax return for free Life tenant. State tax return for free   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. State tax return for free See Certain term interests in property , later, for an exception. State tax return for free 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. State tax return for free If you use property to produce income (investment use), the income must be taxable. State tax return for free You cannot depreciate property that you use solely for personal activities. State tax return for free 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. State tax return for free Example 1. State tax return for free   If you use your car for farm business, you can deduct depreciation based on its percentage of use in farming. State tax return for free If you also use it for investment purposes, you can depreciate it based on its percentage of investment use. State tax return for free Example 2. State tax return for free   If you use part of your home for business, you may be able to deduct depreciation on that part based on its business use. State tax return for free For more information, see Business Use of Your Home in chapter 4. State tax return for free Inventory. State tax return for free   You can never depreciate inventory because it is not held for use in your business. State tax return for free Inventory is any property you hold primarily for sale to customers in the ordinary course of your business. State tax return for free Livestock. State tax return for free   Livestock purchased for draft, breeding, or dairy purposes can be depreciated only if they are not kept in an inventory account. State tax return for free Livestock you raise usually has no depreciable basis because the costs of raising them are deducted and not added to their basis. State tax return for free However, see Immature livestock under When Does Depreciation Begin and End , later, for a special rule. State tax return for free Property Having a Determinable Useful Life To be depreciable, your property must have a determinable useful life. State tax return for free This means it must be something that wears out, decays, gets used up, becomes obsolete, or loses its value from natural causes. State tax return for free Irrigation systems and water wells. State tax return for free   Irrigation systems and wells used in a trade or business can be depreciated if their useful life can be determined. State tax return for free You can depreciate irrigation systems and wells composed of masonry, concrete, tile, metal, or wood. State tax return for free In addition, you can depreciate costs for moving dirt to construct irrigation systems and water wells composed of these materials. State tax return for free However, land preparation costs for center pivot irrigation systems are not depreciable. State tax return for free Dams, ponds, and terraces. State tax return for free   In general, you cannot depreciate earthen dams, ponds, and terraces unless the structures have a determinable useful life. State tax return for free What Property Cannot Be Depreciated? Certain property cannot be depreciated, even if the requirements explained earlier are met. State tax return for free This includes the following. State tax return for free Land. State tax return for free You can never depreciate the cost of land because land does not wear out, become obsolete, or get used up. State tax return for free The cost of land generally includes the cost of clearing, grading, planting, and landscaping. State tax return for free Although you cannot depreciate land, you can depreciate certain costs incurred in preparing land for business use. State tax return for free See chapter 1 of Publication 946. State tax return for free Property placed in service and disposed of in the same year. State tax return for free Determining when property is placed in service is explained later. State tax return for free Equipment used to build capital improvements. State tax return for free You must add otherwise allowable depreciation on the equipment during the period of construction to the basis of your improvements. State tax return for free Intangible property such as section 197 intangibles. State tax return for free This property does not have a determinable useful life and generally cannot be depreciated. State tax return for free However, see Amortization , later. State tax return for free Special rules apply to computer software (discussed below). State tax return for free Certain term interests (discussed below). State tax return for free Computer software. State tax return for free   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. State tax return for free It is readily available for purchase by the general public. State tax return for free It is subject to a nonexclusive license. State tax return for free It has not been substantially modified. State tax return for free   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. State tax return for free Certain term interests in property. State tax return for free   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. State tax return for free This rule does not apply to the holder of a term interest in property acquired by gift, bequest, or inheritance. State tax return for free For more information, see chapter 1 of Publication 946. State tax return for free 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. State tax return for free 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. State tax return for free 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. State tax return for free Even if you are not using the property, it is in service when it is ready and available for its specific use. State tax return for free Example. State tax return for free You bought a planter for use in your farm business. State tax return for free The planter was delivered in December 2012 after harvest was over. State tax return for free 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. State tax return for free If your planter comes unassembled in December 2012 and is put together in February 2013, it is not placed in service until 2013. State tax return for free You begin to depreciate it in 2013. State tax return for free 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. State tax return for free You begin to depreciate it in 2013. State tax return for free Fruit or nut trees and vines. State tax return for free   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). State tax return for free See chapter 6 for information about the uniform capitalization rules. State tax return for free 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). State tax return for free Immature livestock. State tax return for free   Depreciation for livestock begins when the livestock reaches the age of maturity. State tax return for free If you bought immature livestock for drafting purposes, depreciation begins when they can be worked. State tax return for free If you bought immature livestock for dairy purposes, depreciation begins when they can be milked. State tax return for free If you bought immature livestock for breeding purposes, depreciation begins when they can be bred. State tax return for free Your basis for depreciation is your initial cost for the immature livestock. State tax return for free 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. State tax return for free 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. State tax return for free Cost or Other Basis Fully Recovered You stop depreciating property when you have fully recovered your cost or other basis. State tax return for free This happens when your section 179 and allowed or allowable depreciation deductions equal your cost or investment in the property. State tax return for free 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. State tax return for free 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. State tax return for free You sell or exchange the property. State tax return for free You convert the property to personal use. State tax return for free You abandon the property. State tax return for free You transfer the property to a supplies or scrap account. State tax return for free The property is destroyed. State tax return for free For information on abandonment of property, see chapter 8. State tax return for free For information on destroyed property, see chapter 11 and Publication 547, Casualties, Disasters, and Thefts. State tax return for free 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. State tax return for free MACRS is explained later under Figuring Depreciation Under MACRS . State tax return for free You cannot use MACRS to depreciate the following property. State tax return for free Property you placed in service before 1987. State tax return for free Use the methods discussed in Publication 534. State tax return for free Certain property owned or used in 1986. State tax return for free See chapter 1 of Publication 946. State tax return for free Intangible property. State tax return for free Films, video tapes, and recordings. State tax return for free Certain corporate or partnership property acquired in a nontaxable transfer. State tax return for free Property you elected to exclude from MACRS. State tax return for free For more information, see chapter 1 of Publication 946. State tax return for free What Is the Basis of Your Depreciable Property? To figure your depreciation deduction, you must determine the basis of your property. State tax return for free To determine basis, you need to know the cost or other basis of your property. State tax return for free Cost or other basis. State tax return for free   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. State tax return for free The cost includes the amount you pay in cash, debt obligations, other property, or services. State tax return for free   There are times when you cannot use cost as basis. State tax return for free In these situations, the fair market value (FMV) or the adjusted basis of the property may be used. State tax return for free Adjusted basis. State tax return for free   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. State tax return for free Basis adjustment for depreciation allowed or allowable. State tax return for free   After you place your property in service, you must reduce the basis of the property by the depreciation allowed or allowable, whichever is greater. State tax return for free Depreciation allowed is depreciation you actually deducted (from which you received a tax benefit). State tax return for free Depreciation allowable is depreciation you are entitled to deduct. State tax return for free   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. State tax return for free   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). State tax return for free   For more information, see chapter 6. State tax return for free 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. State tax return for free 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. State tax return for free Treat improvements as separate depreciable property. State tax return for free See chapter 1 of Publication 946 for more information. State tax return for free Example. State tax return for free You repair a small section on a corner of the roof of a barn that you rent to others. State tax return for free You deduct the cost of the repair as a business expense. State tax return for free 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. State tax return for free You depreciate the cost of the new roof. State tax return for free Improvements to rented property. State tax return for free   You can depreciate permanent improvements you make to business property you rent from someone else. State tax return for free Do You Have To File Form 4562? Use Form 4562 to claim your deduction for depreciation and amortization. State tax return for free You must complete and attach Form 4562 to your tax return if you are claiming any of the following. State tax return for free A section 179 expense deduction for the current year or a section 179 carryover from a prior year. State tax return for free Depreciation for property placed in service during the current year. State tax return for free Depreciation on any vehicle or other listed property, regardless of when it was placed in service. State tax return for free Amortization of costs that began in the current year. State tax return for free For more information, see the Instructions for Form 4562. State tax return for free 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. State tax return for free You can file an amended return to correct the amount of depreciation claimed for any property in any of the following situations. State tax return for free You claimed the incorrect amount because of a mathematical error made in any year. State tax return for free You claimed the incorrect amount because of a posting error made in any year, for example, omitting an asset from the depreciation schedule. State tax return for free You have not adopted a method of accounting for the property placed in service by you in tax years ending after December 29, 2003. State tax return for free You claimed the incorrect amount on property placed in service by you in tax years ending before December 30, 2003. State tax return for free Note. State tax return for free You have adopted a method of accounting if you used the same incorrect method of depreciation for two or more consecutively filed returns. State tax return for free 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. State tax return for free See the Instructions for Form 3115. State tax return for free 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. State tax return for free This is the section 179 expense deduction. State tax return for free You can elect the section 179 expense deduction instead of recovering the cost by taking depreciation deductions. State tax return for free This part of the chapter explains the rules for the section 179 expense deduction. State tax return for free 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. State tax return for free For more information, see chapter 2 of Publication 946. State tax return for free What Property Qualifies? To qualify for the section 179 expense deduction, your property must meet all the following requirements. State tax return for free It must be eligible property. State tax return for free It must be acquired for business use. State tax return for free It must have been acquired by purchase. State tax return for free Eligible Property To qualify for the section 179 expense deduction, your property must be one of the following types of depreciable property. State tax return for free Tangible personal property. State tax return for free Qualified real property. State tax return for free (Special rules apply to qualified real property that you elect to treat as qualified section 179 real property. State tax return for free For more information, see chapter 2 of Publication 946 and section 179(f) of the Internal Revenue Code. State tax return for free ) 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. State tax return for free Single purpose agricultural (livestock) or horticultural structures. State tax return for free Storage facilities (except buildings and their structural components) used in connection with distributing petroleum or any primary product of petroleum. State tax return for free 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. State tax return for free Tangible personal property. State tax return for free   Tangible personal property is any tangible property that is not real property. State tax return for free It includes the following property. State tax return for free Machinery and equipment. State tax return for free Property contained in or attached to a building (other than structural components), such as milk tanks, automatic feeders, barn cleaners, and office equipment. State tax return for free Gasoline storage tanks and pumps at retail service stations. State tax return for free Livestock, including horses, cattle, hogs, sheep, goats, and mink and other fur-bearing animals. State tax return for free Facility used for the bulk storage of fungible commodities. State tax return for free   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). State tax return for free Bulk storage means the storage of a commodity in a large mass before it is used. State tax return for free Grain bins. State tax return for free   A grain bin is an example of a storage facility that is qualifying section 179 property. State tax return for free It is a facility used in connection with the production of grain or livestock for the bulk storage of fungible commodities. State tax return for free Single purpose agricultural or horticultural structures. State tax return for free   A single purpose agricultural (livestock) or horticultural structure is qualifying property for purposes of the section 179 expense deduction. State tax return for free Agricultural structure. State tax return for free   A single purpose agricultural (livestock) structure is any building or enclosure specifically designed, constructed, and used for both the following reasons. State tax return for free To house, raise, and feed a particular type of livestock and its produce. State tax return for free To house the equipment, including any replacements, needed to house, raise, or feed the livestock. State tax return for free For this purpose, livestock includes poultry. State tax return for free   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. State tax return for free The facility must include, as an integral part of the structure or enclosure, equipment necessary to house, raise, and feed the livestock. State tax return for free Horticultural structure. State tax return for free   A single purpose horticultural structure is either of the following. State tax return for free A greenhouse specifically designed, constructed, and used for the commercial production of plants. State tax return for free A structure specifically designed, constructed, and used for the commercial production of mushrooms. State tax return for free Use of structure. State tax return for free   A structure must be used only for the purpose that qualified it. State tax return for free For example, a hog barn will not be qualifying property if you use it to house poultry. State tax return for free Similarly, using part of your greenhouse to sell plants will make the greenhouse nonqualifying property. State tax return for free   If a structure includes work space, the work space can be used only for the following activities. State tax return for free Stocking, caring for, or collecting livestock or plants or their produce. State tax return for free Maintaining the enclosure or structure. State tax return for free Maintaining or replacing the equipment or stock enclosed or housed in the structure. State tax return for free Property Acquired by Purchase To qualify for the section 179 expense deduction, your property must have been acquired by purchase. State tax return for free For example, property acquired by gift or inheritance does not qualify. State tax return for free Property acquired from a related person (that is, your spouse, ancestors, or lineal descendants) is not considered acquired by purchase. State tax return for free Example. State tax return for free Ken is a farmer. State tax return for free He purchased two tractors, one from his brother and one from his father. State tax return for free He placed both tractors in service in the same year he bought them. State tax return for free The tractor purchased from his father does not qualify for the section 179 expense deduction because he is a related person (as defined above). State tax return for free The tractor purchased from his brother does qualify for the deduction because Ken is not a related person (as defined above). State tax return for free What Property Does Not Qualify? Land and improvements. State tax return for free   Land and land improvements, do not qualify as section 179 property. State tax return for free Land improvements include nonagricultural fences, swimming pools, paved parking areas, wharves, docks, bridges, and fences. State tax return for free However, agricultural fences do qualify as section 179 property. State tax return for free Similarly, field drainage tile also qualifies as section 179 property. State tax return for free Excepted property. State tax return for free   Even if the requirements explained in the preceding discussions are met, farmers cannot elect the section 179 expense deduction for the following property. State tax return for free Certain property you lease to others (if you are a noncorporate lessor). State tax return for free Certain property used predominantly to furnish lodging or in connection with the furnishing of lodging. State tax return for free 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. State tax return for free Property used by governmental units or foreign persons or entities (except property used under a lease with a term of less than 6 months). State tax return for free How Much Can You Deduct? Your section 179 expense deduction is generally the cost of the qualifying property. State tax return for free However, the total amount you can elect to deduct under section 179 is subject to a dollar limit and a business income limit. State tax return for free These limits apply to each taxpayer, not to each business. State tax return for free However, see Married individuals under Dollar Limits , later. State tax return for free See also the special rules for applying the limits for partnerships and S corporations under Partnerships and S Corporations , later. State tax return for free 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. State tax return for free Use Part I of Form 4562 to figure your section 179 expense deduction. State tax return for free Partial business use. State tax return for free   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. State tax return for free If you used the property more than 50% for business, multiply the cost of the property by the percentage of business use. State tax return for free Use the resulting business cost to figure your section 179 expense deduction. State tax return for free Trade-in of other property. State tax return for free   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. State tax return for free 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. State tax return for free It does not include the adjusted basis of the old tractor you trade for the new tractor. State tax return for free Example. State tax return for free J-Bar Farms traded two cultivators having a total adjusted basis of $6,800 for a new cultivator costing $13,200. State tax return for free They received an $8,000 trade-in allowance for the old cultivators and paid $5,200 cash for the new cultivator. State tax return for free J-Bar also traded a used pickup truck with an adjusted basis of $8,000 for a new pickup truck costing $35,000. State tax return for free They received a $5,000 trade-in allowance and paid $30,000 cash for the new pickup truck. State tax return for free Only the cash paid by J-Bar qualifies for the section 179 expense deduction. State tax return for free J-Bar's business costs that qualify for a section 179 expense deduction are $35,200 ($5,200 + $30,000). State tax return for free Dollar Limits The total amount you can elect to deduct under section 179 for most property placed in service in 2013 is $500,000. State tax return for free 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. State tax return for free 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. State tax return for free You do not have to claim the full $500,000. State tax return for free For specific information on the section 179 dollar limits, see chapter 2 of Publication 946. State tax return for free Reduced dollar limit for cost exceeding $2 million. State tax return for free   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. State tax return for free 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. State tax return for free Example. State tax return for free This year, James Smith placed in service machinery costing $2,050,000. State tax return for free Because this cost is $50,000 more than $2 million, he must reduce his dollar limit to $450,000 ($500,000 − $50,000). State tax return for free Limits for sport utility vehicles. State tax return for free   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. State tax return for free 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. State tax return for free   For more information, see chapter 2 of Publication 946. State tax return for free Limits for passenger automobiles. State tax return for free   For a passenger automobile that is placed in service in 2013, the total section 179 and depreciation deduction is limited. State tax return for free See Do the Passenger Automobile Limits Apply , later. State tax return for free Married individuals. State tax return for free   If you are married, how you figure your section 179 expense deduction depends on whether you file jointly or separately. State tax return for free 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. State tax return for free 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. State tax return for free You must allocate the dollar limit (after any reduction) equally between you, unless you both elect a different allocation. State tax return for free If the percentages elected by each of you do not total 100%, 50% will be allocated to each of you. State tax return for free Joint return after separate returns. State tax return for free   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. State tax return for free The dollar limit (after reduction for any cost of section 179 property over $2 million). State tax return for free The total cost of section 179 property you and your spouse elected to expense on your separate returns. State tax return for free 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. State tax return for free 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. State tax return for free Any cost not deductible in one year under section 179 because of this limit can be carried to the next year. State tax return for free See Carryover of disallowed deduction , later. State tax return for free Taxable income. State tax return for free   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. State tax return for free 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. State tax return for free Section 1231 gains (or losses) as discussed in chapter 9. State tax return for free Interest from working capital of your trade or business. State tax return for free Wages, salaries, tips, or other pay earned by you (or your spouse if you file a joint return) as an employee of any employer. State tax return for free   In addition, figure taxable income without regard to any of the following. State tax return for free The section 179 expense deduction. State tax return for free The self-employment tax deduction. State tax return for free Any net operating loss carryback or carryforward. State tax return for free Any unreimbursed employee business expenses. State tax return for free Two different taxable income limits. State tax return for free   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). State tax return for free You may have to figure the limit for this other deduction taking into account the section 179 expense deduction. State tax return for free If so, complete the following steps. State tax return for free Step Action 1 Figure taxable income without the section 179 expense deduction or the other deduction. State tax return for free 2 Figure a hypothetical section 179 expense deduction using the taxable income figured in Step 1. State tax return for free 3 Subtract the hypothetical section 179 expense deduction figured in Step 2 from the taxable income figured in Step 1. State tax return for free 4 Figure a hypothetical amount for the other deduction using the amount figured in Step 3 as taxable income. State tax return for free 5 Subtract the hypothetical other deduction figured in Step 4 from the taxable income figured in  Step 1. State tax return for free 6 Figure your actual section 179 expense deduction using the taxable income figured in Step 5. State tax return for free 7 Subtract your actual section 179 expense deduction figured in Step 6 from the taxable income figured in Step 1. State tax return for free 8 Figure your actual other deduction using the taxable income figured in Step 7. State tax return for free Example. State tax return for free On February 1, 2013, the XYZ farm corporation purchased and placed in service qualifying section 179 property that cost $500,000. State tax return for free It elects to expense the entire $500,000 cost under section 179. State tax return for free In June, the corporation gave a charitable contribution of $10,000. State tax return for free A corporation's limit on charitable contributions is figured after subtracting any section 179 expense deduction. State tax return for free The business income limit for the section 179 expense deduction is figured after subtracting any allowable charitable contributions. State tax return for free XYZ's taxable income figured without the section 179 expense deduction or the deduction for charitable contributions is $520,000. State tax return for free XYZ figures its section 179 expense deduction and its deduction for charitable contributions as follows. State tax return for free Step 1. State tax return for free Taxable income figured without either deduction is $520,000. State tax return for free Step 2. State tax return for free Using $520,000 as taxable income, XYZ's hypothetical section 179 expense deduction is $500,000. State tax return for free Step 3. State tax return for free $20,000 ($520,000 − $500,000). State tax return for free Step 4. State tax return for free Using $20,000 (from Step 3) as taxable income, XYZ's hypothetical charitable contribution (limited to 10% of taxable income) is $2,000. State tax return for free Step 5. State tax return for free $518,000 ($520,000 − $2,000). State tax return for free Step 6. State tax return for free Using $518,000 (from Step 5) as taxable income, XYZ figures the actual section 179 expense deduction. State tax return for free Because the taxable income is at least $500,000, XYZ can take a $500,000 section 179 expense deduction. State tax return for free Step 7. State tax return for free $20,000 ($520,000 − $500,000). State tax return for free Step 8. State tax return for free Using $20,000 (from Step 7) as taxable income, XYZ's actual charitable contribution (limited to 10% of taxable income) is $2,000. State tax return for free Carryover of disallowed deduction. State tax return for free   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. State tax return for free   The amount you carry over is used in determining your section 179 expense deduction in the next year. State tax return for free However, it is subject to the limits in that year. State tax return for free 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. State tax return for free Your selections must be shown in your books and records. State tax return for free Example. State tax return for free Last year, Joyce Jones placed in service a machine that cost $8,000 and elected to deduct all $8,000 under section 179. State tax return for free 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. State tax return for free Her section 179 expense deduction was limited to $6,000. State tax return for free 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. State tax return for free This year, Joyce placed another machine in service that cost $9,000. State tax return for free 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. State tax return for free 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. State tax return for free She can carry over the balance of $1,000 to next year. State tax return for free Partnerships and S Corporations The section 179 expense deduction limits apply both to the partnership or S corporation and to each partner or shareholder. State tax return for free The partnership or S corporation determines its section 179 expense deduction subject to the limits. State tax return for free It then allocates the deduction among its partners or shareholders. State tax return for free 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. State tax return for free 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. State tax return for free After you apply the dollar limit, you apply the business income limit to any remaining section 179 costs. State tax return for free For more information, see chapter 2 of Publication 946. State tax return for free Example. State tax return for free In 2013, Partnership P placed in service section 179 property with a total cost of $2,160,000. State tax return for free P must reduce its dollar limit by $160,000 ($2,160,000 − $2,000,000). State tax return for free Its maximum section 179 expense deduction is $340,000 ($500,000 − $160,000), and it elects to expense that amount. State tax return for free 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. State tax return for free P allocates $100,000 of its section 179 expense deduction and $110,000 of its taxable income to John, one of its partners. State tax return for free John also conducts a business as a sole proprietor and in 2013, placed in service in that business, section 179 property costing $28,000. State tax return for free John's taxable income from that business was $10,000. State tax return for free In addition to the $100,000 allocated from P, he elects to expense the $28,000 of his sole proprietorship's section 179 costs. State tax return for free 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). State tax return for free He carries over $8,000 ($128,000 − $120,000) of the elected section 179 costs to 2014. State tax return for free How Do You Elect the Deduction? You elect to take the section 179 expense deduction by completing Part I of Form 4562. State tax return for free If you elect the deduction for listed property, complete Part V of  Form 4562 before completing Part I. State tax return for free   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. State tax return for free 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. State tax return for free The amended return must also include any resulting adjustments to taxable income. State tax return for free Revoking an election. State tax return for free   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. State tax return for free The amended return must be filed within the time prescribed by law. State tax return for free 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. State tax return for free ) Once made, the revocation is irrevocable. State tax return for free 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. State tax return for free In the year the business use drops to 50% or less, you include the recapture amount as ordinary income. State tax return for free You also increase the basis of the property by the recapture amount. State tax return for free Recovery periods for property are discussed later. State tax return for free If you sell, exchange, or otherwise dispose of the property, do not figure the recapture amount under the rules explained in this discussion. State tax return for free Instead, use the rules for recapturing depreciation explained in  chapter 9 under Section 1245 Property. State tax return for free   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. State tax return for free Instead, use the rules for recapturing depreciation explained in chapter 5 of Publication 946 under Recapture of Excess Depreciation. State tax return for free Figuring the recapture amount. State tax return for free   To figure the amount to recapture, take the following steps. State tax return for free Figure the allowable depreciation for the section 179 expense deduction you claimed. State tax return for free Begin with the year you placed the property in service and include the year of recapture. State tax return for free Subtract the depreciation figured in (1) from the section 179 expense deduction you actually claimed. State tax return for free The result is the amount you must recapture. State tax return for free Example. State tax return for free In January 2011, Paul Lamb, a calendar year taxpayer, bought and placed in service section 179 property costing $10,000. State tax return for free The property is not listed property. State tax return for free He elected a $5,000 section 179 expense deduction for the property and also elected not to claim a special depreciation allowance. State tax return for free He used the property only for business in 2011 and 2012. State tax return for free During 2013, he used the property 40% for business and 60% for personal use. State tax return for free He figures his recapture amount as follows. State tax return for free 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. State tax return for free Where to report recapture. State tax return for free   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). State tax return for free Recapture for qualified section 179 GO Zone property. State tax return for free   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. State tax return for free ” Claiming the Special Depreciation Allowance For qualified property (defined below) placed in service in 2013, you can take an additional 50% special depreciation allowance. State tax return for free The allowance is an additional deduction you can take after any section 179 expense deduction and before you figure regular depreciation under MACRS. State tax return for free Figure the special depreciation allowance by multiplying the depreciable basis of the qualified property by 50%. State tax return for free 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. State tax return for free Certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2014. State tax return for free   Certain qualified property (defined below) acquired after December 31, 2007, and before January 1, 2014, is eligible for a 50% special depreciation allowance. State tax return for free   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. State tax return for free Water utility property. State tax return for free Off-the-shelf computer software. State tax return for free Qualified leasehold improvement property. State tax return for free   Qualified property must also meet all of the following tests: You must have acquired qualified property by purchase after December 31, 2007. State tax return for free If a binding contract to acquire the property existed before January 1, 2008, the property does not qualify. State tax return for free 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). State tax return for free The original use of the property must begin with you after December 31, 2007. State tax return for free For more information, see chapter 3 of Publication 946. State tax return for free 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. State tax return for free To make the election, attach a statement to your return indicating the class of property for which you are making the election. State tax return for free 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. State tax return for free 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). State tax return for free Attach the election statement to the amended return. State tax return for free On the amended return, write “Filed pursuant to section 301. State tax return for free 9100-2. State tax return for free ” Once made, the election may not be revoked without IRS consent. State tax return for free If you elect not to have the special depreciation allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation. State tax return for free 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. State tax return for free For more information, see chapter 3 of Publication 946. State tax return for free 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. State tax return for free MACRS consists of two depreciation systems, the General Depreciation System (GDS) and the Alternative Depreciation System (ADS). State tax return for free Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. State tax return for free To be sure you can use MACRS to figure depreciation for your property, see Can You Use MACRS To Depreciate Your Property, earlier. State tax return for free This part explains how to determine which MACRS depreciation system applies to your property. State tax return for free It also discusses the following information that you need to know before you can figure depreciation under MACRS. State tax return for free Property's recovery class. State tax return for free Placed-in-service date. State tax return for free Basis for depreciation. State tax return for free Recovery period. State tax return for free Convention. State tax return for free Depreciation method. State tax return for free Finally, this part explains how to use this information to figure your depreciation deduction. State tax return for free 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. State tax return for free You generally must use GDS unless you are specifically required by law to use ADS or you elect to use ADS. State tax return for free Required use of ADS. State tax return for free   You must use ADS for the following property. State tax return for free 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. State tax return for free Listed property used 50% or less in a qualified business use. State tax return for free See Additional Rules for Listed Property , later. State tax return for free Any tax-exempt use property. State tax return for free Any tax-exempt bond-financed property. State tax return for free 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. State tax return for free Any tangible property used predominantly outside the United States during the year. State tax return for free If you are required to use ADS to depreciate your property, you cannot claim the special depreciation allowance. State tax return for free Electing ADS. State tax return for free   Although your property may qualify for GDS, you can elect to use ADS. State tax return for free The election generally must cover all property in the same property class you placed in service during the year. State tax return for free However, the election for residential rental property and nonresidential real property can be made on a property-by-property basis. State tax return for free Once you make this election, you can never revoke it. State tax return for free   You make the election by completing line 20 in Part III of Form 4562. State tax return for free Which Property Class Applies Under GDS? The following is a list of the nine property classes under GDS. State tax return for free 3-year property. State tax return for free 5-year property. State tax return for free 7-year property. State tax return for free 10-year property. State tax return for free 15-year property. State tax return for free 20-year property. State tax return for free 25-year property. State tax return for free Residential rental property. State tax return for free Nonresidential real property. State tax return for free See Which Property Class Applies Under GDS in chapter 4 of Publication 946 for examples of the types of property included in each class. State tax return for free 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. State tax return for free The placed-in-service date for your property is the date the property is ready and available for a specific use. State tax return for free It is therefore not necessarily the date it is first used. State tax return for free 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. State tax return for free See Placed in Service under When Does Depreciation Begin and End , earlier, for examples illustrating when property is placed in service. State tax return for free 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. State tax return for free Reduce that amount by any credits and deductions allocable to the property. State tax return for free The following are examples of some of the credits and deductions that reduce basis. State tax return for free Any deduction for section 179 property. State tax return for free Any deduction for removal of barriers to the disabled and the elderly. State tax return for free Any disabled access credit, enhanced oil recovery credit, and credit for employer-provided childcare facilities and services. State tax return for free Any special depreciation allowance. State tax return for free Basis adjustment for investment credit property under section 50(c) of the Internal Revenue Code. State tax return for free For information about how to determine the cost or other basis of property, see What Is the Basis of Your Depreciable Property , earlier. State tax return for free Also, see chapter 6. State tax return for free For additional credits and deductions that affect basis, see section 1016 of the Internal Revenue Code. State tax return for free Which Recovery Period Applies? The recovery period of property is the number of years over which you recover its cost or other basis. State tax return for free It is determined based on the depreciation system (GDS or ADS) used. State tax return for free See Table 7-1 for recovery periods under both GDS and ADS for some commonly used assets. State tax return for free For a complete list of recovery periods, see the Table of Class Lives and Recovery Periods in Appendix B of Publication 946. State tax return for free House trailers for farm laborers. State tax return for free   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). State tax return for free A 7-year recovery period under GDS. State tax return for free A 10-year recovery period under ADS. State tax return for free   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. State tax return for free A 20-year recovery period under GDS. State tax return for free A 25-year recovery period under ADS. State tax return for free Water wells. State tax return for free   Water wells used to provide water for raising poultry and livestock are land improvements. State tax return for free If they are depreciable, use one of the following recovery periods. State tax return for free A 15-year recovery period under GDS. State tax return for free A 20-year recovery period under ADS. State tax return for free   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 . State tax return for free Table 7-1. State tax return for free 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. State tax return for free 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. State tax return for free 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. State tax return for free 2 Not including single purpose agricultural or horticultural structures. State tax return for free 3 Used by logging and sawmill operators for cutting of timber. State tax return for free 4 For property placed in service after May 12, 1993; for property placed in service before May 13, 1993,  the recovery period is 31. State tax return for free 5 years. State tax return for free Which Convention Applies? Under MACRS, averaging conventions establish when the recovery period begins and ends. State tax return for free 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. State tax return for free Use one of the following conventions. State tax return for free The half-year convention. State tax return for free The mid-month convention. State tax return for free The mid-quarter convention. State tax return for free For a detailed explanation of each convention, see Which Convention Applies in chapter 4 of Publication 946. State tax return for free Also, see the Instructions for Form 4562. State tax return for free Which Depreciation Method Applies? MACRS provides three depreciation methods under GDS and one depreciation method under ADS. State tax return for free The 200% declining balance method over a GDS recovery period. State tax return for free The 150% declining balance method over a GDS recovery period. State tax return for free The straight line method over a GDS recovery period. State tax return for free The straight line method over an ADS recovery period. State tax return for free Depreciation Table. State tax return for free   The following table lists the types of property you can depreciate under each method. State tax return for free The declining balance method is abbreviated as DB and the straight line method is abbreviated as SL. State tax return for free 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. State tax return for free   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. State tax return for free The straight line method over a GDS recovery period. State tax return for free The straight line method over an ADS recovery period. State tax return for free 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. State tax return for free If you made this election, continue to use the same method and recovery period for that property. State tax return for free Real property. State tax return for free   You can depreciate real property using the straight line method under either GDS or ADS. State tax return for free Switching to straight line. State tax return for free   If you use a declining balance method, you switch to the straight line method in the year it provides an equal or greater deduction. State tax return for free 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. State tax return for free The tables have the switch to the straight line method built into their rates. State tax return for free Fruit or nut trees and vines. State tax return for free   Depreciate trees and vines bearing fruit or nuts under GDS using the straight line method over a 10-year recovery period. State tax return for free ADS required for some farmers. State tax return for free   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. State tax return for free See chapter 6 for a discussion of the application of the uniform capitalization rules to farm property. State tax return for free Electing a different method. State tax return for free   As shown in the Depreciation Table , you can elect a different method for depreciation for certain types of property. State tax return for free You must make the election by the due date of the return (including extensions) for the year you placed the property in service. State tax return for free 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). State tax return for free Attach the election to the amended return and write “Filed pursuant to section 301. State tax return for free 9100-2” on the election statement. State tax return for free File the amended return at the same address you filed the original return. State tax return for free Once you make the election, you cannot change it. State tax return for free    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. State tax return for free However, you can make the election on a property-by-property basis for residential rental and nonresidential real property. State tax return for free Straight line election. State tax return for free   Instead of using the declining balance method, you can elect to use the straight line method over the GDS recovery period. State tax return for free Make the election by entering “S/L” under column (f) in Part III of Form 4562. State tax return for free ADS election. State tax return for free   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. State tax return for free ADS uses the straight line method of depreciation over the ADS recovery periods, which are generally longer than the GDS recovery periods. State tax return for free The ADS recovery periods for many assets used in the business of farming are listed in Table 7–1. State tax return for free 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. State tax return for free 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. State tax return for free Then you are ready to figure your depreciation deduction. State tax return for free You can figure it in one of two ways. State tax return for free You can use the percentage tables provided by the IRS. State tax return for free You can figure your own deduction without using the tables. State tax return for free Figuring your own MACRS deduction will generally result in a slightly different amount than using the tables. State tax return for free 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. State tax return for free These percentage tables are in Appendix A of Publication 946. State tax return for free Rules for using the tables. State tax return for free   The following rules cover the use of the percentage tables. State tax return for free You must apply the rates in the percentage tables to your property's unadjusted basis. State tax return for free 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. State tax return for free You cannot use the percentage tables for a short tax year. State tax return for free See chapter 4 of Publication 946 for information on how to figure the deduction for a short tax year. State tax return for free You generally must continue to use them for the entire recovery period of the property. State tax return for free 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. State tax return for free Basis adjustment due to casualty loss. State tax return for free   If you reduce the basis of your property because of a casualty, you cannot continue to use the percentage tables. State tax return for free 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. State tax return for free See Figuring the Deduction Without Using the Tables in chapter 4 of Publication 946. State tax return for free Figuring depreciation using the 150% DB method and half-year convention. State tax return for free    Table 7-2 has the percentages for 3-, 5-, 7-, and 20-year property. State tax return for free The percentages are based on the 150% declining balance method with a change to the straight line method. State tax return for free This table covers only the half-year convention and the first 8 years for 20-year property. State tax return for free See Appendix A in Publication 946 for complete MACRS tables, including tables for the mid-quarter and mid-month convention. State tax return for free   The following examples show how to figure depreciation under MACRS using the percentages in Table 7-2 . State tax return for free Example 1. State tax return for free During the year, you bought an item of 7-year property for $10,000 and placed it in service. State tax return for free You do not elect a section 179 expense deduction for this property. State tax return for free In addition, the property is not qualified property for purposes of the special depreciation allowance. State tax return for free The unadjusted basis of the property is $10,000. State tax return for free You use the percentages in Table 7-2 to figure your deduction. State tax return for free Since this is 7-year property, you multiply $10,000 by 10. State tax return for free 71% to get this year's depreciation of $1,071. State tax return for free For next year, your depreciation will be $1,913 ($10,000 × 19. State tax return for free 13%). State tax return for free Example 2. State tax return for free You had a barn constructed on your farm at a cost of $20,000. State tax return for free You placed the barn in service this year. State tax return for free You elect not to claim the special depreciation allowance. State tax return for free The barn is 20-year property and you use the table percentages to figure your deduction. State tax return for free You figure this year's depreciation by multiplying $20,000 (unadjusted basis) by 3. State tax return for free 75% to get $750. State tax return for free For next year, your depreciation will be $1,443. State tax return for free 80 ($20,000 × 7. State tax return for free 219%). State tax return for free Table 7-2. State tax return for free 150% Declining Balance Method (Half-Year Convention) Year 3-Year 5-Year 7-Year 20-Year 1 25. State tax return for free 0 % 15. State tax return for free 00 % 10. State tax return for free 71 % 3. State tax return for free 750 % 2 37. State tax return for free 5   25. State tax return for free 50   19. State tax return for free 13   7. State tax return for free 219   3 25. State tax return for free 0   17. State tax return for free 85   15. State tax return for free 03   6. State tax return for free 677   4 12. State tax return for free 5   16. State tax return for free 66   12. State tax return for free 25   6. State tax return for free 177   5     16. State tax return for free 66   12. State tax return for free 25   5. State tax return for free 713   6     8. State tax return for free 33   12. State tax return for free 25   5. State tax return for free 285   7         12. State tax return for free 25   4. State tax return for free 888   8         6. State tax return for free 13   4. State tax return for free 522   Figuring depreciation using the straight line method and half-year convention. State tax return for free   The following table has the straight line percentages for 3-, 5-, 7-, and 20-year property using the half-year convention. State tax return for free The table covers only the first 8 years for 20-year property. State tax return for free See Appendix A in Publication 946 for complete MACRS tables, including tables for the mid-quarter and mid-month convention. State tax return for free Table 7-3. State tax return for free Straight Line Method (Half-Year Convention) Year 3-Year 5-Year 7-Year 20-Year 1 16. State tax return for free 67 % 10 % 7. State tax return for free 14 % 2. State tax return for free 5 % 2 33. State tax return for free 33   20   14. State tax return for free 29   5. State tax return for free 0   3 33. State tax return for free 33   20   14. State tax return for free 29   5. State tax return for free 0   4 16. State tax return for free 67   20   14. State tax return for free 28   5. State tax return for free 0   5     20   14. State tax return for free 29   5. State tax return for free 0   6     10   14. State tax return for free 28   5. State tax return for free 0   7         14. State tax return for free 29   5. State tax return for free 0   8         7. State tax return for free 14   5. State tax return for free 0