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How To Depreciate Property, Publication 946 (2009)

Publication 946 - Introductory Material

What's New

Increased section 179 deduction dollar limits. The maximum amount you can elect to deduct for most section 179 property you placed in service in 2009 is $250,000 ($285,000 for qualified enterprise zone and renewal community property). This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $800,000. See Dollar Limits under How Much Can You Deduct in chapter 2.

Depreciation limits on business vehicles. The total section 179 deduction and depreciation you can deduct for a passenger automobile (that is not a truck or van) you use in your business and first placed in service in 2009 is $2,960, if the special depreciation allowance does not apply. The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2009 is $3,060, if the special depreciation allowance does not apply. See Maximum Depreciation Deduction in chapter 5.

Election to accelerate certain credits in lieu of the special depreciation allowance. Generally, a corporation that did not make a section 168(k)(4) election for its first tax year after March 31, 2008, may elect to claim pre-2006 unused research and minimum tax credits in lieu of claiming the special depreciation allowance for extension property placed in service before January 1, 2010. In addition, corporations that made the section 168(k)(4) election can elect to not apply section 168(k)(4) to extension property.

For the latest information, see www.irs.gov/formspubs.

Introduction

This publication explains how you can recover the cost of business or income-producing property through deductions for depreciation (for example, the special depreciation allowance and deductions under the Modified Accelerated Cost Recovery System (MACRS)). It also explains how you can elect to take a section 179 deduction, instead of depreciation deductions, for certain property, and the additional rules for listed property.

Definitions.

Many of the terms used in this publication are defined in the Glossary near the end of the publication. Glossary terms used in each discussion under the major headings are listed before the beginning of each discussion throughout the publication.

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