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Military Tax Refund Calculator

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Military Tax Refund Calculator

Military tax refund calculator Index A Assessment of tax, Assessment of tax. Military tax refund calculator Assistance (see Tax help) B Bankruptcy Code tax compliance, Bankruptcy Code Tax Compliance Requirements Returns due after filing, Tax Returns Due After the Bankruptcy Filing Returns due before chapter 13 filing, Tax Returns Due for Periods Ending Before the Bankruptcy Filing in Chapter 13 Cases Bankruptcy estate, Taxes and the Bankruptcy Estate Attribute carryovers, Carrybacks from the debtor's activities. Military tax refund calculator Carrybacks, Carrybacks from the debtor's activities. Military tax refund calculator Disclosure of return information, Disclosure of bankruptcy estate's return information to debtor. Military tax refund calculator Employer identification number, Employer identification number. Military tax refund calculator , Employer identification number. Military tax refund calculator Estimated tax, Estimated tax – Form 1041-ES. Military tax refund calculator Return filing requirements, Bankruptcy Estate Tax Return Filing Requirements and Payment of Tax Due Separate taxable entity, Separate taxable entity. Military tax refund calculator Transfer of assets, Transfer of assets between debtor and bankruptcy estate. Military tax refund calculator C Conversion or dismissal chapter 11 case, Conversion or dismissal of chapter 11 cases. Military tax refund calculator Corporations, Corporations Filing requirements, Corporations Tax-free reorganizations, Tax-Free Reorganizations D Debt cancellation, Debt Cancellation Bankruptcy exclusion, Bankruptcy case exclusion. Military tax refund calculator Corporations, Corporations Insolvency exclusion, Insolvency exclusion. Military tax refund calculator Partnerships, Partnerships S corporations, S Corporations Deductions and credits, Bankruptcy Estate Deductions and Credits Administrative expenses, Administrative expenses. Military tax refund calculator Discharge of tax, Discharge of Unpaid Tax Disclosure of return information, Disclosure of debtor's return information to trustee. Military tax refund calculator , Disclosure of return information to trustee. Military tax refund calculator Dismissal of case Amended return, Dismissal of bankruptcy case. Military tax refund calculator E Election to end tax year: Form 1040, Debtor's Election To End Tax Year – Form 1040 Annualizing taxable income, Annualizing taxable income. Military tax refund calculator Election by spouse, Election by debtor's spouse. Military tax refund calculator Filing requirements, Making the Election - Filing Requirements Short tax years, Short tax years. Military tax refund calculator Employment taxes, Employment taxes. Military tax refund calculator , Employment Taxes Examination of return, Examination of return. Military tax refund calculator F Free tax services, How To Get Tax Help H Help (see Tax help) I Individuals in Chapter 12 or 13, Individuals in Chapter 12 or 13 Individuals in Chapter 7 or 11, Individuals in Chapter 7 or 11 Gross income chapter 11 case, Income of the estate in individual chapter 11 cases. Military tax refund calculator Gross income chapter 7 case, Income of the estate in individual chapter 7 cases. Military tax refund calculator J Jurisdiction over tax matters, Court Jurisdiction Over Tax Matters Bankruptcy Court, Bankruptcy Court Tax Court, Tax Court M More information (see Tax help) O Ordering tax return transcripts, Ordering tax transcripts and copies of returns. Military tax refund calculator P Partnerships, filing requirements, Partnerships Payment of tax claim, Federal Tax Claims Eighth priority taxes, Unsecured Tax Claims Second, third, fourth priority taxes, Higher priority taxes. Military tax refund calculator Secured tax claims, Secured tax claims. Military tax refund calculator Penalties, Penalties. Military tax refund calculator Relief from penalties, Relief from certain penalties. Military tax refund calculator Publications (see Tax help) R Request for prompt tax determination, Prompt Determination Requests Request for refund, Requests for refund or credit S Statute of limitations collections, Statute of limitations for collection. Military tax refund calculator T Tax attributes, Reduction of Tax Attributes Basis reduction, Basis. Military tax refund calculator , Basis Reduction Carryovers, Attribute carryovers. Military tax refund calculator Order of reduction, Order of reduction. Military tax refund calculator Reduction of, Reduction of Tax Attributes Tax help, How To Get Tax Help Tax reporting chapter 11 cases, Tax Reporting – Chapter 11 Cases Employment tax returns, Tax Reporting – Chapter 11 Cases Information returns, Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. Military tax refund calculator Self-employment taxes, Self-employment taxes in individual chapter 11 cases. Military tax refund calculator Wage reporting, tax withholding, Employment taxes and employer's obligation to file Form W-2 in individual chapter 11 cases. Military tax refund calculator Tax return: Form 1041, Figuring tax due. Military tax refund calculator Figuring tax due, Filing Requirements Payment of tax due, Payment of Tax Due When to file, When to file. Military tax refund calculator Taxpayer Advocate, Taxpayer Advocate Service. Military tax refund calculator TTY/TDD information, How To Get Tax Help Prev  Up     Home   More Online Publications
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Understanding your CP180/CP181 Notice

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For assistance with your business return, call 1-800-829-0115 or, for assistance with Form 990-T, call 1-877-829-5500.


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Refer to the instructions for your tax return for required documentation. Attach all required forms and schedules to your tax return when filing.

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Understanding your notice

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The Military Tax Refund Calculator

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