Special Depreciation Allowance
For qualified property (defined below) placed in service during the tax year, you may be able to take an additional 50% special depreciation allowance. The special depreciation allowance applies only for the first year the property is placed in service. The allowance is an additional deduction you can take after any section 179 expense deduction and before you figure regular depreciation under the modified accelerated cost recovery system (MACRS)
You can take the special depreciation allowance for qualified second generation biofuel plant property, certain qualified property acquired after December 31, 2007, and placed in service before January 1, 2015, and qualified reuse and recycling property.
How to figure the allowance
Figure the special depreciation allowance by multiplying the depreciable basis of the property by 50%. To figure the depreciable basis, subtract from the business/investment portion on the cost or other basis of the property any credits and deductions allocable to the property. The following are examples of some credits and deductions that reduce the depreciable basis:
- Section 179 expense deduction
- Deduction for removal of barriers to the disabled and the ederly
- Disabled access credit
- Enhanced oil recovery credit
- Credit for employer-provided childcare facilities and services
- Basis adjustment to investment credit property under section 50(c).
For more information see IRS Instructions for Form 4562.