Part 2 Line14 to Part 3 Line 18 Form 4562 Special Depreciation
Special depreciation is an additional depreciation you can claim on property placed in business during the year. You claim special depreciation allowance after you claimed section 179 and before you claim regular depreciation.
Don’t include listed property (property use for business and personal) in this section.
The special allowance is 100%, 50%, 40%, and 30% for some qualified properties. More detail of qualified properties for special depreciation allowance on IRS Publication 946(2019) Page 23.
If You Elect Not to Claim Special Depreciation Allowance
If your asset qualified for special depreciation but you choose not to claim it, make the election by attaching a statement to your return on which you state you are not claiming special depreciation allowance and state the property class you are making the election for. Page 5-6 of instructions to Form 4562 Depreciation and Amortization.
Line 16: Other depreciation: include accelerated depreciation method on property placed in service before 1981. Read page 7 of Instructions to Form 4562 for properties that can be depreciated on line 16 of Form 4562. Include intangible property like computer software. Depreciate computer software over 38 months using straight line. That is the cost of the software divided by 3 years to figure the amount of depreciation to claim on part 2 of form 4562 every year for 3 years for that software. Don’t depreciate section 197 intangible properties on line 16.
Part 3 Regular Depreciation using MACRS
Line 17: enter your depreciation amount for items you have been depreciating before the current year using MACRS to depreciation items placed in service before the current year. Every year you continue to depreciate them and put them in line 17 if you have to attach Form 4562 to your business tax return.
How to Group Assets under General Asset Accounts (GAA)?
Line 18: you could group properties depreciated into assets if they have the same number of recovery years, depreciation method, same convention, and they are placed in service the same year. Check the box to do so. The assets must be used 100% for business to be grouped. More details on IRS Publication 946 (2019) page 48.
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