U.S. Individual Income Tax Return

2012

Instructions for Form 4562

Department of the Treasury
Internal Revenue Service

Depreciation and Amortization (Including Information on Listed Property)
Section references are to the Internal
Revenue Code unless otherwise noted.

Future Developments

For the latest information about
developments related to Form 4562
and its instructions such as legislation
enacted after this form and
instructions were published, go to
www.irs.gov/form4562.

What's New

For tax years beginning in 2012, the
maximum section 179 expense
deduction is $500,000 ($535,000 for
enterprise zone property). This limit is
reduced by the amount by which the
cost of section 179 property placed in
service during the tax year exceeds
$2 million. See the instructions for
Part I for more information.
For fiscal years ending after
December 31, 2012, you may be able
to take a 50% special depreciation
allowance for qualified second
generation biofuel plant property
placed in service after January 2,
2013, and before January 1, 2014.
See the instructions for line 14.
For fiscal years ending after
December 31, 2012, a corporation
can elect to claim pre-2006 unused
minimum tax credits in lieu of the
special depreciation allowance for
round 3 extension property. See the
instructions for line 14.

General Instructions
Purpose of Form

Use Form 4562 to:
Claim your deduction for
depreciation and amortization,
Make the election under section
179 to expense certain property, and
Provide information on the
business/investment use of
automobiles and other listed property.

Who Must File

Except as otherwise noted, complete
and file Form 4562 if you are claiming
any of the following.

Jan 16, 2013

Depreciation for property placed in
service during the 2012 tax year.
A section 179 expense deduction
(which may include a carryover from a
previous year).
Depreciation on any vehicle or
other listed property (regardless of
when it was placed in service).
A deduction for any vehicle
reported on a form other than
Schedule C (Form 1040), Profit or
Loss From Business, or
Schedule C-EZ (Form 1040), Net
Profit From Business.
Any depreciation on a corporate
income tax return (other than Form
1120S).
Amortization of costs that begins
during the 2012 tax year.
If you are an employee deducting
job-related vehicle expenses using
either the standard mileage rate or
actual expenses, use Form 2106,
Employee Business Expenses, or
Form 2106-EZ, Unreimbursed
Employee Business Expenses, for
this purpose.
File a separate Form 4562 for each
business or activity on your return for
which Form 4562 is required. If you
need more space, attach additional
sheets. However, complete only one
Part I in its entirety when computing
your section 179 expense deduction.
See the instructions for line 12, later.

Additional Information

For more information about
depreciation and amortization
(including information on listed
property), see the following.
Pub. 463, Travel, Entertainment,
Gift, and Car Expenses.
Pub. 534, Depreciating Property
Placed in Service Before 1987.
Pub. 535, Business Expenses.
Pub. 551, Basis of Assets.
Pub. 946, How To Depreciate
Property.

Definitions
Depreciation

Depreciation is the annual deduction
that allows you to recover the cost or
Cat. No. 12907Y

other basis of your business or
investment property over a certain
number of years. Depreciation starts
when you first use the property in your
business or for the production of
income. It ends when you either take
the property out of service, deduct all
your depreciable cost or basis, or no
longer use the property in your
business or for the production of
income.
Generally, you can depreciate:
Tangible property such as
buildings, machinery, vehicles,
furniture, and equipment; and
Intangible property such as patents,
copyrights, and computer software.
Exception. You cannot depreciate
land.

Accelerated Cost Recovery
System

The Accelerated Cost Recovery
System (ACRS) applies to property
first used before 1987. It is the name
given for the tax rules that allow a
taxpayer to recover through
depreciation deductions the cost of
property used in a trade or business
or to produce income. These rules are
mandatory and generally apply to
tangible property placed in service
after 1980 and before 1987. If you
placed property in service during this
period, you must continue to figure
your depreciation under ACRS.
ACRS consists of accelerated
depreciation methods and an
alternate ACRS method that could
have been elected. The alternate
ACRS method used a recovery
percentage based on a modified
straight line method. See the
instructions for line 16 for more
information. For a complete
discussion of ACRS, see Publication
534.

Modified Accelerated Cost
Recovery System

The Modified Accelerated Cost
Recovery System (MACRS) is the
current method of accelerated asset
depreciation required by the tax code.
Under MACRS, all assets are divided

into classes which dictate the number
of years over which an asset's cost
will be recovered. Each MACRS class
has a predetermined schedule which
determines the percentage of the
asset's costs which is depreciated
each year. For more information, see
the instructions for Part III–MACRS
Depreciation, later. For a complete
discussion of MACRS, see chapter 4
of Publication 946.

Section 179 Property

Section 179 property is property that
you acquire by purchase for use in the
active conduct of your trade or
business, and is one of the following.
Tangible personal property,
including cellular telephones and
similar telecommunications
equipment.
Qualified section 179 real property.
For more information, see Special
rules for qualified section 179 real
property, later.
Other tangible property (except
buildings and their structural
components) used as:
1. An integral part of
manufacturing, production, or
extraction or of furnishing
transportation, communications,
electricity, gas, water, or sewage
disposal services;
2. A research facility used in
connection with any of the activities in
(1) above; or
3. A facility used in connection
with any of the activities in (1) above
for the bulk storage of fungible
commodities.
Single purpose agricultural
(livestock) or horticultural structures.
Storage facilities (except buildings
and their structural components) used
in connection with distributing
petroleum or any primary product of
petroleum.
Off-the-shelf computer software.
Section 179 property does not
include the following.
Property held for investment
(section 212 property).
Property used mainly outside the
United States (except for property
described in section 168(g)(4)).
Property used mainly to furnish
lodging or in connection with the
furnishing of lodging (except as
provided in section 50(b)(2)).

Property used by a tax-exempt
organization (other than a section 521
farmers' cooperative) unless the
property is used mainly in a taxable
unrelated trade or business.
Property used by a governmental
unit or foreign person or entity (except
for property used under a lease with a
term of less than 6 months).
Air conditioning or heating units.
See the instructions for Part I and
Pub. 946.
Special rules for qualified section
179 real property. For any tax year
beginning in 2012 or 2013, you can
elect to treat certain qualified real
property placed in service during the
tax year as section 179 property. See
Election for certain qualified section
179 real property in Part I for
information on how to make this
election. If the election is made, the
term "section 179 property" will
include any qualified real property
which is:
Qualified leasehold improvement
property as described in section
168(e)(6),
Qualified restaurant property as
described in section 168(e)(7), or
Qualified retail improvement
property as described in section
168(e)(8).
This property is considered
"qualified section 179 real property."
The maximum section 179
expense deduction that may be
expensed for qualified section 179
real property is $250,000 of the total
cost of all section 179 property placed
in service in 2012. A 2011 deduction
attributable to qualified real property
which is disallowed under the trade or
business income limitation (see
Business Income Limit in chapter 2 of
Pub. 946) is carried over to 2012. This
is referred to as the carryover amount
from 2011. Any such amounts that are
not deducted in 2012, plus any 2012
disallowed section 179 expense
deductions attributable to qualified
section 179 real property, will be
reported on line 13 of Form 4562. For
further information on qualified section
179 real property, see section 179(f)
and Pub. 946.
The IRS will release guidance
concerning qualified section
179 real property. The
guidance will be published in the
Internal Revenue Bulletin.

TIP

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Amortization

Amortization is similar to the straight
line method of depreciation in that an
annual deduction is allowed to
recover certain costs over a fixed time
period. You can amortize such items
as the costs of starting a business,
goodwill, and certain other
intangibles. See the instructions for
Part VI.

Listed Property

Listed property generally includes the
following.
Passenger automobiles weighing
6,000 pounds or less. See Limits for
passenger automobiles, later.
Any other property used for
transportation if the nature of the
property lends itself to personal use,
such as motorcycles, pick-up trucks,
sport utility vehicles, etc.
Any property used for
entertainment or recreational
purposes (such as photographic,
phonographic, communication, and
video recording equipment).
Computers or peripheral
equipment.
Exceptions. Listed property does not
include:
1. Photographic, phonographic,
communication, or video equipment
used exclusively in a taxpayer's trade
or business or at the taxpayer's
regular business establishment;
2. Any computer or peripheral
equipment used exclusively at a
regular business establishment and
owned or leased by the person
operating the establishment;
3. An ambulance, hearse, or
vehicle used for transporting persons
or property for compensation or hire;
or
4. Any truck or van placed in
service after July 6, 2003, that is a
qualified nonpersonal use vehicle.
For purposes of the exceptions
above, a portion of the taxpayer's
home is treated as a regular business
establishment only if that portion
meets the requirements for deducting
expenses attributable to the business
use of a home. However, for any
property listed in (1) above, the
regular business establishment of an
employee is his or her employer's
regular business establishment.

Commuting

Generally, commuting is defined as
travel between your home and a work
location. However, travel that meets
any of the following conditions is not
commuting.
You have at least one regular work
location away from your home and the
travel is to a temporary work location
in the same trade or business,
regardless of the distance. Generally,
a temporary work location is one
where your employment is expected
to last 1 year or less. See Pub. 463 for
details.
The travel is to a temporary work
location outside the metropolitan area
where you live and normally work.
Your home is your principal place of
business for purposes of deducting
expenses for business use of your
home and the travel is to another work
location in the same trade or
business, regardless of whether that
location is regular or temporary and
regardless of distance.

Alternative Minimum Tax
(AMT)

Depreciation may be an adjustment
for the AMT. However, no adjustment
applies in several instances. See
Form 4626, Alternative Minimum
Tax—Corporations; Form 6251,
Alternative Minimum
Tax—Individuals; Schedule I (Form
1041), Alternative Minimum
Tax—Estates and Trusts; and the
related instructions.

Recordkeeping

Except for Part V (relating to listed
property), the IRS does not require
you to submit detailed information
with your return on the depreciation of
assets placed in service in previous
tax years. However, the information
needed to compute your depreciation
deduction (basis, method, etc.) must
be part of your permanent records.
You may use the
depreciation worksheet, later,
to assist you in maintaining
depreciation records. However, the
worksheet is designed only for federal
income tax purposes. You may need
to keep additional records for
accounting and state income tax
purposes.

TIP

Specific Instructions
Part I. Election To Expense
Certain Property Under
Section 179
Note. An estate or trust cannot make
this election.
You can elect to expense part or all
of the cost of section 179 property
(defined earlier) that you placed in
service during the tax year and used
predominantly (more than 50%) in
your trade or business.
However, for taxpayers other than
a corporation, this election does not
apply to any section 179 property you
purchased and leased to others
unless:
You manufactured or produced the
property or
The term of the lease is less than
50% of the property's class life and,
for the first 12 months after the
property is transferred to the lessee,
the deductions related to the property
allowed to you as trade or business
expenses (except rents and
reimbursed amounts) are more than
15% of the rental income from the
property.
Election. You must make the
election on Form 4562 filed with
either:
The original return you file for the
tax year the property was placed in
service (whether or not you file your
return on time) or
An amended return filed within the
time prescribed by law for the
applicable tax year. The 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. The
amended return must also include any
resulting adjustments to taxable
income.
Election for certain qualified
section 179 real property. You can
elect to expense certain qualified real
property that you first placed in
service as section 179 property for tax
years beginning in 2012. If you elect
to treat this property as section 179
property, you must elect the
application of the special rules for
qualified real property under section
-3-

179(f) in order for the term section
179 property to include qualified real
property placed in service during the
tax year.
To make the election, attach a
separate statement to your original
2012 tax return, whether or not you
file it timely, indicating that you are
“electing the application of section
179(f) of the Internal Revenue Code”
for the tax year. Then, indicate on the
statement your election to expense
certain qualified real property under
section 179 on your tax return. The
election to expense must specify one
or more of the three types of qualified
real property (described under
Special rules for qualified section 179
real property, earlier) to which the
election applies, the cost of each such
type, and the portion of cost of each
such type to be taken into account.
Report this information on line 6 of
Form 4562. For more information on
how to report your election, see the
instructions for Line 6, later.
You can also make the election by
attaching a separate statement
(containing the same information
discussed above) to an amended
return for 2012 filed within the time
prescribed by law. The amended
return must also include any resulting
adjustments to the tax year.
Revocation. The election (or any
specification made in the election) can
be revoked without obtaining IRS
approval by filing an amended return.
The amended return must be filed
within the time prescribed by law for
the applicable tax year. The amended
return must include any resulting
adjustments to taxable income or to
the tax liability (for example, allowable
depreciation in that tax year for the
item of section 179 property which the
revocation pertains). For more
information and examples, see
Regulations section 1.179-5. Once
made, the revocation is irrevocable.
If you elect to expense
section 179 property, you
CAUTION
must reduce the amount on
which you figure your depreciation or
amortization deduction (including any
special depreciation allowance) by the
section 179 expense deduction.

!

Line 1

Generally, the maximum section 179
expense deduction is $500,000 for
section 179 property placed in service

in 2012 during the tax year beginning
in 2012.
Qualified real property that is
elected to be treated as section 179
property is limited to $250,000 of the
maximum section 179 deduction of
$500,000 for 2012. For more
information, see Special rules for
qualified section 179 real property,
earlier.
You can use Worksheet 1,
TIP later, to assist you in
determining the amount to
write on line 1. You can also use the
worksheet to figure the maximum
qualified section 179 real property
deduction allowed for 2012.
For an enterprise zone business,
the maximum deduction is increased
by the smaller of:
$35,000 or
The cost of section 179 property
that is also qualified empowerment
zone property placed in service during
the tax year (including such property
placed in service or purchased by
your spouse, even if you are filing a
separate return).
The maximum section 179
deduction is increased for qualified
section 179 disaster assistance
property placed in service in a
federally declared disaster area where
the disaster occurred after December
31, 2007, and before January 1, 2010.
The property must be placed in
service by you on or before the date
which is the last day of the third
calendar year following the applicable
federally declared disaster date to be
qualified section 179 disaster
assistance property.
Example. A federally declared
disaster area in Purple County
occurred on January 2, 2009. John
Smith placed in service property on
December 30, 2012. This property
meets all requirements to be
considered qualified section 179
disaster assistance property for 2012
as it was placed in service on or
before December 31, 2012.
The maximum section 179
deduction is increased by the smaller
of:
$100,000 or
The cost of the qualified section
179 disaster assistance property
placed in service in a federally
declared disaster area where the

disaster occurred after December 31,
2007, and before January 1, 2010
(including such property placed in
service by your spouse, even if you
are filing a separate return).
A list of the federally declared
disaster areas is available at the
Federal Emergency Management
Agency (FEMA) web site at
www.fema.gov.
For purposes of the
increased section 179
CAUTION
expense deduction, qualified
section 179 disaster assistance
property that is located in an
empowerment zone is treated as
qualified empowerment zone property
only if you elect not to treat the
property as qualified section 179
disaster assistance property.

!

For more information, including the
definition of qualified section 179
disaster assistance property and the
eligible disaster areas, see Pub. 946.
Also, see section 179(e)(2).
Recapture rule. If any qualified
section 179 disaster assistance
property placed in service during the
current year ceases to be used in the
applicable federally declared disaster
area in a later year, the benefit of the
increased section 179 expense
deduction must be reported as “other
income” on your return. Similar rules
apply if qualified Liberty Zone property
ceases to be used in the Liberty Zone,
if qualified section 179 GO Zone
property ceases to be used in the GO
Zone, if qualified section 179
Recovery Assistance property ceases
to be used in the Recovery Assistance
area, if qualified empowerment zone
property ceases to be used in an
empowerment zone by an enterprise
zone business, or if qualified renewal
property ceases to be used in a
renewal community by a renewal
community business in any year after
you claim the increased section 179
expense deduction.

Line 2

Enter the total cost of all section 179
property (including the total cost of
qualified real property that you elect to
treat as section 179 property) you
placed in service during the tax year.
Also, include the cost of the following.
Any listed property from Part V.
Any property placed in service by
your spouse, even if you are filing a
separate return. This includes
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qualified section 179 real property
your spouse made the election to treat
as section 179 property for 2012.
50% of the cost of section 179
property that is also qualified
empowerment zone property placed
in service during the tax year.

Line 3

The amount of section 179 property
for which you can make the election is
limited to the maximum dollar amount
on line 1. In most cases, this amount
is reduced if the cost of all section 179
property placed in service in 2012 is
more than $2 million.
To assist you in determining the
amount to write on line 3, see
Worksheet 1, later.

However, if you placed qualified
section 179 disaster assistance
property in service in a federally
declared disaster area on or before
the date which is the last day of the
third calendar year following the
applicable disaster date where the
disaster occurred after December 31,
2007, and before January 1, 2010, the
amount of property for which you can
make the election is reduced if the
cost of all section 179 property placed
in service during the year exceeds $2
million increased by the smaller of:
$600,000 or
The cost of qualified section 179
disaster assistance property placed in
service in a federally declared
disaster area where the disaster
occurred after December 31, 2007,
and before January 1, 2010.
For more information, see section
179(e)(2) and Pub. 946.
For a partnership (other than an
electing large partnership), these
limitations apply to the partnership
and each partner. For an electing
large partnership, the limitations apply
only to the partnership. For an S
corporation, these limitations apply to
the S corporation and each
shareholder. For a controlled group,
all component members are treated
as one taxpayer.

Line 5

If line 5 is zero, you cannot elect to
expense any section 179 property. In
this case, skip lines 6 through 11,
enter zero on line 12, and enter the
carryover of any disallowed deduction
from 2011 on line 13.

Worksheet 1. Worksheet for Lines 1, 2, and
3

Keep for Your Records

Maximum section 179 limitation calculation.
*1. Total cost of qualified section 179 real property placed in service in 2012
during the tax year beginning in 2012 of the type(s) of property for which
you are making the election . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. $250,000 of the maximum section 179 deduction limitation of $500,000
allowed for 2012 can be expensed for qualified section 179 real
property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Enter the smaller of line 1 or line 2

$250,000

.............................

*4. Enter total cost of section 179 property (except qualified section 179 real
property) placed in service in 2012 during the tax year beginning in
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5. The maximum section 179 deduction limitation for 2012

.............

$500,000

6. If you have an enterprise zone business (see the instructions for Line 1,
earlier), enter the smaller of $35,000 or the cost of the qualified section
179 property that is also qualified empowerment zone property . . . . . . . .

Line 10

8. Add lines 5, 6, and 7. Enter this amount here and on Form 4562,
line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maximum threshold cost of section 179 property before reduction in limitation
calculation.
9. Add lines 1 and 4. Enter this amount here and on Form 4562,
line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$2,000,000

11. If you have qualified section 179 disaster assistance property (see the
instructions for Line 3, earlier), enter the smaller of $600,000 or the cost of
the qualified section 179 disaster assistance property . . . . . . . . . . . . . . .
12. Add lines 10 and 11. Enter this amount here and on Form 4562,
line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maximum elected cost for Form 4562, lines 6 and 7, column (c).
13. Add lines 3 and 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14. Enter the smaller of line 8 or line 13. The total amount you enter on
Form 4562, lines 6 and 7, column (c), cannot exceed this
amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
*For lines 1 and 4 of this worksheet include the total amount of eligible section 179 property or section 179
property, not just the amount for which you are making the election.

If you are married filing separately,
you and your spouse must allocate
the dollar limitation for the tax year. To
do so, multiply the total limitation that
you would otherwise enter on line 5 by
50%, unless you both elect a different
allocation. If you both elect a different
allocation, multiply the total limitation
by the percentage elected. The sum
of the percentages you and your
spouse elect must equal 100%.
Do not enter on line 5 more than
your share of the total dollar limitation.

Line 6

Do not include any listed property on
line 6. Enter the elected section 179

cost of listed property in column (i) of
line 26.
Column (a) — Description of property. Enter a brief description of the
property you elect to expense (e.g.,
truck, office furniture, etc.). For all
qualified section 179 real property,
enter “qualified real property”.
Column (b) — Cost (business use
only). Enter the cost of the property.
If you acquired the property through a
trade-in, do not include any carryover
basis of the property traded in. Include
only the excess of the cost of the
property over the value of the property
traded in.
-5-

Line 7

Enter the amount that you elected to
expense for listed property (defined
earlier) on line 29 here. For more
information, see the instructions for
Part V–Listed Property, later.

7. If you have qualified section 179 disaster assistance property (see the
instructions for Line 1, earlier), enter the smaller of $100,000 or the cost of
the qualified section 179 disaster assistance property . . . . . . . . . . . . . . .

10. Base maximum threshold cost of section 179 property before reduction in
limitation for 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Column (c) — Elected cost. Enter
the amount you elect to expense
(including the combined cost of all
qualified real property that you elected
to treat as section 179 property). You
do not have to expense the entire cost
of the property. You can depreciate
the amount you do not expense . See
the line 19 and line 20 instructions.
To report your share of a section
179 expense deduction from a
partnership or an S corporation, write
“from Schedule K-1 (Form 1065)” or
“from Schedule K-1 (Form 1120S)”
across columns (a) and (b).

The carryover of disallowed deduction
from 2011 is the amount of section
179 property, if any, you elected to
expense in previous years that was
not allowed as a deduction because
of the business income limitation. If
you filed Form 4562 for 2011, enter
the amount from line 13 of your 2011
Form 4562.

Line 11

The total cost you can deduct is
limited to your taxable income from
the active conduct of a trade or
business during the year. You are
considered to actively conduct a trade
or business only if you meaningfully
participate in its management or
operations. A mere passive investor is
not considered to actively conduct a
trade or business.
Note. If you have to apply another
Code section that has a limitation
based on taxable income, see Pub.
946 for rules on how to apply the
business income limitation for the
section 179 expense deduction.
Individuals. Enter the smaller of
line 5 or the total taxable income from
any trade or business you actively
conducted, computed without regard
to any section 179 expense
deduction, the deduction for one-half
of self-employment taxes under
section 164(f), or any net operating
loss deduction. Also include all
wages, salaries, tips, and other
compensation you earned as an

employee (from Form 1040, line 7).
Do not reduce this amount by
unreimbursed employee business
expenses. If you are married filing a
joint return, combine the total taxable
incomes for you and your spouse.
Partnerships. Enter the smaller of
line 5 or the partnership's total items
of income and expense described in
section 702(a) from any trade or
business the partnership actively
conducted (other than credits,
tax-exempt income, the section 179
expense deduction, and guaranteed
payments under section 707(c)).
S corporations. Enter the smaller of
line 5 or the corporation's total items
of income and expense described in
section 1366(a) from any trade or
business the corporation actively
conducted (other than credits,
tax-exempt income, the section 179
expense deduction, and the
deduction for compensation paid to
the corporation's
shareholder-employees).
Corporations other than S corporations. Enter the smaller of line 5 or
the corporation's taxable income
before the section 179 expense
deduction, net operating loss
deduction, and special deductions
(excluding items not derived from a
trade or business actively conducted
by the corporation).

Line 12

The limitations on lines 5 and 11 apply
to the taxpayer, and not to each
separate business or activity.
Therefore, if you have more than one
business or activity, you may allocate
your allowable section 179 expense
deduction among them.
To do so, write “Summary” at the
top of Part I of the separate Form
4562 you are completing for the total
amounts from all businesses or
activities. Do not complete the rest of
that form. On line 12 of the Form 4562
you prepare for each separate
business or activity, enter the amount
allocated to the business or activity
from the “Summary.” No other entry is
required in Part I of the separate Form
4562 prepared for each business or
activity.

Part II. Special
Depreciation Allowance
and Other Depreciation
Line 14

For qualified property (defined below)
placed in service during the tax year,
you may be able to take an additional
50% (or 100%, if applicable) 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).
Qualified property. You can take
the special depreciation allowance for
certain qualified property acquired
after September 8, 2010, qualified
cellulosic biofuel plant property,
certain qualified property acquired
after December 31, 2007, and placed
in service before January 1, 2014,
qualified reuse and recycling property,
and certain qualified disaster
assistance property.
Certain qualified property
acquired after September 8, 2010.
Certain qualified property acquired
after September 8, 2010, is eligible for
a 100% special depreciation
allowance. To qualify, the property
must be certain property with a long
production period or certain aircraft
acquired after September 8, 2010,
and before January 1, 2013, and
placed in service before January 1,
2013.
You are considered to have
acquired the qualified property when
you pay or incur the cost of the
property. Qualified property that you
manufacture, construct, or produce for
use in your trade or business or for
your production of income is acquired
by you when you begin constructing,
manufacturing, or producing that
property. If you enter into a binding
contract after September 8, 2010, and
before January 1, 2012 to acquire
(including to manufacture, construct,
or produce) certain property with a
long production period or certain
aircraft, the property will be treated as
timely acquired.

-6-

The original use of the qualified
property must begin with you after
September 8, 2010.
The other requirements for
qualified property to be eligible for a
100% special depreciation allowance
are identical as the requirements for
qualified property to be eligible for a
50% special depreciation allowance
as discussed under Certain qualified
property acquired after December 31,
2007, and placed in service before
January 1, 2014, later.
For more information, see section
168(k)(5) and Rev. Proc. 2011-26,
2011-16 I.R.B. 664, available at
www.irs.gov/irb/2011-16_IRB/
ar10.html. Also, see Pub. 946.
If you elect out of the 100%
special depreciation
CAUTION
allowance for property
acquired after September 8, 2010, the
property does not qualify for the 50%
special depreciation allowance. See
Election out, later, for more
information.

!

Qualified cellulosic biofuel plant
property. Qualified cellulosic biofuel
plant property is property used solely
in the United States to produce
cellulosic biofuel. Cellulosic biofuel is
any liquid fuel which is produced from
any lignocellulosic or hemicellulosic
matter that is available on a
renewable or recurring basis. For
example, lignocellulosic or
hemicellulosic matter that is available
on a renewable or recurring basis
includes bagasse (from sugar cane),
corn stalks, and switchgrass.
The 50% special depreciation
allowance applies to qualified
cellulosic biofuel plant property. The
property must also meet the following
requirements.
The original use of the property
must begin with you after December
20, 2006.
You must have acquired the
property by purchase after December
20, 2006. If a binding contract to
acquire the property existed before
December 21, 2006, the property
does not qualify.
Qualified cellulosic biofuel plant
property must be placed in service for
use in your trade or business or for the
production of income before January
1, 2014.
For property you sold and leased
back or for self-constructed property,

special rules apply. See section 168(l)
(5).
Note. For property placed in service
after January 2, 2013, and before
January 1, 2014, you may be able to
take a 50% special depreciation
allowance for qualified second
generation biofuel plant property that
is used solely in the United States to
produce second generation biofuel
(as defined in section 40(b)(6)(E)).
The other requirements for qualified
second generation biofuel plant
property to be eligible for the special
depreciation allowance are identical
to the requirements discussed for
Qualified cellulosic biofuel plant
property above.
Certain qualified property
acquired after December 31, 2007,
and placed in service before
January 1, 2014. Certain qualified
property (defined below) acquired
after December 31, 2007, is eligible
for a 50% special depreciation
allowance. If a binding contract to
acquire the property existed before
January 1, 2008, the property does
not qualify.
Qualified property is:
Tangible property depreciated
under MACRS with a recovery period
of 20 years or less.
Water utility property (see 25-year
property, later).
Computer software defined in and
depreciated under section 167(f)(1).
Qualified leasehold improvement
property.
Qualified property must also be
placed in service before September 9,
2010, or after December 31, 2011,
and before January 1, 2014 (or before
September 9, 2010, or after
December 31, 2012, and before
January 1, 2015, for certain property
with a long production period and for
certain aircraft). The original use of
the property must begin with you after
December 31, 2007.
See Certain qualified property
acquired after September 8, 2010,
earlier, for information about the
temporary increased 100% special
depreciation allowance for certain
property acquired after September 8,
2010.
See Pub. 946 for more information.
Qualified reuse and recycling
property. Certain qualified reuse and

recycling property (defined below)
placed in service after August 31,
2008, is eligible for a 50% special
depreciation allowance.
Qualified reuse and recycling
property includes any machinery and
equipment (not including buildings or
real estate), along with any
appurtenance, that is used exclusively
to collect, distribute, or recycle
qualified reuse and recyclable
materials. This includes software
necessary to operate such equipment.
See section 168(m)(3) for more
information.
Qualified reuse and recycling
property must also meet all of the
following tests.
The property must be depreciated
under MACRS.
The property must have a useful life
of at least 5 years.
You must have acquired the
property by purchase after August 31,
2008. If a binding contract to acquire
the property existed before
September 1, 2008, the property does
not qualify.
The property must be placed in
service after August 31, 2008.
The original use of the property
must begin with you after August 31,
2008.
For self-constructed property,
special rules apply. See section
168(m)(2)(C).
Qualified reuse and recycling
property does not include rolling stock
or other equipment used to transport
reuse and recyclable materials or any
property to which section 168(g) or (k)
applies.
Qualified disaster assistance
property. You may be able to take a
50% special depreciation allowance
for qualified disaster assistance
property (defined below) placed in
service in federally declared disaster
areas where the disaster occurred
after December 31, 2007, and before
January 1, 2010. A list of the federally
declared disaster areas is available at
the FEMA web site at www.fema.gov.
Qualified disaster assistance
property is:
Tangible property depreciated
under MACRS with a recovery period
of 20 years or less,
Computer software defined in and
depreciated under section 167(f)(1),

-7-

Water utility property (see 25-year
property, later),
Qualified leasehold improvement
property,
Nonresidential real property, or
Residential rental property.
Qualified disaster assistance
property must also meet all of the
following rules.
The property must rehabilitate
property damaged, or replace
property destroyed or condemned, as
a result of the applicable federally
declared disaster area.
The property must be similar in
nature to, and located in the same
county as, the property being
rehabilitated or replaced.
Substantially all (80% or more) of
the use of the property must be in the
active conduct of your trade or
business in a federally declared
disaster area where the disaster
occurred after December 31, 2007,
and before January 1, 2010.
You must have acquired the
property by purchase on or after the
applicable disaster date. If a binding
contract to acquire the property
existed before the applicable disaster
date, the property does not qualify.
The original use of the property
within the applicable disaster area
must begin with you on or after the
applicable disaster date.
The property is placed in service by
you on or before the date which is the
last day of the third calendar year
following the applicable disaster date
(the fourth calendar year in the case
of nonresidential real property and
residential rental property).
For property you sold and leased
back or for self-constructed property,
special rules apply. See section
168(n)(2)(C).
For more information, see Pub.
946.
Election to accelerate minimum
tax credit in lieu of special
depreciation allowance. An
election to claim pre-2006 unused
minimum tax credits in lieu of claiming
the special depreciation allowance
made by a corporation for either its
first tax year ending after March 31,
2008, or its first tax year ending after
December 31, 2008, continues to
apply to round 2 extension property
(as defined in section 168(k)(4)(I)),
unless the corporation makes an
election not to apply the section

168(k)(4) election to round 2
extension property. If a corporation
did not make a section 168(k)(4)
election for either its first tax year
ending after March 31, 2008, or its
first tax year ending after December
31, 2008, the corporation may elect
for its first tax year ending after
December 31, 2010, to claim
pre-2006 unused minimum tax credits
in lieu of claiming the special
depreciation allowance for only round
2 extension property.
For fiscal year taxpayers with a tax
year ending after December 31, 2012,
an election to claim pre-2006 unused
minimum tax credits in lieu of claiming
the special depreciation allowance
made by a corporation for either its
first tax year ending after March 31,
2008, its first tax year ending after
December 31, 2008, or its first tax
year ending after December 31, 2010,
continues to apply to round 3
extension property (as defined in
section 168(k)(4)(J)), unless the
corporation makes an election not to
apply the section 168(k)(4) election to
round 3 extension property. If a
corporation did not make a section
168(k)(4) election for either its first tax
year ending after March 31, 2008, its
first tax year ending after December
31, 2008, or its first tax year ending
after December 31, 2010, the
corporation may elect for its first tax
year ending after December 31, 2012,
to claim pre-2006 unused minimum
tax credits in lieu of claiming the
special depreciation allowance for
only round 3 extension property.
If you make an election to
accelerate this credit in lieu of
claiming the special depreciation
allowance for qualified property, you
must not take the 50% or 100%
special depreciation allowance for the
property and must depreciate the
basis in the property under MACRS
using the straight line method. See
Lines 19a Through 19i, later, for more
information.
Once made, this election cannot be
revoked without IRS consent.
For more information on making
this election, see Form 8827, Credit
for Prior Year Minimum
Tax—Corporations; and related
instructions. Also, see Rev. Proc.
2008-65, 2008-44 I.R.B. 1082,
available at www.irs.gov/irb/
2008-44_IRB/ar15.html, Rev. Proc.

2009-16, 2009-06 I.R.B. 449,
available at www.irs.gov/irb/
2009-06_IRB/ar10.html, and Rev.
Proc. 2009-33, 2009-29 I.R.B. 150,
available at www.irs.gov/irb/
2009-29_IRB/ar09.html.
The IRS will release guidance
TIP concerning round 2 extension
property and round 3
extension property. The guidance will
be published in the Internal Revenue
Bulletin.
Exceptions. Qualified property
does not include:
Listed property used 50% or less in
a qualified business use (as defined in
the instructions for lines 26 and 27);
Any property required to be
depreciated under the alternative
depreciation system (ADS) (that is,
not property for which you elected to
use ADS);
Qualified Liberty Zone leasehold
improvement property;
Property placed in service and
disposed of in the same tax year;
Property converted from business
or income-producing use to personal
use in the same tax year it is acquired;
Property for which you elected not
to claim any special depreciation
allowance;
Any qualified restaurant property
(as defined in section 168(e)(7)) that
is not qualified leasehold
improvement property (as defined in
sections 168(e)(6) and 168(k)(3)); or
Any qualified retail improvement
property (as defined in section 168(e)
(8)) that is not qualified leasehold
improvement property (as defined in
sections 168(e)(6) and 168(k)(3)).
In addition, qualified cellulosic
biofuel plant property does not include
the following:
Any tax-exempt bond financed
property under section 103.
Any property for which a deduction
was taken under section 179C for
certain qualified refinery property.
Other bonus depreciation property
to which section 168(k) applies.
Qualified disaster assistance
property does not include:
Other bonus depreciation property
to which section 168(k), (l), or (m)
applies.
Any property described in section
1400N(p)(3).
Any tax-exempt bond financed
property under section 103.
-8-

Any property required to be
depreciated under the alternative
depreciation system (ADS) (that is,
not property for which you elected to
use ADS).
See sections 168(k), 168(l),
168(m), and 168(n), for additional
information. Also, see Pub. 946.
How to figure the allowance.
Figure the special depreciation
allowance by multiplying the
depreciable basis of the property by
50% (or 100%, if applicable).
To figure the depreciable basis,
subtract from the business/investment
portion of 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 elderly.
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 additional credits and deductions
that affect the depreciable basis, see
section 1016. Also, see Pub. 946.
Note. If you acquired qualified
property through a like-kind exchange
or involuntary conversion, the
carryover basis and any excess basis
of the acquired property is eligible for
the special depreciation allowance.
See Regulations section 1.168(k)-1(f)
(5).
If you take the 50% or 100%
special depreciation
CAUTION
allowance, you must reduce
the amount on which you figure your
regular depreciation or amortization
deduction by the amount deducted.
Also, you will not have any AMT
adjustment for the property if the
depreciable basis of the property for
the AMT is the same as for the regular
tax.

!

Election out. You can elect, for any
class of property, to not deduct any
special depreciation allowance for all
such property in such class placed in
service during the tax year.
To make an election, attach a
statement to your timely filed return
(including extensions) indicating the

class of property for which you are
making the election and that, for such
class you are not to claim any special
depreciation allowance.
The election must be made
separately by each person owning
qualified property (for example, by the
partnership, by the S corporation, or
by the common parent of a
consolidated group).
If you timely filed your return
without making an election, you can
still make the election by filing an
amended return within 6 months of
the due date of the return (excluding
extensions). Write “Filed pursuant to
section 301.9100-2” on the amended
return.
Once made, the election cannot be
revoked without IRS consent.
Note. If you elect not to have any
special depreciation allowance apply,
the property may be subject to an
AMT adjustment for depreciation.
Recapture. 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
you deducted. If qualified GO Zone
property (including specified GO Zone
property) ceases to be qualified GO
Zone property, if qualified Recovery
Assistance property ceases to be
qualified Recovery Assistance
property, if qualified cellulosic
biomass ethanol plant property
ceases to be qualified cellulosic
biomass ethanol plant property, if
qualified cellulosic biofuel plant
property ceases to be qualified
cellulosic biofuel plant property, or if
qualified disaster assistance property
ceases to be qualified disaster
assistance property in any year after
the year you claim the special
depreciation allowance, the excess
benefit you received from claiming the
special depreciation allowance must
be recaptured as ordinary income. For
information on depreciation recapture,
see Pub. 946. Also, see Notice
2008-25, 2008-9 I.R.B. 484, available
at www.irs.gov/irb/2008-9_IRB/
ar10.html for additional guidance on
recapture of qualified GO Zone
property.

Line 15

Report on this line depreciation for
property that you elect to depreciate
under the unit-of-production method
or any other method not based on a
term of years (other than the
retirement-replacement-betterment
method).
Attach a separate sheet showing:
A description of the property and
the depreciation method you elect that
excludes the property from MACRS or
the Accelerated Cost Recovery
System (ACRS); and
The depreciable basis (cost or
other basis reduced, if applicable, by
salvage value, any section 179
expense deduction, deduction for
removal of barriers to the disabled
and the elderly, disabled access
credit, enhanced oil recovery credit,
credit for employer-provided childcare
facilities and services, any special
depreciation allowance, and any other
applicable deduction or credit).
For additional credits and
deductions that may affect the
depreciable basis, see section 1016.
Also, see section 50(c) to determine
the basis adjustment for investment
credit property.

Line 16

Enter the total depreciation you are
claiming for the following types of
property (except listed property and
property subject to a section 168(f)(1)
election).
ACRS property (pre-1987 rules).
See Pub. 534.
Property placed in service before
1981.
Certain public utility property which
does not meet certain normalization
requirements.
Certain property acquired from
related persons.
Property acquired in certain
nonrecognition transactions.
Certain sound recordings, movies,
and videotapes.
Property depreciated under the
income forecast method. The use of
the income forecast method is limited
to motion picture films, videotapes,
sound recordings, copyrights, books,
and patents.
If you use the income forecast
method for any property placed in
service after September 13, 1995, you
may owe interest or be entitled to a
refund for the 3rd and 10th tax years
-9-

beginning after the tax year the
property was placed in service. For
details, see Form 8866, Interest
Computation Under the Look-Back
Method for Property Depreciated
Under the Income Forecast Method.
For property placed in service in
the current tax year, you can either
include certain participations and
residuals in the adjusted basis of the
property or deduct these amounts
when paid. See section 167(g)(7).
You cannot use this method to
depreciate any amortizable section
197 intangible. For more details, see
the instructions on section 197
intangibles, later.
Intangible property, other than
section 197 intangibles, including:
1. Computer software. Use the
straight line method over 36 months.
A longer period may apply to software
leased under a lease agreement
entered into after March 12, 2004, to a
tax-exempt organization,
governmental unit, or foreign person
or entity (other than a partnership).
See section 167(f)(1)(C).
If you elect the section 179
expense deduction or take
CAUTION
the special depreciation
allowance for qualified computer
software, you must reduce the amount
on which you figure your regular
depreciation deduction by the amount
deducted.

!

2. Any right to receive tangible
property or services under a contract
or granted by a governmental unit (not
acquired as part of a business).
3. Any interest in a patent or
copyright not acquired as part of a
business.
4. Residential mortgage servicing
rights. Use the straight line method
over 108 months.
5. Other intangible assets with a
limited useful life that cannot be
estimated with reasonable accuracy.
Generally, use the straight line
method over 15 years. See
Regulations section 1.167(a)-3(b) for
details and exceptions.
Prior years' depreciation, plus
current year's depreciation,
CAUTION
can never exceed the
depreciable basis of the property.

!

Part III. MACRS
Depreciation
The term “Modified Accelerated
Cost Recovery System” (MACRS)
includes the General Depreciation
System and the Alternative
Depreciation System. Generally,
MACRS is used to depreciate any
tangible property placed in service
after 1986. However, MACRS does
not apply to films, videotapes, and
sound recordings. For more details
and exceptions, see Pub. 946.

Section A
Line 17

For tangible property placed in service
in tax years beginning before 2012
and depreciated under MACRS, enter
the deductions for the current year. To
figure the deductions, see the
instructions for line 19, column (g).

Line 18

To simplify the computation of
MACRS depreciation, you can elect to
group assets into one or more general
asset accounts. The assets in each
general asset account are
depreciated as a single asset.
Each general asset account must
include only assets that were placed
in service during the same tax year
with the same asset class (if any),
depreciation method, recovery period,
and convention. However, an asset
cannot be included in a general asset
account if the asset is used both for
personal purposes and business/
investment purposes.
When an asset in an account is
disposed of, the amount realized
generally must be recognized as
ordinary income. The unadjusted
depreciable basis and depreciation
reserve of the general asset account
are not affected as a result of a
disposition.
Special rules apply to passenger
automobiles, assets generating
foreign source income, assets
converted to personal use, certain
asset dispositions, and like-kind
exchanges or involuntary conversions
of property in a general asset account.
For more details, see Regulations
section 1.168(i)-1, (as in effect on
April 1, 2011).

To make the election, check the
box on line 18. You must make the
election on your return filed no later
than the due date (including
extensions) for the tax year in which
the assets included in the general
asset account were placed in service.
Once made, the election is
irrevocable and applies to the tax year
for which the election is made and all
later tax years.
For more information on
depreciating property in a general
asset account, see Pub. 946.

Section B
Property acquired in a like-kind exchange or involuntary conversion.
Generally, you must depreciate the
carryover basis of property you
acquire in a like-kind exchange or
involuntary conversion during the
current tax year over the remaining
recovery period of the property
exchanged or involuntarily converted.
Use the same depreciation method
and convention that was used for the
exchanged or involuntarily converted
property. Treat any excess basis as
newly placed in service property.
Figure depreciation separately for the
carryover basis and the excess basis,
if any.
These rules apply only to acquired
property with the same or a shorter
recovery period or the same or a more
accelerated depreciation method than
the property exchanged or
involuntarily converted. For additional
rules, see Regulations section
1.168(i)-6(c) and Pub. 946.
Election out. Instead of using the
above rules, you can elect, for
depreciation purposes, to treat the
adjusted basis of the exchanged
property as if it was disposed of at the
time of the exchange or involuntary
conversion. Generally, treat the
carryover basis and excess basis, if
any, for the acquired property as if
placed in service on the date you
acquired it. The depreciable basis of
the new property is the adjusted basis
of the exchanged or involuntarily
converted property plus any additional
amount paid for it. See Regulations
section 1.168(i)-6(i).
To make the election, figure the
depreciation deduction for the new
property in Part III. For listed property,
use Part V. Attach a statement
indicating “Election made under
-10-

section 1.168(i)-6(i)” for each property
involved in the exchange or
involuntary conversion. The election
must be made separately by each
person acquiring replacement
property (for example, by the
partnership, by the S corporation, or
by the common parent of a
consolidated group). The election
must be made on your timely filed
return (including extensions). Once
made, the election cannot be revoked
without IRS consent.
If you trade in a vehicle used
for employee business use,
CAUTION
complete Form 2106, Part II,
Section D, instead of Form 4562, to
“elect out” of Regulations section
1.168(i)-6. If you do not “elect out,”
you must use Form 4562 instead of
Form 2106. See the Instructions for
Form 2106.

!

Lines 19a Through 19i

Use lines 19a through 19i only for
assets placed in service during the tax
year beginning in 2012 and
depreciated under the General
Depreciation System (GDS), except
for automobiles and other listed
property (which are reported in Part
V).

Column (a) — Classification of
property. Sort the property you
acquired and placed in service during
the tax year beginning in 2012
according to its classification (3-year
property, 5-year property, etc.) as
shown in column (a) of lines 19a
through 19i. The classifications for
some property are shown below. For
property not shown, see Determining
the classification, later.
3-year property includes:
A race horse that is more than 2
years old at the time it is placed in
service before January 1, 2009.
Note. Any race horse placed in
service after December 31, 2008, and
before January 1, 2014, is treated as
3-year property (regardless of the age
of the race horse).
Any horse (other than a race horse)
that is more than 12 years old at the
time it is placed in service.
Any qualified rent-to-own property
(as defined in section 168(i)(14)).
5-year property includes:
Automobiles.
Light general purpose trucks.

Typewriters, calculators, copiers,
and duplicating equipment.
Any semi-conductor manufacturing
equipment.
Any computer or peripheral
equipment.
Any section 1245 property used in
connection with research and
experimentation.
Certain energy property specified in
section 168(e)(3)(B)(vi).
Appliances, carpets, furniture, etc.,
used in a rental real estate activity.
7-year property includes:
Office furniture and equipment.
Railroad track.
Any motorsports entertainment
complex (as defined in section 168(i)
(15)).
Any natural gas gathering line (as
defined in section 168(i)(17)) placed
in service after April 11, 2005, the
original use of which begins with you
after April 11, 2005, and is not under
self-construction or subject to a
binding contract in existence before
April 12, 2005. Also, no AMT
adjustment is required.
Any property that does not have a
class life and is not otherwise
classified.
10-year property includes:
Vessels, barges, tugs, and similar
water transportation equipment.
Any single purpose agricultural or
horticultural structure (see section
168(i)(13)).
Any tree or vine bearing fruit or
nuts.
Any qualified smart electric meter
property.
Any qualified smart electric grid
system property.
15-year property includes:
Any municipal wastewater
treatment plant.
Any telephone distribution plant
and comparable equipment used for
2-way exchange of voice and data
communications.
Any section 1250 property that is a
retail motor fuels outlet (whether or
not food or other convenience items
are sold there).
Any qualified leasehold
improvement property.
Any qualified restaurant property
that is a building.
Any qualified restaurant property
that is section 1250 property and an
improvement to a building.

Any qualified retail improvement
property (as defined in section 168(e)
(8)).
Initial clearing and grading land
improvements for gas utility property.
Certain electric transmission
property specified in section 168(e)(3)
(E)(vii) placed in service after April 11,
2005, the original use of which begins
with you after April 11, 2005, and is
not under self-construction or subject
to a binding contract in existence
before April 12, 2005.
20-year property includes:
Farm buildings (other than single
purpose agricultural or horticultural
structures).
Municipal sewers not classified as
25-year property.
Initial clearing and grading land
improvements for electric utility
transmission and distribution plants.
25-year property is water utility
property, which is:
Property that is an integral part of
the gathering, treatment, or
commercial distribution of water that,
without regard to this classification,
would be 20-year property.
Municipal sewers. This
classification does not apply to
property placed in service under a
binding contract in effect at all times
since June 9, 1996.
Residential rental property is a
building in which 80% or more of the
total rent is from dwelling units.
Nonresidential real property is
any real property that is neither
residential rental property nor property
with a class life of less than 27.5
years.
50-year property includes any
improvements necessary to construct
or improve a roadbed or right-of-way
for railroad track that qualifies as a
railroad grading or tunnel bore under
section 168(e)(4).
There is no separate line to report
50-year property. Therefore, attach a
statement showing the same
information as required in columns (a)
through (g). Include the deduction in
the line 22 “Total” and write “See
attachment” in the bottom margin of
the form.
Determining the classification. If
your depreciable property is not listed
above, determine the classification as
follows.
-11-

1. Find the property's class life.
See the Table of Class Lives and
Recovery Periods in Pub. 946.
2. Use the following table to find
the classification in column (b) that
corresponds to the class life of the
property in column (a).
(a)
(b)
Class life (in years)
Classification
(See Pub. 946)
4 or less
. . . . . . . . . .
3-year property
More than 4 but less than
5-year property
10 . . . . . . . . . . . . . .
10 or more but less than
7-year property
16 . . . . . . . . . . . . . .
16 or more but less than
10-year property
20 . . . . . . . . . . . . . .
20 or more but less than
15-year property
25 . . . . . . . . . . . . . .
25 or more . . . . . . . . . 20-year property

Column (b) — Month and year
placed in service. For lines 19h and
19i, enter the month and year you
placed the property in service. 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.
Column (c) — Basis for depreciation (business/investment use only). To find the basis for depreciation,
multiply the cost or other basis of the
property by the percentage of
business/investment use. From that
result, subtract any credits and
deductions allocable to the property.
The following are examples of some
credits and deductions that reduce
the basis for depreciation.
Section 179 expense deduction.
Deduction under section 179C for
certain qualified refinery property.
Deduction under section 179D for
certain energy efficient commercial
building property.
Deduction for removal of barriers to
the disabled and the elderly.
Disabled access credit.
Enhanced oil recovery credit.
Credit for alternative fuel vehicle
refueling property.
Credit for employer-provided
childcare facilities and services.
Any special depreciation allowance
included on line 14.
Any basis adjustment for
investment credit property. See
section 50(c).

For additional credits and
deductions that affect the depreciable
basis, see section 1016 and Pub. 946.
Column (d) — Recovery period.
Determine the recovery period from
the following table. See Pub. 946 for
more information on the recovery
period for MACRS property.
Recovery Period for Most
Property
Classification
3-year property . . . . . . . .
5-year property . . . . . . . .
7-year property . . . . . . . .
10-year property . . . . . . .
15-year property . . . . . . .
20-year property . . . . . . .
25-year property . . . . . . .
Residential rental
property . . . . . . . . . . . .
Nonresidential real
property . . . . . . . . . . . .
Railroad gradings and tunnel
bores . . . . . . . . . . . . . .

Recovery
period
3 yrs.
5 yrs.
7 yrs.
10 yrs.
15 yrs.
20 yrs.
25 yrs.
27.5 yrs.
39 yrs.
50 yrs.

Indian reservation property. For
qualified Indian reservation property
placed in service during the tax year,
the following shorter recovery periods
apply.
Recovery Period for Qualified
Indian Reservation Property
Property class
3-year property . .
5-year property . .
7-year property . .
10-year property .
15-year property .
20-year property .
Nonresidential real
property . . . . . .

. . . . . .

Recovery
period
2 yrs.
3 yrs.
4 yrs.
6 yrs.
9 yrs.
12 yrs.

. . . . . .

22 yrs.

. . . . . .
. . . . . .
. . . . . .
. . . . . .
. . . . . .

For example, figure depreciation on
5-year property acquired during the
tax year that is qualified Indian
reservation property in the same
manner as depreciation is figured for
3-year property that is not qualified
Indian reservation property. Report
the depreciation on line 19b, entering
“3 yrs.” as the recovery period in
column (d). For more information,
including the definition of qualified
property, see Pub. 946.
Column (e) — Convention. The
applicable convention determines the
portion of the tax year for which
depreciation is allowable during a
year property is either placed in

service or disposed of. There are
three types of conventions. To select
the correct convention, you must
know the type of property and when
you placed the property in service.
Half-year convention. This
convention applies to all property
reported on lines 19a through 19g,
unless the mid-quarter convention
applies. It does not apply to residential
rental property, nonresidential real
property, and railroad gradings and
tunnel bores. It treats all property
placed in service (or disposed of)
during any tax year as placed in
service (or disposed of) on the
midpoint of that tax year. Enter “HY” in
column (e).
Mid-quarter convention. If the
total depreciable bases (before any
special depreciation allowance) of
MACRS property placed in service
during the last 3 months of your tax
year exceed 40% of the total
depreciable bases of MACRS
property placed in service during the
entire tax year, the mid-quarter,
instead of the half-year, convention
generally applies.
In determining whether the
mid-quarter convention applies, do
not take into account the following.
Property that is being depreciated
under a method other than MACRS.
Any residential rental property,
nonresidential real property, or
railroad gradings and tunnel bores.
Property that is placed in service
and disposed of within the same tax
year.
The mid-quarter convention treats
all property placed in service (or
disposed of) during any quarter as
placed in service (or disposed of) on
the midpoint of that quarter. However,
no depreciation is allowed under this
convention for property that is placed
in service and disposed of within the
same tax year. Enter “MQ” in column
(e).
Mid-month convention. This
convention applies only to residential
rental property (line 19h),
nonresidential real property (line 19i),
and railroad gradings and tunnel
bores. It treats all property placed in
service (or disposed of) during any
month as placed in service (or
disposed of) on the midpoint of that
month. Enter “MM” in column (e).
-12-

Column (f) — Method. Applicable
depreciation methods are prescribed
for each classification of property as
follows. However, you can make an
irrevocable election to use the straight
line method for all property within a
classification that is placed in service
during the tax year. Enter “200 DB” for
200% declining balance, “150 DB” for
150% declining balance, or “S/L” for
straight line.
Note. If you elected to accelerate
pre-2006 unused minimum tax credit
in lieu of special depreciation
allowance for round 2 extension
property (as discussed earlier), you
must depreciate the basis in the
property using the straight line
method. Enter “S/L” in this column for
the applicable property classification.
If you are depreciating other property
in the same classification as the
property for which this election was
made and using a different method,
enter “Various” in this column.
3-, 5-, 7-, and 10-year property.
Generally, the applicable method is
the 200% declining balance method,
switching to the straight line method in
the first tax year that the straight line
rate exceeds the declining balance
rate.
Note. The straight line method is the
only applicable method for trees and
vines bearing fruit or nuts. The 150%
declining balance method is the only
applicable method for any qualified
smart electric meter or any qualified
smart electric grid system property
placed in service after October 3,
2008.
For 3-, 5-, 7-, or 10-year property
eligible for the 200% declining
balance method, you can make an
irrevocable election to use the 150%
declining balance method, switching
to the straight line method in the first
tax year that the straight line rate
exceeds the declining balance rate.
The election applies to all property
within the classification for which it is
made and that was placed in service
during the tax year. You will not have
an AMT adjustment for any property
included under this election.
15- and 20-year property (not
including qualified leasehold
improvement property, qualified
restaurant property, or qualified
retail improvement property) and
property used in a farming

business. The applicable method is
the 150% declining balance method,
switching to the straight line method in
the first tax year that the straight line
rate exceeds the declining balance
rate.
Water utility property,
residential rental property,
nonresidential real property,
qualified leasehold improvement
property, qualified restaurant
property, qualified retail
improvement property, or any
railroad grading or tunnel bore.
The only applicable method is the
straight line method.
Column (g) — Depreciation deduction. To figure the depreciation
deduction, you may use optional
Tables A through E, which begin later.
Multiply column (c) by the applicable
rate from the appropriate table. See
Pub. 946 for complete tables. If you
disposed of the property during the
current tax year, multiply the result by
the applicable decimal amount from
the tables in Step 3 later. Or, you may
compute the deduction yourself by
completing the following steps.
Step 1. Determine the
depreciation rate as follows.
If you are using the 200% or 150%
declining balance method in column
(f), divide the declining balance rate
(use 2.00 for 200 DB or 1.50 for 150
DB) by the number of years in the
recovery period in column (d). For
example, for property depreciated
using the 200 DB method over a
recovery period of 5 years, divide 2.00
by 5 for a rate of 40%. You must
switch to the straight line rate in the
first year that the straight line rate
exceeds the declining balance rate.
If you are using the straight line
method, divide 1.00 by the remaining
number of years in the recovery
period as of the beginning of the tax
year (but not less than one). For
example, if there are 61 2 years
remaining in the recovery period as of
the beginning of the year, divide 1.00
by 6.5 for a rate of 15.38%.
Step 2. Multiply the percentage
rate determined in Step 1 by the
property's unrecovered basis (basis
for depreciation (as defined in column
(c)) reduced by all prior years'
depreciation.
Step 3. For property placed in
service or disposed of during the

current tax year, multiply the result
from Step 2 by the applicable decimal
amount from the tables below (based
on the convention shown in column
(e)).
Half-year (HY) convention . . . . . . .

0.5

Mid-quarter (MQ)
convention
Placed in service Placed
(or disposed of)
in
during the:
service
1st quarter . . .
0.875
2nd quarter
. .
0.625
3rd quarter . . .
0.375
4th quarter . . .
0.125
Mid-month (MM)
convention
Placed in service
(or disposed of)
during the:
1st month
. . . .
2nd month . . . .
3rd month
. . . .
4th month
. . . .
5th month
. . . .
6th month
. . . .
7th month
. . . .
8th month
. . . .
9th month
. . . .
10th month . . . .
11th month . . . .
12th month . . . .

Placed
in
service
0.9583
0.8750
0.7917
0.7083
0.6250
0.5417
0.4583
0.3750
0.2917
0.2083
0.1250
0.0417

Disposed
of
0.125
0.375
0.625
0.875

Instead of depreciating property
under GDS (line 19), you can make an
irrevocable election for any
classification of property for any tax
year to use ADS. For residential rental
and nonresidential real property, you
can make this election separately for
each property. You make this election
by completing line 20 of Form 4562.

Disposed
of
0.0417
0.1250
0.2083
0.2917
0.3750
0.4583
0.5417
0.6250
0.7083
0.7917
0.8750
0.9583

Column (a) — Classification of
property. Use the following rules to
determine the classification of the
property under ADS.
Under ADS, the depreciation
deduction for most property is based
on the property's class life. See
section 168(g)(3) for special rules for
determining the class life for certain
property. See Pub. 946 for information
on recovery periods for ADS and the
Table of Class Lives and Recovery
Periods.
Use line 20a for all property
depreciated under ADS, except
property that does not have a class
life, residential rental and
nonresidential real property, water
utility property, and railroad gradings
and tunnel bores. Use line 20b for
property that does not have a class
life. Use line 20c for residential rental
and nonresidential real property.

Short tax years. See Pub. 946 for
rules on how to compute the
depreciation deduction for property
placed in service in a short tax year.

Section C
Lines 20a Through 20c

Complete lines 20a through 20c for
assets, other than automobiles and
other listed property, placed in service
only during the tax year beginning in
2012 and depreciated under the
Alternative Depreciation System
(ADS). Report on line 17 MACRS
depreciation on assets placed in
service in prior years.
Under ADS, use the applicable
depreciation method, the applicable
recovery period, and the applicable
convention to compute depreciation.

The following types of property
must be depreciated under ADS.
Tangible property used
predominantly outside the United
States.
Tax-exempt use property.
Tax-exempt bond financed
property.
-13-

Imported property covered by an
executive order of the President of the
United States.
Property used predominantly in a
farming business and placed in
service during any tax year in which
you made an election under section
263A(d)(3) not to have the uniform
capitalization rules of section 263A
apply.

Water utility property and
railroad gradings and tunnel
bores. These assets are 50-year
property under ADS. There is no
separate line to report 50-year
property. Therefore, attach a
statement showing the same
information required in columns (a)
through (g). Include the deduction in
the line 22 “Total” and write “See
attachment” in the bottom margin of
the form.
Column (b) — Month and year
placed in service. For 40-year
property, enter the month and year
placed in service or converted to use
in a trade or business or for the
production of income.

Column (c) — Basis for depreciation (business/investment use only). See the instructions for line 19,
column (c).
Column (d) — Recovery period.
On line 20a, enter the property's class
life.
Column (e) — Convention. Under
ADS, the applicable conventions are
the same as those used under GDS.
See the instructions for line 19,
column (e).
Column (g) — Depreciation deduction. Figure the depreciation
deduction in the same manner as
under GDS, except use the straight
line method over the ADS recovery
period and use the applicable
convention.
MACRS recapture. If you later
dispose of property you depreciated
using MACRS, any gain on the
disposition is generally recaptured
(included in income) as ordinary
income up to the amount of the
depreciation previously allowed or
allowable for the property.
Depreciation, for this purpose,
includes any of the following
deductions taken during the 2012 tax
year.
Any section 179 expense deduction
claimed on the property,
Any special depreciation allowance
available for the property (unless you
elected not to claim it),
Any deduction under section 179B
for capital costs incurred in complying
with Environmental Protection Agency
sulfur regulations,
Any deduction under section 179C
for certain qualified refinery property,
and
Any deduction under section 179D
for certain energy efficient commercial
building property.
There is no recapture for residential
rental and nonresidential real
property, unless that property is
qualified property for which you
claimed a special depreciation
allowance (discussed earlier). For
more information on depreciation
recapture, see Pub. 946.

Part IV. Summary
Line 22

A partnership (other than an electing
large partnership) or S corporation
does not include any section 179

expense deduction (line 12) on this
line. Instead, any section 179
expense deduction is passed through
separately to the partners and
shareholders on the appropriate line
of their Schedules K-1.

Line 23

If you are subject to the uniform
capitalization rules of section 263A,
enter the increase in basis from costs
you must capitalize. For a detailed
discussion of who is subject to these
rules, which costs must be
capitalized, and allocation of costs
among activities, see Regulations
section 1.263A-1.

Part V. Listed Property
If you claim the standard mileage
rate, actual vehicle expenses
(including depreciation), or
depreciation on other listed property,
you must provide the information
requested in Part V, regardless of the
tax year the property was placed in
service. However, if you file Form
2106 or 2106-EZ, report this
information on that form and not in
Part V. Also, if you file Schedule C
(Form 1040) or Schedule C-EZ (Form
1040) and are claiming the standard
mileage rate or actual vehicle
expenses (except depreciation), and
you are not required to file Form 4562
for any other reason, report vehicle
information in Part IV of Schedule C or
in Part III of Schedule C-EZ and not
on Form 4562.

Section A
The section 179 expense
deduction should be
CAUTION
computed before calculating
any special depreciation allowance
and/or regular depreciation deduction.
See the instructions for line 26,
column (i).

!

Listed property used 50% or less in a
qualified business use (as defined in
the instructions for lines 26 and 27
below) does not qualify for the section
179 expense deduction or special
depreciation allowance.

Line 25

If you placed in service certain
qualified listed property during the tax
year, you may be able to deduct an
additional special depreciation
allowance. This property includes
certain qualified property acquired
-14-

after December 31, 2007, and placed
in service before January 1, 2014, or
certain qualified disaster assistance
property placed in service during the
tax year. See the instructions for
line 14 for the definition of qualified
property and how to figure the
deduction. This special depreciation
allowance is included in the overall
limit on depreciation and section 179
expense deduction for passenger
automobiles. See the tables for
limitations on passenger vehicles and
trucks and vans, later. Enter on line 25
your total special depreciation
allowance for all qualified listed
property.

Lines 26 and 27

Use line 26 to figure depreciation for
property used more than 50% in a
qualified business use. Use line 27 to
figure the depreciation for property
used 50% or less in a qualified
business use. Also see Limits for
passenger automobiles, later.
If you acquired the property
through a trade-in, special
CAUTION
rules apply for determining
the basis, recovery period,
depreciation method, and convention.
For more details, see Property
acquired in a like-kind exchange or
involuntary conversion, earlier. Also,
see Regulations section 1.168(i)-6(d)
(3).

!

Qualified business use. To
determine whether to use line 26 or
line 27 to report your listed property,
you must first determine the
percentage of qualified business use
for each property. Generally, a
qualified business use is any use in
your trade or business. However, it
does not include any of the following.
Investment use.
Leasing the property to a 5% owner
or related person.
The use of the property as
compensation for services performed
by a 5% owner or related person.
The use of the property as
compensation for services performed
by any person (who is not a 5% owner
or related person), unless an amount
is included in that person's income for
the use of the property and, if
required, income tax was withheld on
that amount.
Excluding these uses above from
the numerator, determine your
percentage of qualified business use

similar to the method used to figure
the business/investment use
percentage in column (c). Your
percentage of qualified business use
may be smaller than the business/
investment use percentage.
For more information, including the
definition of a 5% owner and related
person and exceptions, see Pub. 946.
Listed property recapture. If you
used listed property more than 50% in
a qualified business use in the year
you placed the property in service,
and used it 50% or less in a later year,
you may have to include as income
part of the depreciation deducted in
prior years. Use Form 4797, Sales of
Business Property, to figure the
recapture amount.
Column (a) — Type of property.
List on a property-by-property basis
all your listed property in the following
order.
1. Automobiles and other vehicles.
2. Other listed property
(computers and peripheral equipment,
etc.).
In column (a), list the make and
model of automobiles, and give a
general description of other listed
property.
If you have more than five vehicles
used 100% for business/investment
purposes, you may group them by tax
year. Otherwise, list each vehicle
separately.
Column (b) — Date placed in service. Enter the date the property was
placed in service. If property held for
personal use is converted to
business/investment use, treat the
property as placed in service on the
date of conversion.
Column (c) — Business/investment use percentage. Enter the
percentage of business/investment
use. For automobiles and other
vehicles, determine this percentage
by dividing the number of miles the
vehicle is driven for trade or business
purposes or for the production of
income during the year (not to include
any commuting mileage) by the total
number of miles the vehicle is driven
for all purposes. Treat vehicles used
by employees as being used 100% for
business/investment purposes if the
value of personal use is included in
the employees' gross income, or the

employees reimburse the employer
for the personal use.
Employers who report the amount
of personal use of the vehicle in the
employee's gross income, and
withhold the appropriate taxes, should
enter “100%” for the percentage of
business/investment use. For more
information, see Pub. 463.
For other listed property (such as
computers or video equipment),
allocate the use based on the most
appropriate unit of time the property is
actually used (rather than merely
being available for use).
If during the tax year you convert
property used solely for personal
purposes to business/investment use
(or vice versa), figure the percentage
of business/investment use only for
the number of months you use the
property in your business or for the
production of income. Multiply that
percentage by the number of months
you use the property in your business
or for the production of income, and
divide the result by 12.
Column (d) — Cost or other basis.
Enter the property's actual cost
(including sales tax) or other basis
(unadjusted for prior years'
depreciation). If you traded in old
property, see Property acquired in a
like-kind exchange or involuntary
conversion, earlier.
For a vehicle, reduce your basis by
any qualified electric vehicle credit
you claimed for property placed in
service before January 1, 2007, or by
any alternative motor vehicle credit
allowed.
If you converted the property from
personal use to business/investment
use, your basis for depreciation is the
smaller of the property's adjusted
basis or its fair market value on the
date of conversion.
Column (e) — Basis for depreciation (business/investment use only). Multiply column (d) by the
percentage in column (c). From that
result, subtract any section 179
expense deduction, any special
depreciation allowance, any credit for
employer-provided childcare facilities
and services, and half of any
investment credit taken before 1986
(unless you claimed the reduced
credit). For automobiles and other
listed property placed in service after
1985 (i.e., transition property), reduce
-15-

the depreciable basis by the entire
investment credit.
Column (f) — Recovery period.
Enter the recovery period. For
property placed in service after 1986
and used more than 50% in a qualified
business use, use the table in the
instructions for line 19, column (d).
For property placed in service after
1986 and used 50% or less in a
qualified business use, depreciate the
property using the straight line method
over its ADS recovery period. The
ADS recovery period is 5 years for
automobiles and computers.
Column (g) — Method/convention.
Enter the method and convention
used to figure your depreciation
deduction. See the instructions for
line 19, columns (e) and (f). Write
“200 DB,”“150 DB,” or “S/L,” for the
depreciation method, and “HY,”“MM,”
or “MQ,” for half-year, mid-month, or
mid-quarter conventions, respectively.
For property placed in service before
1987, write “PRE” if you used the
prescribed percentages under ACRS.
If you elected an alternate percentage
or if you are required to depreciate the
property using the straight line
method, enter “S/L.”
Column (h) — Depreciation deduction. See Limits for passenger
automobiles, later, before entering an
amount in column (h).
For property used more than 50%
in a qualified business use (line 26)
and placed in service after 1986,
figure column (h) by following the
instructions for line 19, column (g). If
placed in service before 1987,
multiply column (e) by the applicable
percentage given in Pub. 534 for
ACRS property. If the recovery period
for an automobile ended before your
tax year beginning in 2012, enter your
unrecovered basis, if any, in column
(h).
For property used 50% or less in a
qualified business use (line 27) and
placed in service after 1986, figure
column (h) by dividing the amount in
column (e) by the amount in column
(f). Use the same conventions as
discussed in the instructions for
line 19, column (e). The amount in
column (h) cannot exceed the
property's unrecovered basis. If the
recovery period for an automobile
ended before your tax year beginning

in 2012, enter your unrecovered
basis, if any, in column (h).
For property placed in service
before 1987 that was disposed of
during the year, enter zero.
Limits for passenger automobiles.
The depreciation deduction, including
section 179 expense deduction, for
passenger automobiles is limited. For
any passenger automobile (including
an electric passenger automobile) you
list on line 26 or line 27, the total of
columns (h) and (i) on line 26 or 27
and column (h) on line 25 for that
automobile cannot exceed the
applicable limit shown in Table 1, 2, 3,
or 4. If the business/investment use
percentage in column (c) for the
automobile is less than 100%, you
must reduce the applicable limit to an
amount equal to the limit multiplied by
that percentage. For example, for an
automobile (other than a truck or van)
placed in service in 2012 (for which
you elect not to claim any special
depreciation allowance) that is used
60% for business/investment, the limit
is $1,836 ($3,060 x 60%).
For purposes of the limits for
passenger automobiles, the following
apply.
Passenger automobiles are
4-wheeled vehicles manufactured
primarily for use on public roads that
are rated at 6,000 pounds unloaded
gross vehicle weight or less (for a
truck or van, gross vehicle weight is
substituted for unloaded gross vehicle
weight).
Electric passenger automobiles are
vehicles produced by an original
equipment manufacturer and
designed to run primarily on
electricity, placed in service after
August 5, 1997, and before January 1,
2007.

minimis amount for personal
purposes. For example, a van that has
only a front bench for seating, in which
permanent shelving has been
installed, that constantly carries
merchandise or equipment, and that
has been specially painted with
advertising or the company's name, is
a vehicle not likely to be used more
than a de minimis amount for personal
purposes.
Exception for leasehold
property. The business use
requirement and the limits for
passenger automobiles generally do
not apply to passenger automobiles
leased or held by anyone regularly
engaged in the business of leasing
passenger automobiles.
For a detailed discussion on
passenger automobiles, including
leased automobiles, see Pub. 463.
Table 1—Limits for Passenger
Automobiles Placed in Service
Before 2004 (excluding electric
passenger automobiles placed in
service after August 5, 1997)

IF you placed your
automobile in service:

THEN the
limit on your
depreciation
and section
179 expense
deduction is:

June 19 — Dec. 31, 1984

$6,000

Jan. 1 — Apr. 2, 1985

$6,200

Apr. 3, 1985 — Dec. 31, 1986

$4,800

Jan. 1, 1987 — Dec. 31, 1990

$1,475

Jan. 1, 1991 — Dec. 31, 1992

$1,575

Jan. 1, 1993 — Dec. 31, 1994

$1,675

Jan. 1, 1995 — Dec. 31, 2003

$1,775

Exception. The following vehicles
are not considered passenger
automobiles.
An ambulance, hearse, or
combination ambulance-hearse used
in your trade or business.
A vehicle used in your trade or
business of transporting persons or
property for compensation or hire.
Any truck or van placed in service
after July 6, 2003, that is a qualified
nonpersonal use vehicle. A truck or
van is a qualified nonpersonal use
vehicle only if it has been specially
modified with the result that it is not
likely to be used more than a de

Table 2—Limits for Electric
Passenger Automobiles Placed in
Service After August 5, 1997, and
Before January 1, 2007

IF you placed
your electric
automobile in
service:

AND the
number of
tax years in
which this
automobile
has been in
service is:

Aug. 6, 1997 —
Dec. 31, 1998

4 or
more

. . .

Jan. 1, 1999 —
Dec. 31, 2002

4 or
more

. . .

Jan. 1 — Dec. 31,
2003

4 or
more

. . .

Jan. 1, 2004 —
Dec. 31, 2005

4 or
more

. . .

Jan. 1 — Dec. 31,
2006

4 or
more

. . .

THEN the
limit on your
depreciation
and section
179 expense
deduction is:
 $5,425
  $5,325
 $5,225
 $5,125
 $5,225

Table 3—Limits for Passenger
Automobiles Placed in Service
After 2003 (excluding trucks and
vans placed in service after 2002 and
electric passenger automobiles
placed in service before January 1,
2007)

IF you placed
your automobile
in service:

AND the
number of
tax years in
which this
automobile
has been in
service is:

Jan. 1, 2004 —
Dec. 31, 2005

4 or
more

. . .

Jan. 1, 2006 —
Dec. 31, 2008

4 or
more

. . .

THEN the
limit on your
depreciation
and section
179 expense
deduction is:
$1,675
$1,775

Jan. 1 — Dec. 31,
2009

3

$2,850

4

$1,775

Jan. 1 — Dec. 31,
2010

2

$4,900

3

$2,950

Jan. 1 — Dec. 31,
2011

1

$3,060

2

$4,900

Jan 1— Dec. 31,
2012

1

$3,160*

2

$5,100

* If you take the special depreciation allowance for
qualified passenger automobiles placed in service in
2012, the limit is $11,160.

-16-

Table 4—Limits for Trucks and
Vans Placed in Service After 2002
AND the
number of
IF you placed
tax years in
your truck or van which this
in service:
truck or van
has been in
service is:
Jan. 1 — Dec. 31,
2003

4 or
more

Jan. 1, 2004 —
Dec. 31, 2008

4 or
more

THEN the
limit on your
depreciation
and section
179 expense
deduction is:
$1,975

. . .

. . .

$1,875

Jan. 1 — Dec. 31,
2009

3

$2,950

4

$1,775

Jan. 1 — Dec. 31,
2010

2

$5,100

3

$3,050

Jan. 1 — Dec. 31,
2011

1

$3,260

2

$5,200

Jan 1 — Dec. 31,
2012

1

$3,360*

2

$5,300

* If you take the special depreciation allowance for
qualified trucks and vans placed in service in 2012, the
limit is $11,360.

Column (i) — Elected section 179
cost. Enter the amount you elect to
expense for section 179 property
used more than 50% in a qualified
business use (subject to the limits for
passenger automobiles). Refer to the
instructions for Part I to determine if
the property qualifies under section
179.
You cannot elect to expense more
than $25,000 of the cost of any sport
utility vehicle (SUV) and certain other
vehicles placed in service during the
tax year. This rule applies to any
4-wheeled vehicle primarily designed
or used to carry passengers over
public streets, roads, or highways,
that is rated at more than 6,000
pounds gross vehicle weight and not
more than 14,000 pounds gross
vehicle weight. However, the $25,000
limit does not apply to any vehicle:
Designed to seat more than nine
persons behind the driver's seat,
Equipped with a cargo area (either
open or enclosed by a cap) of at least
six feet in interior length that is not
readily accessible directly from the
passenger compartment, or
That has an integral enclosure fully
enclosing the driver compartment and
load carrying device, does not have
seating rearward of the driver's seat,
and has no body section protruding
more than 30 inches ahead of the
leading edge of the windshield.

Recapture of section 179 expense
deduction. If you used listed
property more than 50% in a qualified
business use in the year you placed
the property in service and used it
50% or less in a later year, you may
have to recapture in the later year part
of the section 179 expense deduction.
Use Form 4797 to figure the recapture
amount.

Section B

Except as noted below, you must
complete lines 30 through 36 for each
vehicle identified in Section A.
Employees must provide their
employers with the information
requested on lines 30 through 36 for
each automobile or vehicle provided
for their use.

Exception. Employers are not
required to complete lines 30 through
36 for vehicles used by employees
who are not more than 5% owners or
related persons and for which the
question on line 37, 38, 39, 40, or 41
is answered “Yes.”

Section C

Employers providing vehicles to their
employees satisfy the employer's
substantiation requirements under
section 274(d) by maintaining a
written policy statement that:
Prohibits personal use including
commuting or
Prohibits personal use except for
commuting.
An employee does not need to
keep a separate set of records for any
vehicle that satisfies these written
policy statement rules.
For both written policy statements,
there must be evidence that would
enable the IRS to determine whether
use of the vehicle meets the
conditions stated below.

Line 37

A policy statement that prohibits
personal use (including commuting)
must meet all of the following
conditions.
The employer owns or leases the
vehicle and provides it to one or more
employees for use in the employer's
trade or business.
When the vehicle is not used in the
employer's trade or business, it is kept
on the employer's business premises,
unless it is temporarily located
elsewhere (e.g., for maintenance or
because of a mechanical failure).
-17-

No employee using the vehicle
lives at the employer's business
premises.
No employee may use the vehicle
for personal purposes, other than de
minimis personal use (e.g., a stop for
lunch between two business
deliveries).
Except for de minimis use, the
employer reasonably believes that no
employee uses the vehicle for any
personal purpose.

Line 38

A policy statement that prohibits
personal use (except for commuting)
is not available if the commuting
employee is an officer, director, or 1%
or more owner. This policy must meet
all of the following conditions.
The employer owns or leases the
vehicle and provides it to one or more
employees for use in the employer's
trade or business, and it is used in the
employer's trade or business.
For bona fide noncompensatory
business reasons, the employer
requires the employee to commute to
and/or from work in the vehicle.
The employer establishes a written
policy under which the employee may
not use the vehicle for personal
purposes, other than commuting or de
minimis personal use (e.g., a stop for
a personal errand between a business
delivery and the employee's home).
Except for de minimis use, the
employer reasonably believes that the
employee does not use the vehicle for
any personal purpose other than
commuting.
The employer accounts for the
commuting use by including an
appropriate amount in the employee's
gross income.

Line 40

An employer that provides more than
five vehicles to its employees who are
not 5% owners or related persons
need not complete Section B for such
vehicles. Instead, the employer must
obtain the information from its
employees and retain the information
received.

Line 41

An automobile meets the
requirements for qualified
demonstration use if the employer
maintains a written policy statement
that:

Prohibits its use by individuals other
than full-time automobile
salespersons,
Prohibits its use for personal
vacation trips,
Prohibits storage of personal
possessions in the automobile, and
Limits the total mileage outside the
salesperson's normal working hours.

Part VI. Amortization
Each year you can deduct part of
certain capital costs over a fixed
period.
If you amortize property, the
part you amortize does not
CAUTION
qualify for the section 179
expense deduction or for
depreciation.

!

Attach any information the Code
and regulations may require to make a
valid election. See the applicable
Code section, regulations, and Pub.
535 for more information.

Line 42

Complete line 42 only for those costs
you amortize for which the
amortization period begins during
your tax year beginning in 2012.
Column (a) — Description of costs.
Describe the costs you are amortizing.
You can amortize the following.
Geological and geophysical
expenditures (section 167(h)). You
must amortize geological and
geophysical expenses paid or
incurred in connection with the
exploration or development of oil and
gas within the United States ratably
over a 24-month period. For major
integrated oil company (as defined in
section 167(h)(5)), the costs paid or
incurred after May 17, 2006, and
before December 20, 2007, must be
amortized ratably over a 5-year period
(a 7-year period for costs paid or
incurred after December 19, 2007),
beginning on the mid-point of the tax
year in which the expenses were paid
or incurred. See section 167(h).
Pollution control facilities
(section 169). You can elect to
amortize the cost of a certified
pollution control facility over a
60-month period (84 months for
certain atmospheric pollution control
facilities placed in service after April
11, 2005). See section 169 and the

related regulations for details and
information required in making the
election. See Pub. 535 for more
information.
You can deduct a special
depreciation allowance on a
CAUTION
certified pollution control
facility that is qualified property.
However, you must reduce the
amount on which you figure your
amortization deduction by any special
depreciation allowance allowed or
allowable, whichever is greater.

!

Also, a corporation must reduce its
amortizable basis of a pollution
control facility by 20% before figuring
the amortization deduction.
Certain bond premiums (section
171). For individuals reporting
amortization of bond premium for
bonds acquired before October 23,
1986, do not report the deduction
here. See the instructions for
Schedule A (Form 1040), line 28.
For taxpayers (other than
corporations) claiming a deduction for
amortization of bond premium for
bonds acquired after October 22,
1986, but before January 1, 1988, the
deduction is treated as interest
expense and is subject to the
investment interest limitations. Use
Form 4952, Investment Interest
Expense Deduction, to compute the
allowable deduction.
For taxable bonds acquired after
1987, you can elect to amortize the
bond premium over the life of the
bond. See section 171 and
Regulations section 1.171-4 for more
information. Individuals, also see Pub.
550, Investment Income and
Expenses.
Research and experimental
expenditures (section 174). You
can elect to either amortize your
research and experimental costs,
deduct them as current business
expenses, or write them off over a
10-year period. If you elect to
amortize these costs, deduct them in
equal amounts over 60 months or
more. For more information, see Pub.
535.
The cost of acquiring a lease
(section 178). Amortize these costs
over the term of the lease. For more
information, see Pub. 535.
Qualified forestation and
reforestation costs (section 194).
-18-

You can elect to deduct a limited
amount of qualifying reforestation
costs paid or incurred during the tax
year for each qualified timber
property. You can elect to amortize
the qualifying costs that are not
deducted currently over an 84-month
period. There is no limit on the amount
of your amortization deduction for
reforestation costs paid or incurred
during the tax year.
If you are otherwise required to file
Form T (Timber), Forest Activities
Schedule, you can make the election
to amortize qualifying reforestation
costs by completing Part IV of the
form. See the instructions for Form T
(Timber) for more information.
See Pub. 535 for more information
on amortizing reforestation costs.
Partnerships and S corporations, also
see the instructions for line 44.
Optional write-off of certain tax
preferences over the period
specified in section 59(e). You can
elect to amortize certain tax
preference items over an optional
period. If you make this election, there
is no AMT adjustment for these
expenditures. The applicable
expenditures and the optional
recovery periods are as follows:
Circulation expenditures (section
173) — 3 years,
Intangible drilling and development
costs (section 263(c)) — 60 months,
and
Research and experimental
expenditures (section 174(a)), mining
exploration and development costs
(sections 616(a) and 617(a)) — 10
years.
For information on making the
election, see Regulations section
1.59-1. Also see Pub. 535.
Certain section 197 intangibles.
The following costs must be
amortized over 15 years (180 months)
starting with the later of (a) the month
the intangibles were acquired or (b)
the month the trade or business or
activity engaged in for the production
of income begins:
Goodwill;
Going concern value;
Workforce in place;
Business books and records,
operating systems, or any other
information base;

A patent, copyright, formula,
process, design, pattern, know-how,
format, or similar item;
A customer-based intangible (e.g.,
composition of market or market
share);
A supplier-based intangible;
A license, permit, or other right
granted by a governmental unit;
A covenant not to compete entered
into in connection with the acquisition
of a business; and
A franchise, trademark, or trade
name (including renewals).
A longer period may apply to
section 197 intangibles leased under
a lease agreement entered into after
March 12, 2004, to a tax-exempt
organization, governmental unit, or
foreign person or entity (other than a
partnership). See section 197(f)(10).
A section 197 intangible is
treated as depreciable
CAUTION
property used in your trade or
business. When you dispose of a
section 197 intangible, any gain on
the disposition, up to the amount of
allowable amortization, is recaptured
as ordinary income. If multiple section
197 intangibles are disposed of in a
single transaction or a series of
related transactions, calculate the
recapture as if all of the section 197
intangibles were a single asset. This
rule does not apply to section 197
intangibles disposed of for which the
adjusted basis exceeds the fair
market value.

!

For more details on section 197
intangibles, see Pub. 535.
Start-up and organizational
costs. You can elect to amortize the
following costs for setting up your
business.
Business start-up costs (section
195).
Organizational costs for a
corporation (section 248).
Organizational costs for a
partnership (section 709).
For business start-up and
organizational costs paid or incurred
after September 8, 2008, you can
elect to deduct a limited amount of
start-up or organizational costs for the
year that your business begins. You
are not required to attach a statement
to make this election. Once made, the
election is irrevocable. Any cost not
deducted currently must be amortized
ratably over a 180-month period. The

amortization period starts with the
month you begin business operations.
See Regulations sections 1.195-1 and
1.248-1.
For business start-up and
organizational costs paid or incurred
after October 22, 2004, and before
September 9, 2008, you can elect to
deduct a limited amount of start-up
and organizational costs for the year
that your business begins. If the
election is made, you must attach any
statement required by Regulations
sections 1.195-1(b) and 1.248-1(c),
as in effect before September 9, 2008.
Any costs not deducted currently can
be amortized ratably over a
180-month period, beginning with the
month you begin business.
Note. You can apply the provisions of
Regulations sections 1.195-1 and
1.248-1 to all expenses paid or
incurred after October 22, 2004,
provided the period of limitations on
assessment has not expired for the
year of the election. Otherwise, the
provisions under Regulations sections
1.195-1(b) and 1.248-1(c), as in effect
before September 9, 2008, will apply.
For business start-up and
organizational costs paid or incurred
before October 23, 2004, you can
elect an amortization period of 60
months or more.
Attach any statements required by
the appropriate section and related
regulations to Form 4562 by the due
date, including extensions, of your
return for the year in which the active
trade or business begins. If you have
both start-up and organizational costs,
attach a separate statement for each
type of cost. If you timely filed your
return without making the election,
you can still make the election on an
amended return filed within 6 months
of the due date, excluding extensions,
of the return. Write “Filed pursuant to
section 301.9100-2” on the amended
return. See Pub. 535 for more details.
Creative property costs. These
are costs paid or incurred to acquire
and develop screenplays, scripts,
story outlines, motion picture
production rights to books and plays,
and other similar properties for
purposes of potential future film
development, production, and
exploitation. You may be able to
amortize creative property costs for
properties not set for production within
-19-

3 years of the first capitalized
transaction. These costs are
amortized ratably over a 15-year
period under the rules of Rev. Proc.
2004-36, 2004-24 I.R.B. 1063.
Column (b) — Date amortization
begins. Enter the date the
amortization period begins under the
applicable Code section.
Column (c) — Amortizable amount.
Enter the total amount you are
amortizing. See the applicable Code
section for limits on the amortizable
amount.
Column (d) — Code section. Enter
the Code section under which you
amortize the costs. For examples, see
the Code sections referenced in the
instructions for line 42, column (a),
earlier.
Column (f) — Amortization for this
year. Compute the amortization
deduction by:
1. Dividing the amount in column
(c) by the number of months over
which the costs are to be amortized
and multiplying the result by the
number of months in the amortization
period included in your tax year
beginning in 2012 or
2. Multiplying the amount in
column (c) by the percentage in
column (e).

Line 43

If you are reporting the amortization of
costs that began before your 2012 tax
year and you are not required to file
Form 4562 for any other reason, do
not file Form 4562. Report the
amortization directly on the “Other
Deductions” or “Other Expenses” line
of your return.

Line 44

Report the total amortization,
including the allowable portion of
forestation or reforestation
amortization, on the applicable “Other
Deductions” or “Other Expenses” line
of your return. For more details,
including limitations that apply, see
Pub. 535. Partnerships (other than
electing large partnerships) and S
corporations, report the amortizable
basis of any forestation or
reforestation expenses for which
amortization is elected and the year in
which the amortization begins as a
separately stated item on Schedules
K and K-1 (Form 1065 or 1120S). See

the instructions for Schedule K (Form
1065 or 1120S) for more details on
how to report.
Paperwork Reduction Act Notice.
We ask for the information on this
form to carry out the Internal Revenue
laws of the United States. You are
required to give us the information.
We need it to ensure that you are
complying with these laws and to
allow us to figure and collect the right
amount of tax.
You are not required to provide the
information requested on a form that
is subject to the Paperwork Reduction
Act unless the form displays a valid

OMB control number. Books or
records relating to a form or its
instructions must be retained as long
as their contents may become
material in the administration of any
Internal Revenue law. Generally, tax
returns and return information are
confidential, as required by section
6103.
The time needed to complete and
file this form will vary depending on
individual circumstances. The
estimated burden for individual
taxpayers filing this form is approved
under OMB control number
1545-0074 and is included in the
estimates shown in the instructions for

-20-

their individual income tax return. The
estimated burden for all other
taxpayers who file this form is shown
below.
Recordkeeping . . . . . . . . 30 hr., 22 min.
Learning about the law or
the form . . . . . . . . . . . . .
4 hr., 16 min.
Preparing and sending
the form to the IRS . . . . . 4 hr., 58 min.

If you have comments concerning
the accuracy of these time estimates
or suggestions for making this form
simpler, we would be happy to hear
from you. See the instructions for the
tax return with which this form is filed.

Table A—General Depreciation System
Method: 200% declining balance switching to straight line
Convention: Half-year
If the recovery period is:
Year

3 years

5 years

7 years

10 years

1

33.33%

20.00%

14.29%

10.00%

2

44.45%

32.00%

24.49%

18.00%

3

14.81%

19.20%

17.49%

14.40%

4

7.41%

11.52%

12.49%

11.52%

5

11.52%

8.93%

9.22%

6

5.76%

8.92%

7.37%

7

8.93%

6.55%

8

4.46%

6.55%

9

6.56%

10

6.55%

11

3.28%

Table B—General and Alternative Depreciation System
Method: 150% declining balance switching to straight line
Convention: Half-year
If the recovery period is:
Year

5 years

7 years

10 years

12 years

15 years

1

15.00%

10.71%

7.50%

6.25%

5.00%

3.750%

2

25.50%

19.13%

13.88%

11.72%

9.50%

7.219%

3

17.85%

15.03%

11.79%

10.25%

8.55%

6.677%

4

16.66%

12.25%

10.02%

8.97%

7.70%

6.177%

5

16.66%

12.25%

8.74%

7.85%

6.93%

5.713%

6

8.33%

12.25%

8.74%

7.33%

6.23%

5.285%

20 years

7

12.25%

8.74%

7.33%

5.90%

4.888%

8

6.13%

8.74%

7.33%

5.90%

4.522%

9

8.74%

7.33%

5.91%

4.462%

10

8.74%

7.33%

5.90%

4.461%

11

4.37%

4.462%

7.32%

5.91%

12

7.33%

5.90%

4.461%

13

3.66%

5.91%

4.462%

14

5.90%

4.461%

15

5.91%

4.462%

16

2.95%

4.461%

17

4.462%

18

4.461%

19

4.462%

20

4.461%

21

2.231%

-21-

Table C—General Depreciation System
Method: Straight line
Convention: Mid-month
Recovery period: 27.5 years
The month in the 1st recovery year the property is placed in service:
Year
1

1

2

3

4

5

6

7

8

9

10

11

12

3.485%

3.182%

2.879%

2.576%

2.273%

1.970%

1.667%

1.364%

1.061%

0.758%

0.455%

0.152%

2–9

3.636%

3.636%

3.636%

3.636%

3.636%

3.636%

3.636%

3.636%

3.636%

3.636%

3.636%

3.636%

10,12,14,16,18, 20, 22, 24, 26

3.637%

3.637%

3.637%

3.637%

3.637%

3.637%

3.636%

3.636%

3.636%

3.636%

3.636%

3.636%

11,13,15,17,19, 21, 23, 25, 27

3.636%

3.636%

3.636%

3.636%

3.636%

3.636%

3.637%

3.637%

3.637%

3.637%

3.637%

3.637%

28

1.97%

2.273%

2.576%

2.879%

3.182%

3.485%

3.636%

3.636%

3.636%

3.636%

3.636%

3.636%

Table D—General Depreciation System
Method: Straight line
Convention: Mid-month
Recovery period: 31.5 years
The month in the 1st recovery year the property is placed in service:
Year
13,15,17,19, 21, 23, 25, 27, 29, 31

1

2

3

4

5

6

7

8

9

10

11

12

3.174%

3.175%

3.174%

3.175%

3.174%

3.175%

3.174%

3.175%

3.174%

3.175%

3.174%

3.175%

14,16,18, 20, 22, 24, 26, 28, 30

3.175%

3.174%

3.175%

3.174%

3.175%

3.174%

3.175%

3.174%

3.175%

3.174%

3.175%

3.174%

32

1.720%

1.984%

2.249%

2.513%

2.778%

3.042%

3.175%

3.174%

3.175%

3.174%

3.175%

3.174%

Table E—General Depreciation System
Method: Straight line
Convention: Mid-month
Recovery period: 39 years
The month in the 1st recovery year the property is placed in service:
Year

1

2

3

4

5

6

7

8

9

10

11

12

1

2.461%

2.247%

2.033%

1.819%

1.605%

1.391%

1.177%

0.963%

0.749%

0.535%

0.321%

0.107%

2–39

2.564%

2.564%

2.564%

2.564%

2.564%

2.564%

2.564%

2.564%

2.564%

2.564%

2.564%

2.564%

40

0.107%

0.321%

0.535%

0.749%

0.963%

1.177%

1.391%

1.605%

1.819%

2.033%

2.247%

2.461%

-22-

-23-

Description of Property

Date
Placed in
Service

Cost or
Other
Basis
Business/
Investment
Use %

Section
179
Deduction
and
Special
Allowance
Depreciation Prior
Years

Basis for
Depreciation

Depreciation Worksheet (Keep for your records.)

Method/
Convention

Recovery
Period

Rate or
Table
%

Depreciation
Deduction

Index

To help us develop a more useful index, please let us know if you have ideas for index entries.
See “Comments and Suggestions” in the “Introduction” for the ways you can reach us.

A
Alternative Depreciation
System:
Basis for
depreciation ...... .... 14
Classification of
property .............. 13
Conventions ............. 14
Depreciation
deduction ............ 14
Placed in service
date ................... 13
Recovery period ........ 14
Alternative minimum
tax .......................... 3
Amortization ............... 18
Amortizable amount .... 19
Amortization
deduction ............ 19
Amortization of costs from
prior year ............. 19
Amortization of costs in
current year .......... 18
Applicable code
section ......... ....... 19
Certain bond
premiums ............ 18
Cost of acquiring a
lease .................. 18
Creative property
costs .................. 19
Date amortization
begins ................ 19
Description of costs .... 18
Forestation and
reforestation
costs .................. 18
Geological and geophysical
expenditures ......... 18
Optional section 59(e)
write-off .............. 18
Pollution control
facilities .............. 18
Research and experimental
expenditures ......... 18
Section 197
intangibles ........... 18
Start-up and organizational
costs .................. 19
C
Conventions:
Half-year ................. 12

Mid-month ............... 12
Mid-quarter .............. 12
D
Definitions ................... 1
Amortization ......... ....... 2
Commuting ................ 3
Depreciation ............... 1
Listed property ............ 2
Listed property Exceptions ........ ...... 2
Section 179 property ..... 2
Depreciation:
Accelerated Cost Recovery
System (ACRS) ....... 9
Assets placed in service in
prior year ............. 10
General asset
accounts ............. 10
Income forecast
method .......... ........ 9
Intangible property ........ 9
Listed property .......... 14
Modified Accelerated Cost
Recovery System
(MACRS) ............. 10
Alternative Depreciation
System ........ ..... 13
General Depreciation
System ........ ..... 10
Involuntary
conversion ...... ... 10
Like-kind
exchange ......... 10
Other ............. ........... 9
Depreciation methods:
Declining balance ....... 12
Straight line .............. 12
Depreciation
tables ................ 21, 22
Depreciation
worksheet .............. 23
E
Election out:
Involuntary
conversion ........... 10
Like-kind exchange ..... 10
Special depreciation
allowance .............. 8

G
General Depreciation
System:
Basis for
depreciation ...... ....
Classification of
property ..............
Conventions .............
Depreciation
deduction ............
Determining the
classification .........
Placed in service
date ...................
Recovery period ........

11
10
12
13
11
11
12

I
Involuntary
conversion ............. 10
L
Like-kind exchange ...... 10
Listed property:
Basis for
depreciation ...... .... 15
Convention .............. 15
Cost or other basis .... .. 15
Depreciation
deduction ............ 15
Information on vehicle
use .................... 17
Method .................. 15
Passenger automobile
limits .................. 16
Definitions ........ ..... 16
Exception ............ 16
Leasehold property
exception ......... 16
Tables ................ 16
Percentage of business or
investment use ...... 15
Placed in service
date ................... 15
Qualified business
use .................... 14
Questions for employers on
vehicle use ........... 17
Recapture of section 179
expense
deduction ............ 17
Recovery period ........ 15

-24-

Section 179 expense
deduction ............ 17
Special depreciation
allowance ............ 14
Type of property ........ 15
R
Recapture:
Listed property ...... 15, 17
MACRS depreciation ... 14
Section 179 expense
deduction .......... 4, 17
Special depreciation
allowance .............. 9
Recordkeeping .............. 3
S
Section 179 expense
deduction ................. 3
Carryover of disallowed
deduction .............. 5
Election .................... 3
Limitations:
Maximum
deduction ....... ..... 3
Sport utility vehicle
(SUV) ............. 17
Taxable income ....... 5
Threshold cost of
property ............. 4
Listed property .......... 17
Recapture ............. 4, 17
Special depreciation
allowance ................. 6
Election out ................ 8
Figuring the
allowance .............. 8
Listed property .......... 14
Qualified property ......... 6
Recapture ................. 9
U
Uniform capitalization
rules ..................... 14
Unit-of-production
method .................... 9
W
Where to find additional
information ......... ....... 1
Who must file ................ 1