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IRS.gov Website
Publication 225
taxmap/pubs/p225-032.htm#en_us_publink1000218221

Claiming the Special Depreciation Allowance(p42)

rule
For qualified property (defined below) placed in service in 2018, you can take an additional 40% or 100% special depreciation allowance depending on the date you acquired the qualified property. The allowance is an additional deduction you can take before you figure regular depreciation under MACRS. Figure the special depreciation allowance by multiplying the depreciable basis of the qualified property by the applicable percentage.
taxmap/pubs/p225-032.htm#en_us_publink1000218222

What is Qualified Property?(p42)

rule
For farmers, qualified property generally is certain qualified property acquired before September 28, 2017, certain property acquired after September 27, 2017, and certain specified plants.
taxmap/pubs/p225-032.htm#en_us_publink1000218224

Certain qualified property acquired before September 28, 2017.(p42)

rule
Certain qualified property (defined below) acquired before September 28, 2017, and placed in service in 2018, is eligible for a 40% special depreciation allowance. Your property is qualified property if it meets the following requirements.
  1. It is one of the following types of property
    1. Tangible property depreciated under MACRS with a recovery period of 20 years or less.
    2. Water utility property depreciated under MACRS.
    3. Computer software that is readily available for purchase by the general public, is subject to non-exclusive license, and has not been substantially modified. (The cost of some computer software is treated as part of the cost of hardware and depreciated under MACRS.)
    4. Qualified improvement property depreciated under MACRS (define under Qualified improvement property.
  2. The property also must be placed in service before January 1, 2020 (or before January 1, 2021, for certain property with a long production period for certain aircraft).
  3. The original use of the property must begin with you.
  4. It is not excepted property.
For more information, see chapter 3 of Pub. 946.
taxmap/pubs/p225-032.htm#en_us_publink10005636
Qualified improvement property.(p42)
Generally, this is any improvement to an interior part of a building that is nonresidential real property. The improvement is placed in service after the date the building is first placed in service and is section 1250 property. See chapter 3 in Pub. 544, Sales and Other Disposition of Assets, for the definition of section 1250 property.
However, a qualified improvement does not include any improvement for which the expenditure is attributable to any of the following.
taxmap/pubs/p225-032.htm#en_us_publink10005592

Certain qualified property acquired after September 27, 2017.(p42)

rule
You can take a 100% special depreciation allowance for property acquired and placed in service after September 27, 2017, and before January 1, 2023 (or before January 1, 2024, for certain property with a long production period and for certain aircraft). Your property is qualified property if it meets the following.
  1. It is one of the following types of property.
    1. Tangible property depreciated under MACRS with a recovery period of 20 years or less.
    2. Water utility property depreciated under MACRS.
    3. Computer software defined in and depreciated under section 167(f)(1) of the Internal Revenue Code.
  2. Qualified property can be either new property or certain used property.
Note.For the first tax year ending after September 27, 2017, you may elect to apply a 50% special depreciation allowance instead of the 100% special depreciation allowance for the qualified property listed above. To make the election, attach a statement to your timely filed return (including extensions) indicating you are electing to claim a 50% special depreciation allowance for all qualified property. Once made the election cannot be revoked without IRS consent.
The election must be made separately by each person owing qualified property (for example, by the partnership, by the S corporation, or for each member of a consolidated group by the common parent of the group).
taxmap/pubs/p225-032.htm#en_us_publink100048004

Certain specified plants.(p43)

rule
You can elect to claim a 100% special depreciation allowance for the adjusted basis of certain specified plants (defined later) bearing fruits and nuts planted or grafted after September 27, 2017, and before January 1, 2023. For the first tax year ending after September 27, 2017, you may elect to apply the 50% special depreciation allowance, instead of the 100% special depreciation allowance. See the Note above for the information on how to make the election.
A specified plant is:
Any property planted or grafted outside the United States does not qualify as a specified plant.
If you elect to claim the special depreciation allowance for any specified plant, the plant will not be treated as qualified property eligible for the special depreciation allowance in the subsequent tax year in which it is placed in service.
To make the election, attach a statement to your timely filed return (including extensions) for the tax year in which you plant or graft the specified plant(s) indicating you are electing to apply section 168(k)(5) and identifying the specified plant(s) for which you are making the election. The election once made cannot be revoked without IRS consent.
See section 168(k)(5) of the Internal Revenue Code.
taxmap/pubs/p225-032.htm#en_us_publink1000218226

How Can You Elect Not To Claim the Allowance?(p43)

rule
You can elect, for any class of property, not to deduct the special depreciation allowance for all property in such class placed in service during the tax year. To make the election, attach a statement to your return indicating the class of property for which you are making the election.
Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. However, if you timely filed your return for the year without making the election, you can still make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Attach the election statement to the amended return. On the amended return, write "Filed pursuant to section 301.9100-2."
Once made, the election may not be revoked without IRS consent.
EIC
If you elect not to have the special depreciation allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation.
taxmap/pubs/p225-032.htm#en_us_publink1000218228

When Must You Recapture an Allowance(p43)

rule
When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. For more information, see chapter 3 of Pub. 946.