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IRS.gov Website
Publication 946
taxmap/pubs/p946-014.htm#en_us_publink1000299491

Chapter 3
Claiming the Special Depreciation Allowance(p22)


taxmap/pubs/p946-014.htm#en_us_publink1000299492Introduction

You can take a special depreciation allowance to recover part of the cost of qualified property (defined next), placed in service during the tax year. The allowance applies only for the first year you place the property in service. The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS for the year you place the property in service.
This chapter explains what is qualified property. It also includes rules regarding how to figure an allowance, how to elect not to claim an allowance, and when you must recapture an allowance.
See chapter 6 for information about getting publications and forms.
taxmap/pubs/p946-014.htm#en_us_publink1000299495

What Is Qualified Property?(p23)

rule

Words you may need to know (see Glossary)

Your property is qualified property if it is one of the following.
The following discussions provide information about the types of qualified property listed above for which you can take the special depreciation allowance.
taxmap/pubs/p946-014.htm#en_us_publink1000299521

Qualified Reuse and Recycling Property(p23)

rule
You can take a 50% special depreciation allowance for qualified reuse and recycling property. Qualified reuse and recycling property is any machinery or 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 (as defined in section 168(m)(3)(B) of the Internal Revenue Code). Qualified reuse and recycling property also includes software necessary to operate such equipment. The property must meet the following requirements.
taxmap/pubs/p946-014.htm#en_us_publink1000299522

Excepted Property(p23)

rule
Qualified reuse and recycling property does not include any of the following.
taxmap/pubs/p946-014.htm#en_us_publink1000299536

Certain Qualified Property Acquired Before September 28, 2017(p23)

rule
Certain qualified property (defined below), acquired before September 28, 2017, and placed in service in 2018, is eligible for 40% special depreciation allowance. Property with a long production period and certain aircraft acquired before September 28, 2017, and placed in service in 2018, is eligible for 50% 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 defined in and depreciated under section 167(f)(1) of the Internal Revenue Code.
  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 and for certain aircraft). See Long Production Period Property and Noncommercial Aircraft, later.
  3. The original use of the property must begin with you.
  4. It is not excepted property (explained later in Excepted property).
taxmap/pubs/p946-014.htm#en_us_publink1000299537

Long Production Period Property(p24)

rule
To be qualified property, long production period property must meet the following requirements.
taxmap/pubs/p946-014.htm#en_us_publink1000299538

Noncommercial Aircraft(p24)

rule
To be qualified property, noncommercial aircraft must meet the following requirements.
taxmap/pubs/p946-014.htm#en_us_publink1000299539

Special Rules(p24)

rule
taxmap/pubs/p946-014.htm#en_us_publink1000299540

Sale-leaseback.(p24)

rule
If you sold qualified property you placed in service and leased it back within 3 months after you originally placed it in service, the property is treated as originally placed in service no earlier than the date it is used by you under the leaseback.
taxmap/pubs/p946-014.htm#en_us_publink1000299541

Syndicated leasing transactions.(p24)

rule
If qualified property is originally placed in service by a lessor, the property is sold within 3 months of the date it was placed in service, and the user of the property does not change, then the property is treated as originally placed in service by the taxpayer no earlier than the date of the last sale.
Multiple units of property subject to the same lease will be treated as originally placed in service no earlier than the date of the last sale if the property is sold within 3 months after the final unit is placed in service and the period between the time the first and last units are placed in service does not exceed 12 months.
taxmap/pubs/p946-014.htm#en_us_publink1000299542

Excepted Property(p24)

rule
Qualified property acquired before September 28, 2017, does not include any of the following.
taxmap/pubs/p946-014.htm#en_us_publink100078241

Certain Qualified Property Acquired After September 27, 2017(p24)

rule
You can take a 100% special depreciation allowance for property acquired 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.
Qualified property also must be placed in service before January 1, 2027 (or before January 1, 2028, for certain property with a long production period and for certain aircraft) and can be either new property or certain used property.
taxmap/pubs/p946-014.htm#en_us_publink100016289

Excepted Property(p25)

rule
Qualified property acquired after September 27, 2017, does not include any of the following.