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Publication 334


If property you acquire to use in your business is expected to last more than 1 year, you generally cannot deduct the entire cost as a business expense in the year you acquire it. You must spread the cost over more than 1 tax year and deduct part of it each year on Schedule C. This method of deducting the cost of business property is called depreciation.
The discussion here is brief. You will find more information about depreciation in Pub. 946.

What property can be depreciated?(p33)

You can depreciate property if it meets all the following requirements.


In general, you do not depreciate the costs of repairs or maintenance if they do not improve your property. Instead, you deduct these amounts on line 21 of Schedule C or line 2 of Schedule C-EZ. Improvements are amounts paid for betterments to your property, restorations of your property, or work that adapts your property to a new or different use.
Election to capitalize repair and maintenance costs that do not improve your property. (p33)
You can make an election to treat certain repairs or replacements in your trade or business as improvements subject to depreciation. This election is available if you treat these amounts as capital expenditures on your books and records regularly used in computing your income and expense. The election to capitalize repair and maintenance costs is discussed in chapter 1 of Pub. 535.

Depreciation method.(p33)

The method for depreciating most business and investment property placed in service after 1986 is called the Modified Accelerated Cost Recovery System (MACRS). MACRS is discussed in detail in Pub. 946.

Section 179 deduction.(p33)

You can elect to deduct a limited amount of the cost of certain depreciable property in the year you place the property in service. This deduction is known as the "section 179 deduction." The maximum amount you can elect to deduct during 2017 is generally $510,000 (higher limits apply to certain property).
This limit is generally reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2,030,000. The total amount of depreciation (including the section 179 deduction) you can take for a passenger automobile you use in your business and first place in service in 2017 is $3,160 ($11,160 if you take the special depreciation allowance for qualified passenger automobiles placed in service in 2017). Special rules apply to trucks and vans. For more information, see Pub. 946. It explains what property qualifies for the deduction, what limits apply to the deduction, and when and how to recapture the deduction.
Your section 179 election for the cost of any sport utility vehicle (SUV) and certain other vehicles is limited to $25,000. For more information, see the Instructions for Form 4562 or Pub. 946.

Listed property.(p34)

You must follow special rules and recordkeeping requirements when depreciating listed property. Listed property is any of the following.
For more information about listed property, see Pub. 946.

Form 4562.(p34)

Use Form 4562, Depreciation and Amortization, if you are claiming any of the following.
If you have to use Form 4562, you must file Schedule C. You cannot use Schedule C-EZ.