Special Depr Allowance

This special allowance is a deduction equal to 30%, 50% or 100% of the depreciable basis of the qualified property. You figure the amount of the special depreciation allowance after any section 179 deduction you choose to claim, but before figuring your regular depreciation deduction under the Modified Accelerated Cost Recovery System (MACRS).

To qualify for this allowance the following requirements must be meet:

It is new property.
The Property type is:

MACRS property with a life of 20 years or less.
Water Utility property.
Computer software that is not type 197.
Qualified leasehold improvement.

The special first-year depreciation allowance has been increased from 30% to 50% for qualified property acquired after May 5, 2003 (except for property acquired under a binding written contract in effect before May 6, 2003). Instead of claiming the 50% allowance, taxpayers may elect to claim the 30% allowance or elect not to claim any special allowance. The depreciation limit for vehicles subject to the 50% allowance has been increased.

The special depreciation allowance ends for most assets place in service after December 31, 2004.

A new 50% allowance has been created for assets placed in service after January 2008.

The 100% special depreciation allowance applies to qualified property acquired after September 8, 2010 and placed in service before January 1, 2012