How To  
Depreciate  
Property

The maximum amount you can elect to deduct for most section 179 property you placed in service in 2010 is $500,000 ($535,000 for qualified enterprise zone property). This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2,000,000. See Dollar Limits under How Much Can You Deduct in chapter 2.

For tax years beginning after 2009, cellular telephones and similar telecommunications equipment have been removed from the definition of listed property.

The total section 179 deduction and depreciation you can deduct for a passenger automobile (that is not a truck or van) you use in your business and first placed in service in 2010 is $3,060, if the special depreciation allowance does not apply. The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2010 is $3,160, if the special depreciation allowance does not apply. See Maximum Depreciation Deduction in chapter 5.

The election to accelerate research and minimum tax credits in lieu of the special depreciation allowance applies only to certain property placed in service before January 1, 2011. For fiscal years ending after December 31, 2010, only minimum tax credits can be elected to be accelerated in lieu of the special depreciation allowance for round 2 extension property. See Election to Accelerate Certain Credits in Lieu of the Special Depreciation Allowance in chapter 3.

For the latest information on depreciation, see www.irs.gov/form4562

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This publication explains how you can recover the cost of business or income-producing property through deductions for depreciation (for example, the special depreciation allowance and deductions under the Modified Accelerated Cost Recovery System (MACRS)). It also explains how you can elect to take a section 179 deduction, instead of depreciation deductions, for certain property, and the additional rules for listed property.

Many of the terms used in this publication are defined in the Glossary near the end of the publication. Glossary terms used in each discussion under the major headings are listed before the beginning of each discussion throughout the publication.

The following table shows where you can get more detailed information when depreciating certain types of property.

For information on depreciating:	See Publication:
A car	463, Travel, Entertainment, Gift, and Car Expenses
Residential rental property	527, Residential Rental Property (Including Rental of Vacation Home)
Office space in your home	587, Business Use of Your Home (Including Use by Daycare Providers)
Farm property	225, Farmer's Tax Guide

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