1040x Tax Form
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1040x Tax Form
1040x tax form Publication 550 - Additional Material Prev Up Next Home More Online Publications
Small Business/Self-Employed Topics
A Brief Overview of Depreciation
Depreciation is an income tax deduction that allows a taxpayer to recover the cost or other basis of certain property. It is an annual allowance for the wear and tear, deterioration, or obsolescence of the property.
Most types of tangible property (except, land), such as buildings, machinery, vehicles, furniture, and equipment are depreciable. Likewise, certain intangible property, such as patents, copyrights, and computer software is depreciable.
In order for a taxpayer to be allowed a depreciation deduction for a property, the property must meet all the following requirements:
The taxpayer must own the property. Taxpayers may also depreciate any capital improvements for property the taxpayer leases.
A taxpayer must use the property in business or in an income-producing activity. If a taxpayer uses a property for business and for personal purposes, the taxpayer can only deduct depreciation based only on the business use of that property.
The property must have a determinable useful life of more than one year.
Even if a taxpayer meets the preceding requirements for a property, a taxpayer cannot depreciate the following property:
Property placed in service and disposed of in same year.
Equipment used to build capital improvements. A taxpayer must add otherwise allowable depreciation on the equipment during the period of construction to the basis of the improvements.
Certain term interests.
Depreciation begins when a taxpayer places property in service for use in a trade or business or for the production of income. The property ceases to be depreciable when the taxpayer has fully recovered the property’s cost or other basis or when the taxpayer retires it from service, whichever happens first.
A taxpayer must identify several items to ensure the proper depreciation of a property, including:
The depreciation method for the property
The class life of the asset
Whether the property is “Listed Property”
Whether the taxpayer elects to expense any portion of the asset
Whether the taxpayer qualifies for any “bonus” first year depreciation
The depreciable basis of the property
The Modified Accelerated Cost Recovery System (MACRS) is the proper depreciation method for most property. Additional information about MACRS, and the other components of depreciation are in Publication 946, How to Depreciate Property.
A taxpayer must use Form 4562, Depreciation and Amortization, to report depreciation on a tax return. Form 4562 is divided into six sections and the Instructions for Form 4562 contain information on how, and when to fill out each section.
Page Last Reviewed or Updated: 16-Sep-2013
The 1040x Tax Form
1040x tax form Index A Adjusted basis: Adoption tax benefits, Adoption Tax Benefits Assessment for local improvements, Assessments for Local Improvements Canceled debt, Canceled Debt Excluded From Income Casualty and theft losses, Casualties and Thefts Credit for qualified electric vehicles, Vehicle Credits Decreases to, Decreases to Basis Depreciation, Depreciation Easements, Easements Employer-provided child care, Employer-Provided Child Care Example, Adjustments to Basis Example Gain from sale of home, Postponed Gain From Sale of Home Gas-guzzler tax, Gas-Guzzler Tax Increases to, Increases to Basis Section 179 deduction, Section 179 Deduction Subsidies for energy conservation, Exclusion of Subsidies for Energy Conservation Measures Adoption tax benefits, Adoption Tax Benefits Allocating basis, Allocating the Basis Assistance (see Tax help) Assumption of mortgage, Assumption of mortgage. 1040x tax form B Business acquired, Trade or Business Acquired Business assets, Business Assets Businesses exchanged, Exchange of business property. 1040x tax form C Canceled debt, Canceled Debt Excluded From Income Casualty and theft losses, Casualties and Thefts Change to business use, Property Changed to Business or Rental Use Community property, Community Property Constructing assets, Constructing assets. 1040x tax form Copyrights, Copyrights. 1040x tax form Cost basis: Allocating basis, Allocating the Basis Assumption of mortgage, Assumption of mortgage. 1040x tax form Capitalized costs, Activities subject to the rules. 1040x tax form , Deducting vs. 1040x tax form Capitalizing Costs Loans, low or no interest, Loans with low or no interest. 1040x tax form Real estate taxes, Real estate taxes. 1040x tax form Real property, Real Property Settlement costs (fees), Settlement costs. 1040x tax form D Decreases to basis, Decreases to Basis Demolition of building, Demolition of building. 1040x tax form Depreciation, Depreciation E Easements, Easements Employer-provided child care, Employer-Provided Child Care Exchanges: Involuntary, Involuntary Conversions Like-kind, Like-Kind Exchanges Nontaxable, Nontaxable Exchanges Partial business use of property, Partial Business Use of Property Taxable, Taxable Exchanges F Fair market value, Fair market value (FMV). 1040x tax form Franchises, Franchises, trademarks, and trade names. 1040x tax form Free tax services, How To Get Tax Help G Gain from sale of home, Postponed Gain From Sale of Home Gifts, property received, Property Received as a Gift Group of assets acquired, Group of Assets Acquired H Help (see Tax help) I Inherited property, Inherited Property Intangible assets, Intangible Assets Involuntary exchanges, Involuntary Conversions L Land and buildings, Land and Buildings Loans, low or no interest, Loans with low or no interest. 1040x tax form M More information (see Tax help) N Nontaxable exchanges: Like-kind, Like-Kind Exchanges Partial, Partially Nontaxable Exchange P Partially nontaxable exchanges, Partially Nontaxable Exchange Patents, Patents. 1040x tax form Points, Points. 1040x tax form Property changed to business use, Property Changed to Business or Rental Use Property received as a gift, Property Received as a Gift Property received for services: Bargain purchases, Bargain Purchases Fair market value, Property Received for Services Restricted property, Restricted Property Property transferred from a spouse, Property Transferred From a Spouse Publications (see Tax help) R Real estate taxes, Real estate taxes. 1040x tax form Real property, Real Property S Settlement costs (fees), Settlement costs. 1040x tax form Special-use valuation, Special-use valuation. 1040x tax form Spouse, property transferred from, Property Transferred From a Spouse Stocks and bonds, Stocks and Bonds Subdivided lots, Subdivided lots. 1040x tax form T Tax help, How To Get Tax Help Taxable exchanges, Taxable Exchanges Taxpayer Advocate, Contacting your Taxpayer Advocate. 1040x tax form Trade or business acquired, Trade or Business Acquired Trademarks and trade names, Franchises, trademarks, and trade names. 1040x tax form Trading property (see Exchanges), Taxable Exchanges TTY/TDD information, How To Get Tax Help U Uniform capitalization rules: Activities subject to the rules, Activities subject to the rules. 1040x tax form Exceptions, Exceptions. 1040x tax form Prev Up Home More Online Publications