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taxmap/pubs/p225-031.htm#TXMP333ea856 Claiming the Special Depreciation Allowance(p40)

Depreciation, Allowance

For qualified property (defined below) placed in service in 2007, you can take an additional 50% special depreciation allowance. The allowance is an additional deduction you can take after any section 179 deduction and before you figure regular depreciation under MACRS. Figure the special depreciation allowance by multiplying the depreciable basis of the qualified property 
by 50%.

taxmap/pubs/p225-031.htm#TXMP4bcc20ab What is Qualified Property?(p40)

What is Qualified Property?

For farmers, qualified property generally is qualified GO Zone property. This is depreciable property that meets the following requirements.

• The property must be acquired by purchase after August 27, 2005. If a binding contract to acquire the property existed before August 28, 2005, the property does not qualify.
• The property must be placed in service in the GO Zone during the tax year.
• Substantially all of the use of the property must be in the GO Zone in the active conduct of your trade or business.
• The original use of the property within the GO Zone must begin with you.

For more information, including a description of the areas in the GO Zone, and a list of qualified GO Zone property, see chapter 3 of Publication 946.

taxmap/pubs/p225-031.htm#TXMP66a2e6e3 How Can You Elect Not To Claim the Allowance?(p41)

You can elect, for any class of property, not to deduct the special allowance for all property in such class placed in service during the tax year. To make the election, attach a statement to your return indicating the class of property for which you are making the election.

Generally, you must make the election on a timely filed tax return (including extensions) for the year in which you place the property in service. However, if you timely filed your return for the year without making the election, you still can make the election by filing an amended return within 6 months of the due date of the original return (not including extensions). Attach the election statement to the amended return. On the amended return, write "Filed pursuant to section 301.9100-2."

Once made, the election may not be revoked without IRS consent.

If you elect not to have the special allowance apply, the property may be subject to an alternative minimum tax adjustment for depreciation.

taxmap/pubs/p225-031.htm#TXMP2202dd15 When Must You Recapture an Allowance(p41)

When Must You Recapture an Allowance

When you dispose of property for which you claimed a special depreciation allowance, any gain on the disposition is generally recaptured (included in income) as ordinary income up to the amount of the special depreciation allowance previously allowed or allowable. For more information, see chapter 3 of Publication 946.

Previous Page:  Publication 225 - Farmer's Tax Guide - Section 179 Deduction Next Page:  Publication 225 - Farmer's Tax Guide - Figuring Depreciation Under MACRS Use   to find additional occurrences of topic items.