Increased section 179 deduction dollar limits. The maximum amount you can elect to deduct for most section 179 property you placed in service in 2007 is $125,000 ($160,000 for qualified enterprise zone and renewal community property). This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $500,000. See Dollar Limits under How Much Can You Deduct in chapter 2. For qualified section 179 Gulf Opportunity Zone (GO Zone) property, the maximum section 179 deduction and the $500,000 threshold are increased. See Dollar limits under Gulf Opportunity Zone (GO Zone) Property in chapter 2.

Depreciation limits on business vehicles. 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 2007 is $3,060. The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2007 is $3,260. See Maximum Depreciation Deduction in chapter 5.

Property classification for qualified motorsports entertainment complex. Qualified motorsports complexes placed in service before January 1, 2008, will be treated as 7-year property. See Which Property Class Applies Under GDS in chapter 4.

Property classification for qualified leasehold improvement and restaurant property. Qualified leasehold improvement property and qualified restaurant property placed in service before January 1, 2008, is treated as 15-year property under MACRS. See Which Property Class Applies Under GDS in chapter 4.

Recovery periods for Indian Reservation property. The shorter recovery periods for qualified property placed in service on an Indian reservation applies to property placed in service before January 1, 2008. See Indian Reservation Property under Which Recovery Period Applies in chapter 4.

Bonus depreciation for qualified cellulosic biomass ethanol plant property. A 50% special depreciation allowance is available for qualified cellulosic biomass ethanol plant property placed in service after December 20, 2006. See Qualified Cellulosic Biomass Ethanol Plant Property in chapter 3.

Photographs of missing children. The Internal Revenue Service is a proud partner with the National Center for Missing and Exploited Children. Photographs of missing children selected by the Center may appear in this publication on pages that would otherwise be blank. You can help bring these children home by looking at the photographs and calling 1-800-THE-LOST (1-800-843-5678) if you recognize a child.

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.