Increased section 179 deduction dollar limit. The maximum amount you can elect to deduct for most section 179 property you placed in service in 2005 is $105,000 ($140,000
for qualified
enterprise zone, renewal community, and New York Liberty Zone (Liberty Zone) property). This limit is reduced by the amount
by which the cost of the
property placed in service during the tax year exceeds $420,000. See Dollar Limits under How Much Can You Deduct in chapter 2.
Increased section 179 limits for Gulf Opportunity Zone property. If you placed in service section 179 property that is qualified Gulf Opportunity Zone (GO Zone) property acquired after August
27, 2005, the
$105,000 section 179 deduction dollar limit and the $420,000 threshold used to figure any reduction in the amount for which
you can make the section
179 election are increased. See Increased dollar limits under Gulf Opportunity Zone (GO Zone) Property in chapter 2.
Limited applicability of special depreciation allowance. The additional special depreciation allowance (including the increased limits for passenger automobiles) only applies to certain
property placed in
service in 2005. You can claim a special allowance for certain aircraft, certain property with a long production period, and
qualified Liberty Zone
property you placed in service in 2005. You can also claim a special allowance for qualified GO Zone property you acquired
after August 27, 2005. See
chapter 3, Claiming the Special Depreciation Allowance, later.
Recovery periods for certain natural gas gathering and transmission lines and electric transmission property. Certain natural gas gathering lines placed in service after April 11, 2005, are treated as 7-year property under MACRS. In
addition, certain
electric transmission property and natural gas distribution lines placed in service after April 11, 2005, are treated as 15-year
property under MACRS.
See Which Property Class Applies Under GDS and Which Recovery Period Applies in chapter 4.
Depreciation limits on business vehicles. The total section 179 deduction and depreciation you can deduct for a passenger automobile (that is not an electric vehicle
or a truck or van) you
use in your business and first placed in service in 2005 is $2,960. The maximum deduction for an electric vehicle is $8,880.
The maximum deduction you
can take for a truck or van you use in your business and first placed in service in 2005 is $3,260. See Maximum Depreciation Deduction in
chapter 5.
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.
Property classification for qualified leasehold improvement and restaurant property. Qualified leasehold improvement property and qualified restaurant property placed in service after December 31, 2005, will
not be 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 will not apply to property
placed in service after
December 31, 2005. See Indian Reservation Property under Which Recovery Period Applies in chapter 4.
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.
The depreciation methods discussed in this publication generally do not apply to property placed in service before 1987. If
you want information
about depreciating such property, see Publication 534.
Definitions.
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.
Do you need a different 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
|
|
Office space in your home
|
587, Business Use of Your Home (Including Use by Daycare Providers)
|
|
Farm property
|
225, Farmer's Tax Guide
|
Comments and suggestions.
We welcome your comments about this publication and your suggestions for future editions.
You can write to us at the following address:
Internal Revenue Service
Business Forms and Publications Branch
SE:W:CAR:MP:T:B
1111 Constitution Ave. NW, IR-6406
Washington, DC 20224
We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number,
including the area code, in
your correspondence.
You can email us at
*taxforms@irs.gov. (The asterisk must be included in the
address.) Please put “
Publications Comment” on the subject line. Although we cannot respond individually to each email, we do appreciate your
feedback and will consider your comments as we revise our tax products.
Tax questions.
If you have a tax question, visit
www.irs.gov or call 1-800-829-1040. We cannot answer tax questions at either
of the addresses listed above.
Ordering forms and publications.
Visit
www.irs.gov/formspubs to download forms and publications, call 1-800-829-3676, or write to the National Distribution Center at the
address shown under
How To Get Tax Help in chapter 6.
