HIRE and Section 179 Deduction
A qualifying taxpayer can choose to treat the cost of certain property as an expense and deduct it in the year the property is placed in service instead of depreciating it over several years. This property is frequently referred to as section 179 property.
The Hiring Incentives to Restore Employment (HIRE) Act of 2010 extends the dates of the IRC Section 179 temporary increase in limitations on expensing of depreciable business assets.
Under HIRE, qualifying businesses can continue to expense up to $250,000 of section 179 property for the 2010 tax year. Without HIRE, the 2010 expensing limit for section 179 property would have been $125,000.
The $250,000 amount provided under the new law is reduced, but not below zero, if the cost of all section 179 property placed in service by the taxpayer during the tax year exceeds $800,000.
Use Form 4562 to:
- Claim your deduction for depreciation and amortization,
- Make the election under section 179 to expense certain property, and
- Provide information on the business/investment use of automobiles and other listed property.
Who Must File
Except as otherwise noted, complete and file Form 4562 if you are claiming any of the following.
- Depreciation for property placed in service during the 2009 tax year.
- A section 179 expense deduction (which may include a carryover from a previous year).
- Depreciation on any vehicle or other listed property (regardless of when it was placed in service).
- A deduction for any vehicle reported on a form other than Schedule C (Form 1040), Profit or Loss From Business, or Schedule C-EZ (Form 1040), Net Profit From Business.
- Any depreciation on a corporate income tax return (other than Form 1120S).
- Amortization of costs that begins during the 2009 tax year.
If you are an employee deducting job-related vehicle expenses using either the standard mileage rate or actual expenses, use Form 2106, Employee Business Expenses, or Form 2106-EZ, Unreimbursed Employee Business Expenses, for this purpose.
File a separate Form 4562 for each business or activity on your return for which Form 4562 is required. If you need more space, attach additional sheets. However, complete only one Part I in its entirety when computing your section 179 expense deduction. See the instructions for line 12 on page 4.
For more information about depreciation and amortization (including information on listed property) see the following.
- Pub. 463, Travel, Entertainment, Gift, and Car Expenses.
- Pub. 534, Depreciating Property Placed in Service Before 1987.
- Pub. 535, Business Expenses.
- Pub. 551, Basis of Assets.
- Pub. 946, How To Depreciate Property.
Depreciation is the annual deduction that allows you to recover the cost or other basis of your business or investment property over a certain number of years. Depreciation starts when you first use the property in your business or for the production of income. It ends when you either take the property out of service, deduct all your depreciable cost or basis, or no longer use the property in your business or for the production of income.
Generally, you can depreciate:
- Tangible property such as buildings, machinery, vehicles, furniture, and equipment; and
- Intangible property such as patents, copyrights, and computer software.
Exception. You cannot depreciate land.