IRS Logo
 
Print - Click this link to Print this page

Depreciation & Recapture

Question: Can the entire acquisition cost of a computer that I purchased for my business be deducted as a business expense or do I have to use depreciation?

Answer:

The acquisition cost of a computer purchased for business use:

  • Can be expensed under Internal Revenue Code section 179, if qualified, by electing to recover all or part of the cost up to a dollar limit, by deducting the cost in the year you place the computer in service, and, if there is any remaining cost, it is depreciated over a 5-year recovery period.  If there is any remaining cost and if the computer is eligible for the 50-percent special depreciation allowance in the year you place the computer in service, 50% of the remaining cost is depreciated in the year you place the computer in service and the remaining 50% is depreciated over a 5-year recovery period.

  • Can be depreciated over a 5-year recovery period in the year you place the computer in service, if you do not elect to expense any of the cost under section 179 and if the computer is not eligible for the 50-percent special depreciation allowance in the year you place the computer in service.
  • May be eligible for the 50-percent special depreciation allowance in the year you would place the computer in service if the computer meets certain conditions and if so, then 50-percent of the cost is depreciated in the year you place the computer in service and the remaining cost is depreciated over a 5-year recovery period, if you do not elect to expense any of the cost under section 179.

Note:  The American Taxpayer Relief Act of 2012 enhances the section 179 expense deduction. For tax years beginning in 2012 or 2013, the maximum section 179 deduction you can elect for section 179 property placed in service during the tax year is limited to $500,000. Taxpayers must reduce this limit when the cost of the section 179 property placed in service for the year exceeds $2,000,000.

Additional Information:


Category: Sale or Trade of Business, Depreciation, Rentals
Subcategory: Depreciation & Recapture

Please provide your feedback.

1. Was it easy to find your information within the above Frequently Asked Question?

2. How satisfied are you with the information provided within the above Frequently Asked Question?

3. If you still need help from the IRS, what would your next step be?




The OMB number for this study is 1545-1432.
If you have any comments regarding this study, please write to:
IRS, Tax Products Coordinating Committee
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue NW
Washington, DC 20224