Publication 946 - Introductory Material


What's New for 2013

Increased section 179 deduction dollar limits. The maximum amount you can elect to deduct for most section 179 property you placed in service in 2013 is $500,000 ($535,000 for qualified enterprise zone property). This limit is reduced by the amount by which the cost of the property placed in service during the tax year exceeds $2,000,000. See Dollar Limits under How Much Can You Deduct 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 2013 is $3,160, if the special depreciation allowance does not apply. The maximum deduction you can take for a truck or van you use in your business and first placed in service in 2013 is $3,360, if the special depreciation allowance does not apply. See Maximum Depreciation Deduction in chapter 5.

Special allowance for qualified second generation biofuel plant property. . For tax years ending after December 31, 2012, you may be able to take a 50 percent special depreciation allowance for qualified second generation biofuel plant property placed in service after January 2, 2013, and before January 1, 2014.

Election to accelerate minimum tax credits for round 3 extension property. . For tax years ending after December 31, 2012, a corporation can elect to claim pre-2006 unused minimum tax credits in lieu of the special depreciation allowance for round 3 extension property.

What's New for 2014

Expiration of the increased section 179 deduction limits and expanded definition of section 179 property. For tax years beginning after 2013, the increased section 179 expense deduction limit and threshold amount before reduction in limitation will no longer apply. Also, the definition of section 179 property will no longer include certain qualified real property.

Expiration of the 7-year recovery period for motor sports entertainment complexes. Qualified motor sports entertainment complex property placed in service after December 31, 2013, will not be treated as 7-year property under MACRS.

Expiration of the 15-year recovery period for qualified leasehold improvement, restaurant, and retail improvement properties. Qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property placed in service after December 31, 2013, will not be treated as 15-year property under MACRS.

Expiration of the accelerated depreciation for qualified Indian reservation property. The accelerated depreciation of property on an Indian Reservation will not apply to property placed in service after December 31, 2013.

Expiration of the 3-year recovery period for certain race horses. The 3-year recovery period for race horses two years old or younger will expire for such horses placed in service after December 31, 2013.

Reminders

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.

Introduction

Future developments.   For the latest information about developments related to Publication 946 such as legislation enacted after this publication was published, go to www.irs.gov/pub946.

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. For more information, see Publication 534, Depreciating Property Placed in Service Before 1987.

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 (Including Rental of Vacation Home)
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 
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  You can send us comments from www.irs.gov/formspubs/. Select “Comment on Tax Forms and Publications” under “More Information.

  Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products.

Ordering forms and publications.   Visit www.irs.gov/formspubs/ to download forms and publications, call 1-800-TAX-FORM (1-800-829-3676), or write to the address below and receive a response within 10 days after your request is received.

Internal Revenue Service 
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Tax questions.   If you have a tax question, check the information available on IRS.gov or call 1-800-829-1040. We cannot answer tax questions sent to either of the above addresses.


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