Property Details: Description of Property - Form 4562
Form 4562, titled "Depreciation and Amortization (Including Information on Listed Property)," is used by taxpayers to claim deductions for depreciation and amortization, make the Section 179 expense election, and report information on the business or investment use of automobiles and other listed property.
Purpose of Form 4562
- Claim deductions for depreciation and amortization.
- Make the Section 179 election to expense certain property.
- Provide details on the business/investment use of listed property, such as automobiles.
Description of Property
The form requires detailed information about the property being depreciated or amortized. This includes:
- Type of Property: Tangible personal property, real property, or qualified production property.
- Placement in Service: The date the property was first used in the business or activity.
- Cost Basis: The original cost or other basis of the property, reduced by any prior depreciation.
- Method of Depreciation: MACRS (Modified Accelerated Cost Recovery System) or other allowable methods.
- Convention: Half-year, mid-month, or mid-quarter convention based on the property type and placement date.
Qualified Production Property (QPP)
Qualified production property includes tangible personal property used in manufacturing or producing goods. It must meet specific criteria, such as not being food or beverage prepared in the same building as a retail establishment where it is sold. For QPP, taxpayers must report the MACRS depreciation claimed on line 19j and attach a statement identifying the property as “QPP.”
Section 179 Expense Deduction
Taxpayers may elect to deduct the cost of qualifying property under Section 179. This includes machinery, equipment, and qualified section 179 real property. The deduction is limited by the taxpayer’s business income and may be carried over if disallowed in a given year.
Special Rules for Listed Property
Listed property includes automobiles, computers, and other assets with potential personal use. Taxpayers must report the business use percentage and comply with special rules for depreciation. For passenger automobiles, there are specific limits on annual depreciation deductions.
Filing Instructions
- File a separate Form 4562 for each business or activity.
- Complete only one Part I for Section 179 deductions, even if multiple businesses are involved.
- Use the “Summary” line in Part I to aggregate deductions from all businesses, then allocate to each business on line 12.
Source:
Form 4562 - Depreciation and Amortization (Including Information on Listed Property)
Disclaimer: Always verify details with official Federal or State Department of Revenue Forms and Instructions.