Property Details - Method - Form 4562
Form 4562 is used 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. The form requires detailed information about property, including its method of depreciation, basis, and usage.
Who Must File Form 4562?
- Individuals, partnerships, S corporations, trusts, and estates that claim depreciation or amortization deductions.
- Those making the Section 179 expense election for certain property.
- Those reporting business or investment use of listed property (such as passenger automobiles).
Key Sections of Form 4562
- Part I: Section 179 Expense Deduction – Used to claim the deduction for qualifying property. Only one Part I is required per return, even if multiple businesses are involved.
- Part II: Depreciation and Amortization – Reports details for each property, including cost basis, recovery period, method (e.g., MACRS), and depreciation amount.
- Part III: Listed Property – Required for vehicles and other listed property to report business use percentage and related details.
Depreciation Method and Property Details
The method of depreciation must be specified for each asset. Common methods include:
- Modified Accelerated Cost Recovery System (MACRS)
- Unit-of-production method (for certain assets)
- Alternative Depreciation System (ADS) – if required by law or election
For MACRS, the IRS provides tables based on the asset’s class life and recovery period. The applicable convention (half-year, mid-month, mid-quarter) must be selected based on when the property was placed in service.
Special Rules for Listed Property
- Passenger automobiles are subject to annual depreciation limits.
- Business use percentage must be reported to determine allowable deduction.
- Information on vehicle use must be provided in Part III.
Qualified Production Property (QPP)
For QPP, the deduction is reported on line 19j of Form 4562. A note “See attachment” should be entered in the bottom margin, with a separate statement identifying the property as “QPP” and detailing the MACRS depreciation claimed.
Recordkeeping and 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.
- Attach additional sheets if more space is needed.
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 before filing.