Revised Proof Ok to Print Rtext sent (date) Requested (init. & date) (init. & date) Page 1 of 8 of Instructions for Form 4562 3

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Department of the Treasury Instructions for Form 4562 Depreciation and Amortization (Section references are to the , unless otherwise noted.)

General Instructions ● Information on the use of vehicles for which Federal income purposes. You may need the standard mileage rate or actual expenses to keep additional records for accounting and Paperwork Reduction Act (other than depreciation) are being claimed on purposes. Notice Schedule C-EZ (Form 1040), Net Profit From Business. Instead, use Part III of Schedule Certification of Business Use We ask for the information on this form to C-EZ for this purpose. Requirement for Aircraft carry out the Internal Revenue laws of the You should prepare and submit a separate Exempt From Luxury Tax United States. You are required to give us the Form 4562 for each business or activity on information. We need it to ensure that your return. If more space is needed, attach If you purchased a new aircraft in 1992 with a taxpayers are complying with these laws and additional sheets. However, complete only sales price of more than $250,000, the 10% to allow us to figure and collect the right one Part I in its entirety when computing your Federal luxury tax generally imposed on such amount of tax. allowable section 179 expense deduction. a sale will not apply if at least 80% of your The time needed to complete and file this use of the aircraft (measured in hours of flight form will vary depending on individual Definitions time) will be for business purposes. If you purchased an aircraft that was exempt from circumstances. The estimated average time Depreciation is: the luxury tax solely for this reason, you must Depreciation is the annual deduction allowed attach a statement to your income tax return Recordkeeping 35 hr., 17 min. to recover the cost or other basis of business for each of the 2 tax years ending after the Learning about the or income-producing property with a date the aircraft was placed in service. On law or the form 3 hr., 35 min. determinable useful life of more than 1 year. this statement, you must certify that at least 80% of your use of the aircraft during the tax Preparing and sending However, land and goodwill are not depreciable. year was in a trade or business. If you fail to the form to the IRS 4 hr., 35 min. make this certification, you must pay a tax Depreciation starts when you first use the If you have comments concerning the equal to the luxury tax that would have been property in your business or for the accuracy of these time estimates or imposed on the sale of the aircraft if the production of income. It ends when you take suggestions for making this form more business use exemption had not applied. In the property out of service, deduct all your simple, we would be happy to hear from you. addition, interest is imposed on the tax from depreciable cost or other basis, or no longer You can write to both the IRS and the Office the date of sale of the aircraft. of Management and Budget at the addresses use the property in your business or for the production of income. If you do not pay the tax when due listed in the instructions for the tax return because you failed to meet this requirement, If you acquired depreciable property for the with which this form is filed. no depreciation may be claimed on the first time in 1992, get Pub. 946, How To aircraft for any tax year. Purpose of Form Begin Depreciating Your Property. For a more comprehensive guide on depreciation, get See the instructions for Form 720, Use Form 4562 to claim your deduction for Quarterly Federal Excise Tax Return, for more depreciation and amortization; to make the Pub. 534, Depreciation. For information on claiming depreciation on a car, get Pub. 917, information on paying the tax and interest election to expense certain tangible property due. (section 179); and to provide information on Business Use of a Car. the business/investment use of automobiles Amortization Specific Instructions and other listed property. Amortization is similar to the straight line Part I—Election To Expense Who Must File method of depreciation in that an annual Certain Tangible Property Except as otherwise noted, complete and file deduction is allowed to recover certain costs Form 4562 if you are claiming: over a fixed period of time. You can amortize (Section 179) such items as the costs of starting a Note: An estate or trust cannot make this ● Depreciation for property placed in service business, reforestation, and pollution control election. If you are married filing separately, during the 1992 tax year; facilities. For additional information, get Pub. see section 179(b)(4) for special limitations. ● A section 179 expense deduction (which 535, Business Expenses. may include a carryover from a previous You may make an irrevocable election to year); Listed Property expense part of the cost of certain tangible personal property used in your trade or ● Depreciation on any listed property For a definition of “listed property” see business and certain other property described (regardless of when it was placed in service); Part V—Listed Property on page 4. in Pub. 534. To do so, you must have ● The standard mileage rate; Recordkeeping purchased the property (as defined in section ● Any depreciation on a corporate income 179(d)(2)) and placed it in service during the Except for Part V, relating to listed property, tax return (other than Form 1120S); or 1992 tax year. the IRS does not require you to submit ● Amortization of costs that begins during the detailed information with your return The election must be made with: 1992 tax year. regarding the depreciation of assets placed in 1. The original return you file for the tax However, do not file Form 4562 to report: service in previous tax years. However, the year the property was placed in service ● Depreciation and information on the use of information needed to compute your (whether or not you file your return on time), vehicles if you are an employee deducting depreciation deduction (basis, method, etc.) or job-related vehicle expenses using either the must be part of your permanent records. 2. An amended return filed no later than the standard mileage rate or actual expenses Because Form 4562 does not provide for due date (including extensions) for your return (including depreciation). Instead, use Form permanent recordkeeping, you may use the for the tax year the property was placed in 2106, Employee Business Expenses, for this depreciation worksheet on page 8 to assist service. purpose. you in maintaining depreciation records. If you elect this deduction, reduce the However, the worksheet is designed only for amount on which you figure your depreciation Cat. No. 12907Y Page 2 of 8 of Instructions for Form 4562 3

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

or amortization deduction by the section 179 expense can be depreciated. See the line 14 property placed in service after 1986. expense deduction. and line 15 instructions. However, MACRS does not apply to films, Section 179 property does not include: To report your share of a section 179 videotapes, and sound recordings. See section 168(f) for other exceptions. 1. Property used 50% or less in your trade expense deduction from a partnership or an S or business, corporation, instead of completing columns Depreciation may be an adjustment for (a) and (b), write “from Schedule K-1 (Form purposes. For details, 2. Property held for investment (section 212 1065)” or “from Schedule K-1 (Form 1120S)” get Form 4626, Alternative Minimum Tax— property), or across the columns. Corporations; Form 6251, Alternative 3. Property you lease to others (if you are a Minimum Tax—Individuals; or Schedule H of noncorporate lessor) unless (a) you Line 9 Form 1041, U.S. Fiduciary Income Tax manufactured or produced the property or (b) The tentative deduction represents the Return. the term of the lease is less than 50% of the amount you may expense in 1992 or carry property’s class life, and for the first 12 over to 1993. If this amount is less than the Lines 14a Through 14h—General months after the property is transferred to the taxable income limitation on line 11, you may Depreciation System (GDS) lessee, the sum of the deductions related to expense the entire amount. If this amount is Note: Use lines 14a through 14h only for the property that are allowed to you solely more than line 11, you may expense in 1992 assets placed in service during the tax year under section 162 (except rents and only an amount equal to line 11. Any excess beginning in 1992 and depreciated under the reimbursed amounts) is more than 15% of the may be carried over to 1993. General Depreciation System, except for rental income from the property. automobiles and other listed property (which The section 179 expense deduction is Line 10 are reported in Part V). subject to two separate limitations, both of The carryover of disallowed deduction from Column (a).—Determine which property you which are figured in Part I: 1991 is the amount of section 179 property, if acquired and placed in service during the tax 1. A dollar limitation and any, elected to be expensed in previous year beginning in 1992. Then, sort that 2. A taxable income limitation. years, but not allowed as a deduction due to property according to its classification (3-year the taxable income limitation. If you filed property, 5-year property, etc.) as shown in In the case of a partnership, these Form 4562 for 1991, enter the amount from column (a) of lines 14a through 14h. The limitations apply to the partnership and each line 13 of your 1991 Form 4562. For classifications for some property are shown partner. In the case of an S corporation, additional information, see Pub. 534. below. For property not shown, see these limitations apply to the S corporation Determining the classification on page 3. and each shareholder. In the case of a Line 11 ● 3-year property includes (a) a race horse controlled group, all component members are The section 179 expense deduction is further treated as one taxpayer. that is more than 2 years old at the time it is limited to the “taxable income” limitation placed in service and (b) any horse (other Line 1 under section 179(b)(3). than a race horse) that is more than 12 years For an individual, enter the aggregate The maximum amount of section 179 old at the time it is placed in service. taxable income from any active trade or deduction you can claim is $10,000. If you ● 5-year property includes (a) automobiles; business computed without regard to any are married filing separately, your maximum (b) light general purpose trucks; section 179 expense deduction or the deduction is $5,000, unless you and your (c) typewriters, calculators, copiers, and deduction for one-half of self-employment spouse elect otherwise. However, the total duplicating equipment; (d) any under section 164(f). Include in deduction for both of you cannot be more semi-conductor manufacturing equipment; aggregate taxable income the wages, than $10,000. If you are married filing (e) any computer or peripheral equipment; salaries, tips, and other compensation you separately, cross out the preprinted (f) any section 1245 property used in earned as an employee. If you are married “$10,000” on line 1 and enter in the margin connection with research and filing a joint return, combine the aggregate “$5,000” (or whatever other amount you experimentation; and (g) certain energy taxable incomes for both you and your elect, not to exceed $10,000 for both property specified in section 168(e)(3)(B)(vi). spouse. For all other entities, enter the spouses). 7-year property (a) taxable income computed without regard to ● includes office furniture and equipment; (b) appliances, carpets, Line 2 any section 179 expense deduction. In any case, do not enter more than line 5. furniture, etc., used in residential rental Enter the cost of all section 179 property property; (c) railroad track; and (d) any placed in service during the tax year. Be sure Line 12 property that does not have a class life and is to include amounts from any listed property not otherwise classified. The limitations on lines 5 and 11 apply to the from Part V. taxpayer, and not to each separate business ● 10-year property includes (a) vessels, Line 5 or activity. Therefore, if you have more than barges, tugs, and similar water transportation one business or activity, you may allocate equipment; (b) any single purpose agricultural If you placed $210,000 or more of section your allowable section 179 expense or horticultural structure (see section 179 property in service during the 1992 tax deduction among them. To do so, write 168(i)(13)); and (c) any tree or vine bearing year, you cannot elect to expense any “Summary” at the top of Part I of the fruit or nuts. property. If line 5 is zero, skip lines 6 through separate Form 4562 you are completing for ● 15-year property includes (a) any 11, enter zero on line 12, and enter the the aggregate amounts from all businesses or municipal wastewater treatment plant and (b) carryover of disallowed deduction from 1991, activities. Do not complete the rest of that any telephone distribution plant and if any, on line 13. form. On line 12 of the Form 4562 you comparable equipment used for 2-way Line 6 prepare for each separate business or exchange of voice and data communications. activity, enter the amount allocated to the Caution: Do not include any listed property ● 20-year property includes any municipal business or activity from the “Summary.” No sewers. on line 6. other entry is required in Part I of the Residential rental property Column (a).—Enter a brief description of the separate Form 4562 prepared for each ● is a building in property for which you are making the business or activity. which 80% or more of the total rent is from election (e.g., truck, office furniture, etc.). dwelling units. Column (b).—Enter the cost of the property. Part II—MACRS Depreciation ● Nonresidential real property is any real If you acquired the property through a For Assets Placed in Service property that is neither residential rental trade-in, do not include any undepreciated ONLY During Your 1992 Tax property nor property with a class life of less basis of the assets you traded in. Get Pub. than 27.5 years. 551, Basis of Assets, for more information. Year ● 50-year property includes any Column (c).—Enter the amount that you elect Note: The term “Modified Accelerated Cost improvements necessary to construct or to expense. You do not have to elect to Recovery System” (MACRS) includes the improve a roadbed or right-of-way for railroad expense the entire cost of the property. General Depreciation System and the track that qualifies as a railroad grading or Whatever amount you do not elect to Alternative Depreciation System. Generally, tunnel bore under section 168(e)(4). MACRS is used to depreciate any tangible Page 2 Page 3 of 8 of Instructions for Form 4562 3

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

There is no separate line to report 50-year property is either placed in service or You may also make an irrevocable election property. Therefore, attach a statement disposed of. There are three types of to use the straight line method for all property showing the same information as required in conventions (discussed below). To select the within a classification that is placed in service columns (a) through (g). Include the deduction correct convention, you must know when you during the tax year. in the line 20 “Total” and write “See placed the property in service and the type of Enter “200 DB” for 200% declining attachment” in the bottom margin of the property. balance; “150 DB” for 150% declining form. Half-year convention (HY).—This convention balance; or “S/L” for straight line. Determining the classification.—If your applies to all property reported on lines 14a Column (g).—To compute the depreciation depreciable property is not listed above, through 14f, unless the mid-quarter deduction you may use optional Tables A determine the classification as follows: First, convention applies. It does not apply to through D on page 7. To do this, multiply the find the property’s class life. The class life of residential rental property, nonresidential real applicable rate from the appropriate table by most property can be found in the Table of property, and railroad gradings and tunnel the property’s unadjusted basis (column (c)) Class Lives and Recovery Periods in Pub. bores. It treats all property placed in service (see Pub. 534 for complete tables). Or you 534. Next, use the following table to find the (or disposed of) during any tax year as placed may compute the deduction yourself by classification in column (b) that corresponds in service (or disposed of) on the mid-point of completing the following steps: to the class life of the property in column (a). such tax year. Step 1.—Determine the depreciation rate as Mid-quarter convention (MQ).—If the follows: (a) (b) aggregate bases of property subject to depreciation under section 168 and placed in ● If you are using the 200% or 150% Class life (in years) Classification declining balance method in column (f), divide (See Pub. 534) service during the last 3 months of your tax the declining balance rate (use 2.00 for 200 4 or less 3-year property year exceed 40% of the aggregate bases of property subject to depreciation under DB or 1.50 for 150 DB) by the number of More than 4 but less than 10 5-year property section 168 and placed in service during the years in the recovery period in column (d). For 10 or more but less than 16 7-year property entire tax year, the mid-quarter, instead of the example, for property depreciated using the 200 DB method over a recovery period of 5 16 or more but less than 20 10-year property half-year, convention applies. years, divide 2.00 by 5 for a rate of 40%. 20 or more but less than 25 15-year property The mid-quarter convention treats all ● If you are using the straight line method, 25 or more 20-year property property placed in service (or disposed of) during any quarter as placed in service (or divide 1.00 by the remaining number of years disposed of) on the mid-point of such quarter. in the recovery period as of the beginning of Column (b).—For lines 14g and 14h, enter the tax year (but not less than one). For 1 the month and year the property was placed In determining whether the mid-quarter example, if there are 6 ⁄2 years remaining in in service. If property held for personal use is convention applies, do not take into account: the recovery period as of the beginning of the converted to use in a trade or business or for ● Property that is being depreciated under year, divide 1.00 by 6.5 for a rate of 15.38%. the production of income, treat the property the pre-1987 rules; Note: If you are using the 200% or 150% DB as being placed in service on the date of ● Any residential rental property, method, be sure to switch to the straight line conversion. nonresidential real property, or railroad rate in the first year that the straight line rate Column (c).—To find the basis for gradings and tunnel bores; and exceeds the declining balance rate. depreciation, multiply the cost or other basis ● Property that is placed in service and Step 2.—Multiply the percentage rate of the property by the percentage of disposed of within the same tax year. determined in Step 1 by the property’s business/investment use. From that result, unrecovered basis (cost or other basis subtract any section 179 expense deduction Mid-month convention (MM).—This convention applies ONLY to residential rental reduced by any section 179 expense and the amount of any enhanced oil recovery deduction and all prior years’ depreciation). credit (section 43). See section 50(c) to property, nonresidential real property (lines determine the basis adjustment for 14g or 14h), and railroad gradings and tunnel Step 3.—For property placed in service or investment credit property. bores. It treats all property placed in service disposed of during the current tax year, (or disposed of) during any month as placed multiply the result from Step 2 by the Column (d).—See the “Note” in the in service (or disposed of) on the mid-point of applicable decimal amount from the tables instructions for line 14, column (f), for an such month. below (based on the convention shown in election you can make to use the 150% column (e)). declining balance method of depreciation (for Enter “HY” for half-year; “MQ” for 3-, 5-, 7-, and 10-year property). If you do not mid-quarter; or “MM” for mid-month Half-year (HY) convention 0.5 elect to use the 150% method, determine the convention. recovery period from the table below: Column (f).—Applicable depreciation Mid-quarter (MQ) convention methods are prescribed for each classification Placed in service Placed Disposed of property. For 3-, 5-, 7-, and 10-year (or disposed of) during the: in service of The applicable property the applicable method is the 200% In the case of: recovery period is: declining balance method, switching to the 1st quarter 0.875 0.125 3-year property 3 yrs. straight line method in the first tax year that 2nd quarter 0.625 0.375 5-year property 5 yrs. maximizes the depreciation allowance. 3rd quarter 0.375 0.625 4th quarter 0.125 0.875 7-year property 7 yrs. Note: You may make an irrevocable election 10-year property 10 yrs. to use the 150% declining balance method for one or more classes of property (except Mid-month (MM) convention 15-year property 15 yrs. for residential rental property, nonresidential Placed in service Placed Disposed 20-year property 20 yrs. real property, any railroad grading or tunnel (or disposed of) during the: in service of Residential rental property 27.5 yrs. bore, or any tree or vine bearing fruit or nuts). If you make this election, see Lines 15a 1st month 0.9583 0.0417 Nonresidential real property 31.5 yrs. Through 15c—Alternative Depreciation 2nd month 0.8750 0.1250 Railroad gradings and tunnel bores 50 yrs. 3rd month 0.7917 0.2083 System (ADS) for the recovery period. 4th month 0.7083 0.2917 For 15- and 20-year property, and property 5th month 0.6250 0.3750 If you elect the 150% declining balance used in a farming business, the applicable 6th month 0.5417 0.4583 7th month 0.4583 0.5417 method, you must use the recovery period method is the 150% declining balance under the Alternative Depreciation System 8th month 0.3750 0.6250 method, switching to the straight line method 9th month 0.2917 0.7083 (ADS) discussed in the line 15 instructions. in the first tax year that maximizes the 10th month 0.2083 0.7917 You will not have an adjustment for depreciation allowance. 11th month 0.1250 0.8750 alternative minimum tax purposes on the 12th month 0.0417 0.9583 property for which you make this election. For residential rental property, nonresidential real property, any railroad Short tax years.—See Pub. 534 for rules on Column (e).—The applicable convention grading or tunnel bore, or any tree or vine how to compute the depreciation deduction determines the portion of the tax year for bearing fruit or nuts, the only applicable for property placed in service in a short tax which depreciation is allowable during a year method is the straight line method. year. Page 3 Page 4 of 8 of Instructions for Form 4562 3

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Lines 15a Through 15c.—Alternative Column (f).—Under ADS, the only applicable chose in the prior year. See Pub. 534 for Depreciation System (ADS) method is the straight line method. more information and tables. Note: Lines 15a through 15c should be Column (g).—The depreciation deduction is Include any amounts attributable to the completed for assets, other than automobiles computed in the same manner as under GDS Class Life Asset Depreciation Range (CLADR) and other listed property, placed in service except you must apply the straight line system. If you previously elected the CLADR ONLY during the tax year beginning in 1992 method over the ADS recovery period and system, you must continue to use it to and depreciated under the Alternative use the applicable convention. depreciate assets left in your vintage accounts. You must continue to meet Depreciation System. Depreciation on assets Part III—Other Depreciation placed in service in prior years is reported on recordkeeping requirements. line 16. Note: Do not use Part III for automobiles and Prior years’ depreciation, plus current Under ADS, depreciation is computed by other listed property. Instead, report this year’s depreciation, can never exceed the using the applicable depreciation method, the property in Part V on page 2 of Form 4562. depreciable basis of the property. applicable recovery period, and the applicable Use Part III for: The basis and amounts claimed for convention. The following types of property ● ACRS property (pre-1987 rules); depreciation should be part of your must be depreciated under ADS: permanent books and records. No ● Property placed in service before 1981; Any tangible property used predominantly attachment is necessary. ● ● Certain public utility property, which does outside the United States, not meet certain normalization requirements; Part IV—Summary ● Any tax-exempt use property, ● Certain property acquired from related Line 20 ● Any tax-exempt bond financed property, persons; A partnership or S corporation does not ● Any imported property covered by an ● Property acquired in certain nonrecognition executive order of the President of the United transactions; and include any section 179 expense deduction States, and (line 12) on this line. Any section 179 expense ● Certain sound recordings, movies, and deduction is passed through separately to the ● Any property used predominantly in a videotapes. partners and shareholders on the appropriate farming business and placed in service during line of their Schedules K-1. any tax year in which you made an election Line 16 under section 263A(d)(3). For assets placed in service after 1986 and Line 21 Instead of depreciating property under GDS depreciated under post-’86 rules, enter the If you are subject to the uniform capitalization (line 14), you may make an irrevocable GDS and ADS deduction for the current year. rules of section 263A, enter the increase in election with respect to any classification of To compute the deduction, see the basis from costs that are required to be property for any tax year to use ADS. For instructions for column (g), line 14. capitalized. For a detailed discussion of who residential rental and nonresidential real Line 17 is subject to these rules, which costs must be property, you may make this election capitalized, and allocation of costs among separately for each property. Report property that you elect, under section activities, see Temp. Regs. section Column (a).—Use the following rules to 168(f)(1), to depreciate under the 1.263A-1T. determine the classification of the property unit-of-production method or any other under ADS: method not based on a term of years (other Part V—Listed Property than the retirement-replacement-betterment ● Class life. Under ADS, the depreciation Taxpayers claiming the standard mileage rate, method). deduction for most property is based on the actual vehicle expenses (including property’s class life, which can be found in Attach a separate sheet showing (a) a depreciation), or depreciation on other listed the Table of Class Lives and Recovery description of the property and the property, must provide the information Periods in Pub. 534. Use line 15a for all depreciation method you elect that excludes requested in Part V, regardless of the tax year property depreciated under ADS, except for the property from ACRS or MACRS; and the property was placed in service. However, property that does not have a class life, (b) the depreciable basis (cost or other basis for taxpayers claiming vehicle expenses residential rental and nonresidential real reduced, if applicable, by salvage value, (including the standard mileage rate) on Form property, and railroad gradings and tunnel enhanced oil recovery credit, and the section 2106 or Schedule C-EZ (Form 1040), this bores. 179 expense deduction). See section 50(c) to information is reported on those forms determine the basis adjustment for Note: See section 168(g)(3)(B) for a special instead of Part V. Listed property includes, investment credit property. rule for determining the class life for certain but is not limited to: property. Line 18 ● Passenger automobiles weighing 6,000 pounds or less. ● 12-year. Use line 15b for property that Enter the total depreciation attributable to Any other property used for transportation does not have a class life. assets, other than automobiles and other ● if the nature of the property lends itself to ● 40-year. Use line 15c for residential rental listed property, placed in service before 1981 personal use, such as motorcycles, pick-up and nonresidential real property. (pre-ACRS), property subject to ACRS, or trucks, etc. ● Railroad gradings and tunnel bores are property that cannot otherwise be 50-year property under ADS. There is no depreciated under ACRS. For ACRS property, ● Any property used for entertainment or separate line to report 50-year property. unless you use an alternate percentage, recreational purposes (such as photographic, Therefore, attach a statement showing the multiply the property’s unadjusted basis by phonographic, communication, and video same information as required in columns (a) the applicable percentage as follows: recording equipment). through (g). Include the deduction in the line ● 5-year property—1st year (15%), 2nd year ● Cellular telephones (or other similar 20 “Total” and write “See attachment” in the (22%), 3rd through 5th years (21%); telecommunications equipment). bottom margin of the form. ● 10-year property—1st year (8%), 2nd year ● Computers or peripheral equipment. Column (b).—For 40-year property, enter the (14%), 3rd year (12%), 4th through 6th years Listed property does not include month and year it was placed in service or (10%), 7th through 10th years (9%); (a) photographic, phonographic, was converted to use in a trade or business ● 15-year public utility property—1st year communication, or video equipment used or for the production of income. (5%), 2nd year (10%), 3rd year (9%), 4th year exclusively in a taxpayer’s trade or business Column (c).—See the instructions for line 14, (8%), 5th and 6th years (7%), 7th through or at the taxpayer’s regular business column (c). 15th years (6%); establishment; (b) any computer or peripheral equipment used exclusively at a regular Column (d).—On line 15a, enter the ● 15-year, 18-year, and 19-year real property business establishment and owned or leased property’s class life. and low-income housing—Use the tables in by the person operating the establishment; or Pub. 534. Column (e).—Under ADS, the applicable (c) an ambulance, hearse, or vehicle used for conventions are the same as those used If you elected an alternate percentage for transporting persons or property for hire. under GDS. See the instructions for line 14, any property listed above, use the straight column (e). line method over the recovery period you

Page 4 Page 5 of 8 of Instructions for Form 4562 3

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Section A—Depreciation equipment), allocate the use based on the your tax year beginning in 1992, enter your most appropriate unit of time the property is unrecovered basis, if any, in column (h). Lines 23 and 24 actually used. See Temp. Regs. section If the property is used 50% or less in a Qualified business use.—For purposes of 1.280F-6T. qualified business use (line 24), and the determining whether to use line 23 or line 24 If you have property that is used solely for property was placed in service after 1986, to report your listed property, you must first personal use that is converted to figure column (h) by dividing column (e) by determine the percentage of qualified business/investment use during the tax year, column (f) and using the same conventions as business use for each property. Generally, a figure the percentage of business/investment discussed in the instructions for line 14, qualified business use is any use in your use only for the number of months the column (e). For automobiles placed in service trade or business. However, it does not property is used in your business or for the after June 18, 1984, and before 1987, enter include: production of income. Multiply that your unrecovered basis, if any, in column (h). ● Any investment use; percentage by the number of months the For computers placed in service after June property is used in your business or for the ● Leasing the property to a 5% owner or 18, 1984, and before 1987, multiply column production of income, and divide the result by (e) by 8.333%. related person; 12. For property placed in service before 1987 ● The use of the property as compensation Column (d).—Enter the property’s actual cost for services performed by a 5% owner or that was disposed of during the year, enter or other basis (unadjusted for prior years’ zero. related person; or depreciation). If you traded in old property, Limitations for automobiles.— ● The use of the property as compensation your basis is the adjusted basis of the old The for services performed by any person (who is property (figured as if 100% of the property’s depreciation deduction plus section 179 not a 5% owner or related person), unless an use had been for business purposes) plus any expense deduction for automobiles is limited amount is included in that person’s income additional amount you paid for the new for any tax year. The limitation depends on for the use of the property and, if required, property. Reduce your basis by any diesel when you placed the property in service. Use income tax was withheld on that amount. fuel tax credit if the property is a vehicle. For Table E on page 7 to determine the limitation. For any automobile you list on line 23 or 24, As an exception to the general rule, if at property purchased after 1986, add to your basis any sales tax paid on the property. the total of columns (h) and (i) for that least 25% of the total use of any aircraft automobile cannot exceed the limit shown in during the tax year is for a qualified business If you converted the property from personal Table E. use, the leasing or compensatory use of the use to business use, your basis for Note: aircraft by a 5% owner or related person is depreciation is the smaller of the property’s These limitations are further reduced considered a qualified business use. adjusted basis or its fair market value on the when the business/investment use percentage date of conversion. (column (c)) is less than 100%. For example, if Determine your percentage of qualified an automobile placed in service in 1992 is business use in a manner similar to that used Column (e).—Multiply column (d) by the used 60% for business/investment purposes, to figure the business/investment use percentage in column (c). From that result, then the first year depreciation plus section percentage in column (c). Your percentage of subtract any section 179 expense deduction 179 expense deduction is limited to 60% of qualified business use may be smaller than and half of any investment credit taken before $2,760, which is $1,656. the business/investment use percentage. 1986 (unless you took the reduced credit). Column (i).—Enter the amount you choose to For more information, see Pub. 534. For automobiles and other listed property placed in service after 1985 (i.e., transition expense for section 179 property used more Column (a).—List on a property-by-property than 50% in a qualified business use (subject basis all of your listed property in the property), reduce the depreciable basis by the entire investment credit. to the limitations for automobiles noted following order: above). Refer to the Part I instructions to Column (f).— 1. Automobiles and other vehicles; and Enter the recovery period. For determine if the property qualifies under property placed in service after 1986 and 2. Other listed property (computers and section 179. Be sure to include the total cost used more than 50% in a qualified business of such property on line 2, page 1. peripheral equipment, etc.). use, use the table in the line 14, column (d) Recapture of depreciation and section 179 In column (a), list the make and model of instructions. For property placed in service expense deduction.— automobiles, and give a general description after 1986 and used 50% or less in a If any listed property of other listed property. qualified business use, you must depreciate was used more than 50% in a qualified business use in the year it was placed in If you have more than five vehicles used the property using the straight line method over its ADS recovery period. The ADS service, and used 50% or less in a later year, 100% for business/investment purposes, you you may have to recapture in the later year may group them by tax year. Otherwise, list recovery period is 5 years for automobiles and computers. part of the depreciation and section 179 each vehicle separately. expense deduction. Use Form 4797, Sales of Column (b).—Enter the date the property was Column (g).—Enter the method and Business Property, to figure the recapture placed in service. If property held for personal convention used to figure your depreciation amount. use is converted to business/investment use, deduction. See the instructions for line 14, treat the property as placed in service on the columns (e) and (f). Write “200 DB,” “150 Section B—Information date of conversion. DB,” or “S/L,” for the depreciation method, Regarding Use of Vehicles and “HY,” “MM,” or “MQ,” for half-year, Column (c).—Enter the percentage of mid-month, or mid-quarter conventions, The information requested in Questions 27 business/investment use. For automobiles respectively. For property placed in service through 33 must be completed for each and other vehicles, this is determined by before 1987, write “PRE” if you used the vehicle identified in Section A. dividing the number of miles the vehicle is prescribed percentages under ACRS. If you driven for trade or business purposes or for Employees must provide their employers elected an alternate percentage, enter “S/L.” the production of income during the year (not with the information requested in Questions to include any commuting mileage) by the Column (h).— 27 through 33 for each automobile or vehicle total number of miles the vehicle is driven for provided for their use. Caution: See Limitations for automobiles any purpose. Treat vehicles used by Employers providing more than five below before entering an amount in column employees as being used 100% for vehicles to their employees, who are not (h). business/investment purposes if the value of more than 5% owners or related persons, are personal use is included in the employees’ If the property is used more than 50% in a not required to complete Questions 27 gross income, or the employees reimburse qualified business use (line 23), and the through 33 for such vehicles. Instead, they the employer for the personal use. property was placed in service after 1986, must obtain this information from their figure column (h) by following the instructions Employers who report the amount of employees, check “Yes” to Question 37, and for line 14, column (g). If placed in service personal use of the vehicle in the employee’s retain the information received as part of their before 1987, multiply column (e) by the gross income, and withhold the appropriate permanent records. applicable percentages given in the line 18 taxes, should enter “100%” for the instructions for ACRS property. If the percentage of business/investment use. For recovery period for the property ended before more information, see Pub. 917. For listed property (such as computers or video Page 5 Page 6 of 8 of Instructions for Form 4562 3

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Section C—Questions for employees for use in the employer’s trade or 1986, but before January 1, 1988, the business and is used in the employer’s trade deduction is treated as interest expense and Employers Who Provide or business; is subject to the investment interest Vehicles for Use by Their ● For bona fide noncompensatory business limitations. Use Form 4952, Investment Employees reasons, the employer requires the employee Interest Expense Deduction, to compute the allowable deduction. For employers providing vehicles to their to commute to and/or from work in the employees, a written policy statement vehicle; For taxable bonds acquired after 1987, the regarding the use of such vehicles, if initiated ● The employer establishes a written policy amortization offsets the interest income. Get and kept by the employer, will relieve the under which the employee may not use the Pub. 550, Investment Income and Expenses. employee of keeping separate records for vehicle for personal purposes, other than Line 39 substantiation. commuting or de minimis personal use (such Complete line 39 only for those costs for Two types of written policy statements will as a stop for a personal errand between a which the amortization period begins during satisfy the employer’s substantiation business delivery and the employee’s home); your tax year beginning in 1992. requirements under section 274(d): (a) a ● Except for de minimis use, the employer policy statement that prohibits personal use reasonably believes that the employee does Column (a).—Describe the costs you are including commuting; and (b) a policy not use the vehicle for any personal purpose amortizing. You may amortize— statement that prohibits personal use except other than commuting; and ● Pollution control facilities (section 169, for commuting. ● The employer accounts for the commuting limited by section 291 for corporations). Line 34 use by including an appropriate amount in the ● Certain bond premiums (section 171). employee’s gross income. ● Research and experimental expenditures A policy statement that prohibits personal use For both written policy statements, there (section 174). (including commuting) must meet the must be evidence that would enable the IRS following conditions: ● Qualified forestation and reforestation costs to determine whether use of the vehicle (section 194). ● The vehicle is owned or leased by the meets the conditions stated above. employer and is provided to one or more ● Business start-up expenditures (section employees for use in the employer’s trade or Line 38 195). business; An automobile is considered to have qualified ● Organizational expenditures for a ● When the vehicle is not used in the demonstration use if the employer maintains corporation (section 248) or partnership employer’s trade or business, it is kept on the a written policy statement that: (section 709). employer’s business premises, unless it is ● Prohibits its use by individuals other than ● Optional write-off of certain tax preferences temporarily located elsewhere, for example, full-time automobile salesmen; over the period specified in section 59(e). for maintenance or because of a mechanical ● Prohibits its use for personal vacation trips; Column (b).—Enter the date the amortization failure; period begins under the applicable Code ● Prohibits storage of personal possessions No employee using the vehicle lives at the ● in the automobile; and section. employer’s business premises; Column (c).—Enter the total amount you are ● Limits the total mileage outside the No employee may use the vehicle for ● salesmen’s normal working hours. amortizing. See the applicable Code section personal purposes, other than de minimis for limits on the amortizable amount. personal use (such as a stop for lunch Part VI—Amortization Column (d).—Enter the Code section under between two business deliveries); and Each year you may elect to deduct part of which you amortize the costs. ● Except for de minimis use, the employer certain capital costs over a fixed period. If Column (f).—Compute the amortization reasonably believes that no employee uses you amortize property, the part you amortize deduction by: the vehicle for any personal purpose. does not qualify for the election to expense 1. Dividing column (c) by the number of Line 35 certain tangible property or depreciation. years over which the costs are to be amortized; or A policy statement that prohibits personal use For individuals reporting amortization of (except for commuting) is NOT available if the bond premium for bonds acquired before 2. Multiplying column (c) by the percentage commuting employee is an officer, director, or October 23, 1986, do not report the in column (e). deduction here. See the instructions for 1% or more owner. This policy must meet the Attach any other information the Code and Schedule A (Form 1040). following conditions: regulations may require to make a valid For taxpayers (other than corporations) ● The vehicle is owned or leased by the election. See Pub. 535 for more information. employer and is provided to one or more claiming a deduction for amortization of bond premium for bonds acquired after October 22, Line 40 Enter the amount of amortization attributable to those costs for which the amortization period began before 1992.

Page 6 Page 7 of 8 of Instructions for Form 4562 3

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.

Table A—General Depreciation System Method: 200% declining balance switching to straight line Convention: Half-year

If the recovery period is:

Year 3 yrs. 5 yrs. 7 yrs. 10 yrs. 1 33.33% 20.00% 14.29% 10.00% 2 44.45% 32.00% 24.49% 18.00% 3 14.81% 19.20% 17.49% 14.40% 4 7.41% 11.52% 12.49% 11.52% 5 11.52% 8.93% 9.22% 6 5.76% 8.92% 7.37% 7 8.93% 6.55%

Table B—General and Alternative Depreciation System Method: 150% declining balance switching to straight line Convention: Half-year If the recovery period is:

Year 5 yrs. 7 yrs. 10 yrs. 12 yrs. 15 yrs. 20 yrs. 1 15.00% 10.71% 7.50% 6.25% 5.00% 3.750% 2 25.50% 19.13% 13.88% 11.72% 9.50% 7.219% 3 17.85% 15.03% 11.79% 10.25% 8.55% 6.677% 4 16.66% 12.25% 10.02% 8.97% 7.70% 6.177% 5 16.66% 12.25% 8.74% 7.85% 6.93% 5.713% 6 8.33% 12.25% 8.74% 7.33% 6.23% 5.285% 7 12.25% 8.74% 7.33% 5.90% 4.888%

Table C—General Depreciation System Method: Straight line Convention: Mid-month Recovery period: 27.5 years

The month in the 1st recovery year the property is placed in service: Year 1 2 3 4 5 6 7 8 9 10 11 12 1 3.485% 3.182% 2.879% 2.576% 2.273% 1.970% 1.667% 1.364% 1.061% 0.758% 0.455% 0.152% 2–8 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636% 3.636%

Table D—General Depreciation System Method: Straight line Convention: Mid-month Recovery period: 31.5 years The month in the 1st recovery year the property is placed in service: Year 1 2 3 4 5 6 7 8 9 10 11 12 1 3.042% 2.778% 2.513% 2.249% 1.984% 1.720% 1.455% 1.190% 0.926% 0.661% 0.397% 0.132% 2–7 3.175% 3.175% 3.175% 3.175% 3.175% 3.175% 3.175% 3.175% 3.175% 3.175% 3.175% 3.175%

Table E—Limitations for automobiles

If placed in service:

Year of after: 6/18/84 12/31/84 4/2/85 12/31/86 12/31/88 12/31/90 12/31/91 Deduction but before: 1/1/85 4/3/85 1/1/87 1/1/89 1/1/91 1/1/92 1/1/93

1st tax year 4,000 4,100 3,200 2,560 2,660 2,660 2,760 2nd tax year 6,000 6,200 4,800 4,100 4,200 4,300 4,400 3rd tax year 6,000 6,200 4,800 2,450 2,550 2,550 2,650 each succeeding 6,000 6,200 4,800 1,475 1,475 1,575 1,575 tax year

Page 7 Page 8 of 8 of Instructions for Form 4562 3

The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing. Deduction Depreciation % Table Rate or Period Recovery Method/ Convention Basis for Depreciation Years Depreciation Prior 179 Section Deduction Depreciation Depreciation Worksheet Use % Business/ Investment Other Basis Cost or Date Service Placed in Description of Property

Page 8