Publication 534 - Introductory Material
Important Change for 1995
Major changes to Publications 534 and 946. This publication, as well as Publication 946,How To Depreciate Property, has been changed. Publication 534 has been shortened. It no
longer contains general information on MACRS and the section 179 deduction. It contains a discussion of the accelerated cost
recovery system (ACRS),
the ACRS Percentage Tables, a discussion of other methods of depreciation, and a limited discussion of listed property.
We expanded Publication 946 by adding material taken from Publication 534. We added more detail to the discussions of the
section 179 deduction,
the modified accelerated cost recovery system (MACRS), and listed property. We replaced the partialMACRS Percentage Tables with the
complete ones from Publication 534. We also added the Table of Class Lives and Recovery Periods from Publication 534.
We made these changes to eliminate most of the duplication that existed in the two publications. This will save money and
make it easier for you to
decide which publication you need. Use this publication to figure depreciation on property you placed in service before 1987;
use Publication 946 to
figure depreciation on property you placed in service after 1986.
The law allows you to recover your cost in business or income-producing property through yearly tax deductions. You do this
by depreciating your
property, that is, by deducting some of your cost on your tax return each year. You can depreciate both tangible property,
such as a car, building, or
machinery, and certain intangible property, such as a copyright or a patent.
The amount you can deduct depends on:
How much the property cost,
When you began using it,
How long it will take to recover your cost, and
Which of several depreciation methods you use.
Depreciation is a loss in the value of property over the time the property is being used. Events that can cause property
to depreciate include wear
and tear, age, deterioration, and obsolescence. You can get back your cost of certain property, such as equipment you use
in your business or property
used for the production of income by taking deductions for depreciation. Black's Law Dictionary
Amortization is similar to depreciation. Using amortization, you can recover your cost or basis in certain property
proportionately over a specific
number of years or months. Examples of costs you can amortize are the costs of starting a business, reforestation, and pollution
You can find information on amortization inchapter 12 of Publication 535, Business Expenses.
Alternative minimum tax.
If you use accelerated depreciation for real property, or personal property that is leased to others, you may be liable
for the alternative minimum
tax. Accelerated depreciation is any method, that allows recovery at a faster rate in the earlier years than the straight
line method. For more
information, you may wish to see the following:
Form 6251, Alternative Minimum Tax-Individuals, and
Publication 542, Tax Information on
Ordering publications and forms.
To order free publications and forms, 1-800-TAX-FORM (1-800-829-3676). You can also write to the IRS Forms Distribution
Center nearest you. Check
your income tax package for the address.
If you have access to a personal computer and a modem, you can also get many forms and publications electronically.
See How To Get Forms and
in your income tax package for details.
You can call the IRS with your tax question Monday through Friday during regular business hours. Check your telephone
book for the local number or
you can call1-800-829-1040.
Telephone help for hearing-impaired persons.
If you have access to TDD equipment, you can call 1-800-829-4059
with your tax question or to order forms and publications. See your tax
package for the hours of operation.
How To Use This Publication
This publication describes the kinds of property that can be depreciated and the methods used to figure depreciation on property
placed in service
before 1987. It is divided into three chapters and contains an appendix.
|Chapter 1 explains the rules for depreciating property under the Accelerated Cost Recovery System (ACRS).
|Chapter 2 explains the rules for depreciating property first used before 1981.
|Chapter 3 explains the rules for listed property. Also this chapter defines listed property.
|The appendix contains the ACRS Percentage Tables.