Special Depreciation Allowance - Economic Stimulus Act 2008

It's way too early to get into the mechanics of this. Let's wait for the form 4562 instructions due out by December. Probably. perhaps. maybe. if we're lucky.

ChEAr$, Harlan Lunsford, EA n LA

The IRS said it would issue guidance. They also said you can rely on the regulations 1.168(k)-1. This was the reg for the last bonus depreciation. See

1364,00.html Below is an excerpt from the Reg. Below that is the Form 4562 instructions for 2002. The instructions about attaching a statement were included in all 4562 instructions where bonus depreciation was allowed.

I expect that the guidance will utilize the same method.

(3)Time and manner for making election?(i) Time for making election. Except as provided in paragraph (e)(4) of this section, any election specified in paragraph (e)(1) of this section must be made by the due date (including extensions) of the Federal tax return for the taxable year in which the qualified property or the 50-percent bonus depreciation property, as applicable, is placed in service by the taxpayer.

(ii) Manner of making election. Except as provided in paragraph (e)(4) of this section, any election specified in paragraph (e)(1) of this section must be made in the manner prescribed on Form 4562, ?Depreciation and Amortization,? and its instructions. The election is made separately by each person owning qualified property or 50-percent bonus depreciation property (for example, for each member of a consolidated group by the common parent of the group, by the partnership, or by the S corporation). If Form

4562 is revised or renumbered, any reference in this section to that form shall be treated as a reference to the revised or renumbered form.

(4) Special rules for 2000 or 2001 returns. For the election specified in paragraph (e)(1)(i) of this section for qualified property placed in service by the taxpayer during the taxable year that included September 11, 2001, the taxpayer should refer to the guidance provided by the Internal Revenue Service for the time and manner of making this election on the 2000 or 2001 Federal tax return for the taxable year that included September

11, 2001 (for further guidance, see sections 3.03(3) and 4 of Rev. Proc. 2002?33 (2002?1 C.B. 963), Rev. Proc. 2003?50 (2003?29 I.R.B. 119), and §601.601(d)(2)(ii)(b) of this chapter).

(5) Failure to make election. If a taxpayer does not make the applicable election specified in paragraph (e)(1) of this section within the time and in the manner prescribed in paragraph (e)(3) or (4) of this section, the amount of depreciation allowable for that property under section 167(f)(1) or under section 168, as applicable, must be determined for the placed-in-service year and for all subsequent taxable years by taking into account the additional first year depreciation deduction. Thus, any election specified in paragraph (e)(1) of this section shall not be made by the taxpayer in any other manner (for example, the election cannot be made through a request under section 446(e) to change the taxpayer's method of accounting).

4562 Instructions

To make an election, attach a statement to your timely filed return indicating the class of property for which you are making the election and that, for such class: (a) you are electing not to claim the 30% special allowance for qualified property acquired before May 6, 2003; (b) you are electing to claim the

30% special allowance instead of the 50% special allowance for qualified property acquired after May 5, 2003; or (c) you are electing not to claim any special allowance for qualified property acquired after May 5, 2003. The election must be made separately by each person owning qualified property (for example, by the partnership, by the S corporation, or by the common parent of a consolidated group).

Thank you, unfortunately I have some 2008 short year returns due soon (due dates stipulated by other factors, not IRS due dates) so if there is any information sooner than December, it would be appreciated!

The draft of the 2008 form is already available - but instructions are not.

Speaking of guidance to be issued re new depreciation, IRS announced they will issue some time in the future a new 4562-FY form.

ChEAr$, Harlan Lunsford, EA n LA

I thought that was released with the Economic Stimulus Act. Their July Qs & As on the Act have a link to the form and instructions already loaded on the "pdf" server.

The 4562-FY has been issued and the IRS website does give instructions on how to elect out - attaching a statement (same as how you elected out of the bonus depreciation years ago). Thank you for your help. I didn't realize that the new form and instructions were already available. Shocked, yet impressed by how quickly the IRS issued guidence ...