PDF document

- 1 -

Userid: CPM Schema: Leadpct: 100% Pt. size: 9.5 Draft Ok to Print
instrx
AH XSL/XML Fileid: … ions/i4562/2023/a/xml/cycle06/source (Init. & Date) _______

Page 1 of 21 14:09 - 8-Jan-2024

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

Department of the Treasury
Internal Revenue Service
2023

Instructions for Form 4562

Depreciation and Amortization (Including Information on Listed Property)

Section references are to the Internal Revenue Code unless • A section 179 expense deduction (which may include a
otherwise noted. carryover from a previous year).
• Depreciation on any vehicle or other listed property
Future Developments (regardless of when it was placed in service).
For the latest information about developments related to • A deduction for any vehicle reported on a form other than
Form 4562 and its instructions, such as legislation enacted Schedule C (Form 1040), Profit or Loss From Business.
after this form and instructions were published, go to IRS.gov/ • Any depreciation on a corporate income tax return (other
Form4562. than Form 1120-S).
• Amortization of costs that begins during the 2023 tax year.
What's New
If you are an employee deducting job-related vehicle
Section 179 deduction dollar limits. For tax years expenses using either the standard mileage rate or actual
beginning in 2023, the maximum section 179 expense expenses, use Form 2106, Employee Business Expenses, for
deduction is $1,160,000. This limit is reduced by the amount this purpose.
by which the cost of section 179 property placed in service File a separate Form 4562 for each business or activity on
during the tax year exceeds $2,890,000. Also, the maximum your return for which Form 4562 is required. If you need more
section 179 expense deduction for sport utility vehicles space, attach additional sheets. However, complete only one
(SUVs) placed in service in tax years beginning in 2023 is Part I in its entirety when computing your section 179
$28,900. expense deduction. See the instructions for line 12, later.
Phase down of the special depreciation allowance for
certain property. Certain qualified property (other than Additional Information
property with a long production period and certain aircraft) For more information about depreciation and amortization
placed in service after December 31, 2023, and before (including information on listed property), see the following.
January 1, 2025, is limited to a special allowance of 60% of • Pub. 463, Travel, Gift, and Car Expenses.
the depreciable basis of the property. Property with a long • Pub. 534, Depreciating Property Placed in Service Before
production period and certain aircraft placed in service after 1987.
December 31, 2023, and before January 1, 2025, is limited to • Pub. 551, Basis of Assets.
a special depreciation allowance of 80% of the depreciable • Pub. 946, How To Depreciate Property.
basis of the property. For certain plants bearing fruits and
nuts planted and grafted after December 31, 2023, and Definitions
before January 1, 2025, the special depreciation allowance is
also limited to 60% of the adjusted basis of the specified Depreciation
plants. See Certain qualified property acquired after Depreciation is the annual deduction that allows you to
September 27, 2017 and Certain plants bearing fruits and recover the cost or other basis of your business or investment
nuts, later. property over a certain number of years. Depreciation starts
when you first use the property in your business or for the
production of income. It ends when you either take the
General Instructions property out of service, deduct all your depreciable cost or
basis, or no longer use the property in your business or for
Purpose of Form
the production of income.
Use Form 4562 to:
• Claim your deduction for depreciation and amortization, Generally, you can depreciate:
• Make the election under section 179 to expense certain • Tangible property such as buildings, machinery, vehicles,
property, and furniture, and equipment; and
• Provide information on the business/investment use of • Intangible property such as patents, copyrights, and
automobiles and other listed property. computer software.
Exception. You cannot depreciate land.
Note. Do not use Form 4562 to claim the deduction for
energy efficient commercial buildings under section 179D. Accelerated Cost Recovery System
Instead use Form 7205, Energy Efficient Commercial
Buildings Deduction. See Form 7205 and the related The Accelerated Cost Recovery System (ACRS) applies to
instructions for more information. property first used before 1987. It is the name given for the
tax rules that allow a taxpayer to recover through depreciation
Who Must File deductions the cost of property used in a trade or business or
Except as otherwise noted, complete and file Form 4562 if to produce income. These rules are mandatory and generally
you are claiming any of the following. apply to tangible property placed in service after 1980 and
• Depreciation for property placed in service during the 2023 before 1987. If you placed property in service during this
tax year. period, you must continue to figure your depreciation under
ACRS.

Dec 4, 2023 Cat. No. 12907Y

- 2 -

Page 2 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

ACRS consists of accelerated depreciation methods and election is made, the term "section 179 property" will include
an alternate ACRS method that could have been elected. any qualified real property which is:
The alternate ACRS method used a recovery percentage • Qualified improvement property as described in section
based on a modified straight line method. See the 168(e)(6), and
instructions for line 16 for more information. For a complete • Any of the following improvements to nonresidential real
discussion of ACRS, see Pub. 534. property placed in service after the date the nonresidential
real property was first placed in service.
Modified Accelerated Cost Recovery System 1. Roofs.
The Modified Accelerated Cost Recovery System (MACRS) 2. Heating, ventilation, and air-conditioning property.
is the current method of accelerated asset depreciation
required by the tax code. Under MACRS, all assets are 3. Fire protection and alarm systems.
divided into classes which dictate the number of years over 4. Security systems.
which an asset's cost will be recovered. Each MACRS class This property is considered "qualified section 179 real
has a predetermined schedule which determines the property."
percentage of the asset's costs which is depreciated each
A deduction attributable to qualified section 179 real
year. For more information, see Part III. MACRS
property which is disallowed under the trade or business
Depreciation, later. For a complete discussion of MACRS,
income limitation (see Business Income Limit in chapter 2 of
see chapter 4 of Pub. 946.
Pub. 946) for 2023 can be carried over to 2024. Thus, the
Section 179 Property amount of any 2023 disallowed section 179 expense
deduction attributable to qualified section 179 real property
Section 179 property is property that you acquire by will be reported on line 13 of Form 4562.
purchase for use in the active conduct of your trade or
business, and is one of the following. Amortization
• Qualified section 179 real property. For more information,
Amortization is similar to the straight line method of
see Special rules for qualified section 179 real property, later.
depreciation in that an annual deduction is allowed to recover
• Tangible personal property, including cellular telephones,
certain costs over a fixed time period. You can amortize such
similar telecommunications equipment, and air conditioning
items as the costs of starting a business, goodwill, and
or heating units (for example, portable air conditioners or
certain other intangibles. See the instructions for Part VI.
heaters). Also, tangible personal property may include
certain property used mainly to furnish lodging or in Listed Property
connection with the furnishing of lodging (except as provided
in section 50(b)(2)). Listed property generally includes the following.
• Other tangible property (except buildings and their • Passenger automobiles weighing 6,000 pounds or less.
structural components) used as: See Limits for passenger automobiles, later.
• Any other property used for transportation if the nature of
1. An integral part of manufacturing, production, or the property lends itself to personal use, such as
extraction, or of furnishing transportation, communications, motorcycles, pickup trucks, SUVs, etc.
electricity, gas, water, or sewage disposal services; Any property used for entertainment or recreational
•
2. A research facility used in connection with any of the purposes (such as photographic, phonographic,
activities in (1) above; or communication, and video recording equipment).
3. A facility used in connection with any of the activities in Exceptions. Listed property does not include:
(1) above for the bulk storage of fungible commodities.
• Single purpose agricultural (livestock) or horticultural 1. Photographic, phonographic, communication, or video
structures. equipment used exclusively in a taxpayer's trade or business
• Storage facilities (except buildings and their structural or at the taxpayer's regular business establishment;
components) used in connection with distributing petroleum 2. Any computer or peripheral equipment used
or any primary product of petroleum. exclusively at a regular business establishment and owned or
• Off-the-shelf computer software. leased by the person operating the establishment;
3. An ambulance, hearse, or vehicle used for transporting
Section 179 property does not include the following. persons or property for compensation or hire; or
• Property held for investment (section 212 property). 4. Any truck or van placed in service after July 6, 2003,
• Property used mainly outside the United States (except for that is a qualified nonpersonal use vehicle.
property described in section 168(g)(4)).
• Property used by a tax-exempt organization (other than a For purposes of the exceptions above, a portion of the
section 521 farmers' cooperative) unless the property is used taxpayer's home is treated as a regular business
mainly in a taxable unrelated trade or business. establishment only if that portion meets the requirements for
• Property used by a governmental unit or foreign person or deducting expenses attributable to the business use of a
entity (except for property used under a lease with a term of home. However, for any property listed in (1) above, the
less than 6 months). regular business establishment of an employee is their
employer's regular business establishment.
See the instructions for Part I and Pub. 946.
Commuting
Special rules for qualified section 179 real property. You
can elect to treat certain qualified real property placed in Generally, commuting is defined as travel between your
service during the tax year as section 179 property. See home and a work location. However, travel that meets any of
Election for certain qualified section 179 real property under the following conditions is not commuting.
Part I, later, for information on how to make this election. If the

2 Instructions for Form 4562 (2023)

- 3 -

Page 3 of 21          Fileid: … ions/i4562/2023/a/xml/cycle06/source                             14:09 - 8-Jan-2024

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

• You have at least one regular work location away from your     • An amended return filed within the time prescribed by law 
home and the travel is to a temporary work location in the       for the applicable tax year. The election made on an 
same trade or business, regardless of the distance.              amended return must specify the item of section 179 
Generally, a temporary work location is one where your           property to which the election applies and the part of the cost 
employment is expected to last 1 year or less. See Pub. 463      of each such item to be taken into account. The amended 
for details.                                                     return must also include any resulting adjustments to taxable 
• The travel is to a temporary work location outside the         income.
metropolitan area where you live and normally work.                Election for certain qualified section 179 real 
• Your home is your principal place of business for purposes     property. You can elect to expense certain qualified real 
of deducting expenses for business use of your home and          property that you first placed in service as section 179 
the travel is to another work location in the same trade or      property for tax years beginning in 2023. For more 
business, regardless of whether that location is regular or      information, see Election above.
temporary and regardless of distance.
                                                                 Revocation. The election (or any specification made in the 
Alternative Minimum Tax (AMT)                                    election) can be revoked without obtaining IRS approval by 
                                                                 filing an amended return. The amended return must be filed 
Depreciation may be an adjustment for the AMT. However, no 
                                                                 within the time prescribed by law for the applicable tax year. 
adjustment applies in several instances. See Form 6251, 
                                                                 The amended return must include any resulting adjustments 
Alternative Minimum Tax—Individuals; Schedule I (Form 
                                                                 to taxable income or to the tax liability (for example, allowable 
1041), Alternative Minimum Tax—Estates and Trusts; and the 
                                                                 depreciation in that tax year for the item of section 179 
related instructions.
                                                                 property to which the revocation pertains). For more 
Recordkeeping                                                    information and examples, see Regulations sections 
                                                                 1.179-5(c)(3) and (c)(4). Once made, the revocation is 
Except for Part V (relating to listed property), the IRS does    irrevocable.
not require you to submit detailed information with your return 
on the depreciation of assets placed in service in previous              If you elect to expense section 179 property, you 
tax years. However, the information needed to compute your         !     must reduce the amount on which you figure your 
depreciation deduction (basis, method, etc.) must be part of     CAUTION depreciation or amortization deduction (including any 
your permanent records.                                          special depreciation allowance) by the section 179 expense 
                                                                 deduction.
      You may use the Depreciation Worksheet, later, to 
TIP   assist you in maintaining depreciation records. 
      However, the worksheet is designed only for federal        Line 1
income tax purposes. You may need to keep additional             Generally, the maximum section 179 expense deduction is 
records for accounting and state income tax purposes.            $1,160,000 for section 179 property (including qualified 
                                                                 section 179 real property) placed in service during the tax 
                                                                 year beginning in 2023.
Specific Instructions
                                                                         You can use Worksheet 1 to assist you in determining 
Part I. Election To Expense Certain                              TIP     the amount to enter on line 1.
Property Under
                                                                 Recapture rule.  If the section 179 property is not used 
Section 179                                                      predominantly (more than 50%) in your trade or business at 
                                                                 any time before the end of the property's recovery period, the 
                                                                 benefit of the section 179 expense deduction must be 
Note. An estate or trust cannot make this election.              reported as “other income” on your return.
   You can elect to expense part or all of the cost of section     If any qualified section 179 disaster assistance property 
179 property (defined earlier) that you placed in service        ceases to be used in the applicable federally declared 
during the tax year and used predominantly (more than 50%)       disaster area in any year after you claim the increased 
in your trade or business.                                       section 179 expense deduction for that property, the benefit 
                                                                 of the increased section 179 expense deduction must be 
   However, for taxpayers other than a corporation, this         reported as “other income” on your return. Similar rules apply 
election does not apply to any section 179 property you          if qualified Liberty Zone property ceases to be used in the 
purchased and leased to others unless:                           Liberty Zone, if qualified section 179 GO Zone property 
• You manufactured or produced the property; or                  ceases to be used in the GO Zone, if qualified section 179 
• The term of the lease is less than 50% of the property's       Recovery Assistance property ceases to be used in the 
class life and, for the first 12 months after the property is    Recovery Assistance area, if qualified empowerment zone 
transferred to the lessee, the deductions related to the         property ceases to be used in an empowerment zone by an 
property allowed to you as trade or business expenses            enterprise zone business, or if qualified renewal property 
(except rents and reimbursed amounts) are more than 15%          ceases to be used in a renewal community by a renewal 
of the rental income from the property.                          community business in any year after you claim the increased 
Election. You must make the election on Form 4562 filed          section 179 expense deduction.
with either:
• The original return you file for the tax year the property was Line 2
placed in service (whether or not you file your return on time), Enter the total cost of all section 179 property you placed in 
or                                                               service during the tax year (including the total cost of 

Instructions for Form 4562 (2023)                                                                                               3

- 4 -

Page 4 of 21           Fileid: … ions/i4562/2023/a/xml/cycle06/source                              14:09 - 8-Jan-2024

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

Worksheet 1. Worksheet for Lines 1, 2, and 3                                                Keep for Your Records

Maximum section 179 limitation calculation.
  1.* Enter total cost of section 179 property (including qualified section 179 real property) placed in service during the tax year 
         beginning in 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  2. The maximum section 179 deduction limitation for 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                         $1,160,000
  3. Enter the smaller of line 1 or line 2 here  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  4. Enter the amount from line 3 here and on Form 4562, line 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maximum threshold cost of section 179 property before reduction in limitation calculation.
  5. Enter the amount from line 1 here and on Form 4562, line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
  6. Base maximum threshold cost of section 179 property before reduction in limitation for 2023. Enter this amount on Form                                                    $2,890,000
         4562, line 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maximum elected cost for Form 4562, lines 6 and 7, column (c).
  7. Enter the smaller of line 1 or line 4. The total amount you enter on Form 4562, lines 6 and 7, column (c), cannot 
         exceed this amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
* For line 1 of this worksheet, include the total amount of eligible section 179 property (including qualified section 179 real property), not just the amount for which you are 
making the election. See the instructions for line 2.

qualified real property that you elect to treat as section 179     Column (a)—Description of property.                                                                         Enter a brief 
property). Also, include the cost of the following.                description of the property you elect to expense (for example, 
• Any listed property from Part V.                                 truck, office furniture, qualified improvement property, roof, 
• Any property placed in service by your spouse, even if you       etc.).
are filing a separate return. This includes qualified section 
179 real property that your spouse made the election to treat      Column (b)—Cost (business use only).                                                                        Enter the cost of 
as section 179 property for 2023.                                  the property. If you acquired the property through a trade-in, 
                                                                   do not include any carryover basis of the property traded in. 
Line 3                                                             Include only the excess of the cost of the property over the 
The amount of section 179 property for which you can make          value of the property traded in.
the election is limited to the maximum dollar amount on            Column (c)—Elected cost. Enter the amount you elect to 
line 1. This amount is reduced if the cost of all section 179      expense. You can depreciate the amount you do not 
property placed in service in 2023 is more than $2,890,000.        expense. See the line 19 and line 20 instructions.
  For a partnership, these limitations apply to the                To report your share of a section 179 expense deduction 
partnership and each partner. For an S corporation, these          from a partnership or an S corporation, enter “from 
limitations apply to the S corporation and each shareholder.       Schedule K-1 (Form 1065)” or “from Schedule K-1 (Form 
For a controlled group, all component members are treated          1120-S)” across columns (a) and (b).
as one taxpayer.
                                                                   Line 7
Line 5                                                             Enter the amount that you elected to expense for listed 
If line 5 is zero, you cannot elect to expense any section 179     property (defined earlier) on line 29 here. For more 
property. In this case, skip lines 6 through 11, enter zero on     information, see Part V—Listed Property, later.
line 12, and enter the carryover of any disallowed deduction 
from 2019 (which does not include amounts attributable to          Line 10
qualified section 179 real property) on line 13.                   The carryover of disallowed deduction from 2022 is the 
  See Special rules for qualified section 179 real property,       amount of section 179 property, if any, you elected to 
earlier.                                                           expense in previous years that was not allowed as a 
                                                                   deduction because of the business income limitation. If you 
  If you are married filing separately, you and your spouse        filed Form 4562 for 2022, enter the amount from line 13 of 
must allocate the dollar limitation for the tax year. To do so,    your 2022 Form 4562.
multiply the total limitation that you would otherwise enter on 
line 5 by 50% (0.50), unless you both elect a different            Line 11
allocation. If you both elect a different allocation, multiply the The total cost you can deduct is limited to your taxable 
total limitation by the percentage elected. The sum of the         income from the active conduct of a trade or business during 
percentages you and your spouse elect must equal 100%.             the year. You are considered to actively conduct a trade or 
  Do not enter on line 5 more than your share of the total         business only if you meaningfully participate in its 
dollar limitation.                                                 management or operations. A mere passive investor is not 
                                                                   considered to actively conduct a trade or business.
Line 6
                                                                   Note. If you have to apply another Code section that has a 
Do not include any listed property on line 6. Enter the elected    limitation based on taxable income, see Pub. 946 for rules on 
section 179 cost of listed property in column (i) of line 26.

4                                                                                         Instructions for Form 4562 (2023)

- 5 -

Page 5 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

how to apply the business income limitation for the section Certain qualified property acquired after September
179 expense deduction. 27, 2017. Certain qualified property (defined below)
acquired after September 27, 2017, and placed in service
Individuals. Enter the smaller of line 5 or the total taxable
after December 31, 2022, and before January 1, 2024 (other
income from any trade or business you actively conducted,
than property with a long production period and certain
computed without regard to any section 179 expense
aircraft), is limited to a special depreciation allowance of 80%
deduction, the deduction for one-half of self-employment
of the depreciable basis of the property. Property with a long
taxes under section 164(f), or any net operating loss
production period and certain aircraft acquired after
deduction. Also, include all wages, salaries, tips, and other
September 27, 2017, and placed in service before January 1,
compensation you earned as an employee (from Form 1040,
2024, is eligible for a special depreciation allowance of 100%
line 1). Do not reduce this amount by unreimbursed
of the depreciable basis of the property.
employee business expenses. If you are married filing a joint
return, combine the total taxable incomes for you and your The special depreciation allowance for certain qualified
spouse. property (other than certain long production period property
and certain aircraft) placed in service after December 31,
Partnerships. Enter the smaller of line 5 or the partnership's 2023, and before January 1, 2025, is limited to 60% of the
total items of income and expense, described in section depreciable basis of the property. Property with a long
702(a), from any trade or business the partnership actively production period and certain aircraft placed in service after
conducted (other than credits, tax-exempt income, the December 31, 2023, and before January 1, 2025, is limited to
section 179 expense deduction, and guaranteed payments a special depreciation allowance of 80% of the depreciable
under section 707(c)). basis of the property.
S corporations. Enter the smaller of line 5 or the Qualified property is:
corporation's total items of income and expense described in • Tangible property depreciated under MACRS with a
section 1366(a) from any trade or business the corporation recovery period of 20 years or less;
actively conducted (other than credits, tax-exempt income, • Computer software defined in and depreciated under
the section 179 expense deduction, and the deduction for section 167(f)(1);
compensation paid to the corporation's • Water utility property (see 25-year property, later); and
shareholder-employees). • Qualified film, television, and live theatrical productions, as
Corporations other than S corporations. Enter the defined in sections 181(d) and (e).
smaller of line 5 or the corporation's taxable income before Qualified property must also be placed in service before
the section 179 expense deduction, net operating loss January 1, 2027 (or before January 1, 2028, for certain
deduction, and special deductions (excluding items not property with a long production period and for certain
derived from a trade or business actively conducted by the aircraft), and can be either new property or certain used
corporation). property.
See Pub. 946 for more information. Also, see section
Line 12 168(k) and Regulations sections 1.168(k)-2 and 1.1502-68.
The limitations on lines 5 and 11 apply to the taxpayer, and Qualified reuse and recycling property. Certain
not to each separate business or activity. Therefore, if you qualified reuse and recycling property (defined below) placed
have more than one business or activity, you may allocate in service after August 31, 2008, is eligible for a 50% special
your allowable section 179 expense deduction among them. depreciation allowance.
To do so, enter “Summary” at the top of Part I of the Qualified reuse and recycling property includes any
separate Form 4562 you are completing for the total amounts machinery and equipment (not including buildings or real
from all businesses or activities. Do not complete the rest of estate), along with any appurtenance, that is used exclusively
that form. On line 12 of the Form 4562 you prepare for each to collect, distribute, or recycle qualified reuse and recyclable
separate business or activity, enter the amount allocated to materials. This includes software necessary to operate such
the business or activity from the “Summary.” No other entry is equipment. See section 168(m)(3) for more information.
required in Part I of the separate Form 4562 prepared for Qualified reuse and recycling property must also meet all
each business or activity. of the following tests.
• The property must be depreciated under MACRS.
Part II. Special Depreciation • The property must have a useful life of at least 5 years.
Allowance and Other Depreciation • You must have acquired the property by purchase after
August 31, 2008. If a binding contract to acquire the property
Line 14 existed before September 1, 2008, the property does not
qualify.
For qualified property (defined below) placed in service
during the tax year, you may be able to take an additional • The property must be placed in service after August 31,
2008.
special depreciation allowance. The special depreciation
allowance applies only for the first year the property is placed • The original use of the property must begin with you after
August 31, 2008.
in service. The allowance is an additional deduction you can
take after any section 179 expense deduction and before you • For self-constructed property, special rules apply. See
section 168(m)(2)(C).
figure regular depreciation under MACRS.
Qualified reuse and recycling property does not include
Qualified property. You can take the special depreciation rolling stock or other equipment used to transport reuse and
allowance for certain qualified property acquired after recyclable materials or any property to which section 168(g)
September 27, 2017, qualified reuse and recycling property, or (k) applies.
and certain plants bearing fruits and nuts.

Instructions for Form 4562 (2023) 5

- 6 -

Page 6 of 21         Fileid: … ions/i4562/2023/a/xml/cycle06/source                              14:09 - 8-Jan-2024

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

  Certain plants bearing fruits and nuts.     You can elect to   • Credit for employer-provided childcare facilities and 
claim an 80% special depreciation allowance for the adjusted     services.
basis of certain specified plants (defined later) bearing fruits • Basis adjustment to investment credit property under 
and nuts planted or grafted after December 31, 2022, and         section 50(c).
before January 1, 2024. For certain specified plants bearing     • Section 181 expense deduction.
fruits and nuts planted or grafted after December 31, 2023,      For additional credits and deductions that affect the 
and before January 1, 2025, the special depreciation             depreciable basis, see section 1016. Also, see Pub. 946.
allowance is limited to 60% of the adjusted basis of the 
specified plants.                                                Note. If you acquired qualified property through a like-kind 
   A specified plant is:                                         exchange or involuntary conversion after September 27, 
• Any tree or vine that bears fruits or nuts, and                2017, and the qualified property is new property, the 
• Any other plant that will have more than one yield of fruits   carryover basis and any excess basis of the acquired 
or nuts and generally has a preproductive period of more         property is eligible for the special depreciation allowance.
than 2 years from planting or grafting to the time it begins       Generally, a like-kind exchange after December 31, 2017, 
bearing fruits or nuts.                                          is an exchange of real property.
   Any property planted or grafted outside the United States       If you acquired qualified property through a like-kind 
does not qualify as a specified plant.                           exchange or involuntary conversion after September 27, 
   If you elect to claim the special depreciation allowance for  2017, and the qualified property is used property, only the 
any specified plant, the special depreciation allowance          excess basis of the acquired property is eligible for the 
applies only for the tax year in which the plant is planted or   special depreciation allowance.
grafted. The plant will not be treated as qualified property             If you take the special depreciation allowance, you 
eligible for the special depreciation allowance in the             !     must reduce the amount on which you figure your 
subsequent tax year in which it is placed in service.            CAUTION regular depreciation or amortization deduction by the 
   To make the election, attach a statement to your timely       amount deducted. Also, you will not have any AMT 
filed return (including extensions) indicating you are electing  adjustment for depreciation for the qualified property.
to apply section 168(k)(5) and identifying the specified 
plant(s) for which you are making the election. Once made,       Election out. You can elect, for any class of property, to not 
the election cannot be revoked without IRS consent.              deduct any special depreciation allowance for all such 
  Exceptions. Qualified property does not include:               property in such class placed in service during the tax year.
• Listed property used 50% or less in a qualified business         To make an election, attach a statement to your timely filed 
use (as defined in the instructions for lines 26 and 27);        return (including extensions) indicating the class of property 
• Any property required to be depreciated under the              for which you are making the election and that, for such class, 
Alternative Depreciation System (ADS) (that is, not property     you are not to claim any special depreciation allowance.
for which you elected to use ADS);                                 The election must be made separately by each person 
• Property placed in service, or planted or grafted, as          owning qualified property (for example, by the partnership, by 
applicable, and disposed of in the same tax year;                the S corporation, or for each member of a consolidated 
• Property converted from business or income-producing           group by the common parent of the group).
use to personal use in the same tax year it is acquired;           If you timely filed your return without making an election, 
• Property described in section 168(k)(9)(A) or 168(K)(9)(B);    you can still make the election by filing an amended return 
or                                                               within 6 months of the due date of the return (excluding 
• Property for which you elected not to claim any special        extensions). Enter “Filed pursuant to section 301.9100-2” on 
depreciation allowance.                                          the amended return.
   In addition, qualified second generation biofuel plant          Once made, the election cannot be revoked without IRS 
property does not include the following.                         consent.
• Any tax-exempt bond financed property under section 103.
• Any property for which a deduction was taken under             Note. If you elect to not have any special depreciation 
section 179C for certain qualified refinery property.            allowance apply, the property placed in service during the tax 
• Other bonus depreciation property to which section 168(k)      year will not be subject to an AMT adjustment for 
applies.                                                         depreciation.
   See sections 168(k) and 168(m) for additional information.    Recapture. When you dispose of property for which you 
Also, see Pub. 946.                                              claimed a special depreciation allowance, any gain on the 
How to figure the allowance.   Figure the special                disposition is generally recaptured (included in income) as 
depreciation allowance by multiplying the depreciable basis      ordinary income up to the amount of the depreciation 
of the property by the applicable percentage.                    previously allowed or allowable for the property, including the 
                                                                 special depreciation allowance. For more information, see 
   To figure the depreciable basis, subtract from the            MACRS recapture, later. If qualified GO Zone property 
business/investment portion of the cost or other basis of the    (including specified GO Zone property) ceases to be 
property any credits and deductions allocable to the property.   qualified GO Zone property, if qualified Recovery Assistance 
The following are examples of some credits and deductions        property ceases to be qualified Recovery Assistance 
that reduce the depreciable basis.                               property, if qualified cellulosic biomass ethanol plant property 
• Section 179 expense deduction.                                 ceases to be qualified cellulosic biomass ethanol plant 
• Deduction for removal of barriers to the disabled and the      property, if qualified second generation biofuel plant property 
elderly.                                                         ceases to be qualified second generation biofuel plant 
• Disabled access credit.                                        property, or if qualified disaster assistance property ceases to 
• Enhanced oil recovery credit.

6                                                                                   Instructions for Form 4562 (2023)

- 7 -

Page 7 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

be qualified disaster assistance property in any year after the 1. Computer software. Use the straight line method over
year you claim the special depreciation allowance, the excess 36 months. A longer period may apply to software leased
benefit you received from claiming the special depreciation under a lease agreement entered into after March 12, 2004,
allowance must be recaptured as ordinary income. For to a tax-exempt organization, governmental unit, or foreign
information on depreciation recapture, see Pub. 946. Also, person or entity (other than a partnership). See section 167(f)
see Notice 2008-25, 2008-9 I.R.B. 484, available at (1)(C).
IRS.gov/irb/2008-09_IRB/ar10.html, for additional guidance
If you elect the section 179 expense deduction or
on recapture of qualified GO Zone property.
take the special depreciation allowance for qualified
Line 15 CAUTION! computer software, you must reduce the amount on
which you figure your regular depreciation deduction by the
Report on this line depreciation for property that you elect to amount deducted.
depreciate under the unit-of-production method or any other
method not based on a term of years (other than the 2. Any right to receive tangible property or services under
retirement-replacement-betterment method). a contract or granted by a governmental unit (not acquired as
part of a business).
Attach a separate sheet showing:
• A description of the property and the depreciation method 3. Any interest in a patent or copyright not acquired as
you elect that excludes the property from MACRS or ACRS; part of a business.
and 4. Residential mortgage servicing rights. Use the straight
• The depreciable basis (cost or other basis reduced, if line method over 108 months.
applicable, by salvage value, any section 179 expense 5. Other intangible assets with a limited useful life that
deduction, deduction for removal of barriers to the disabled cannot be estimated with reasonable accuracy. Generally,
and the elderly, disabled access credit, enhanced oil use the straight line method over 15 years. See Regulations
recovery credit, credit for employer-provided childcare section 1.167(a)-3(b) for details and exceptions.
facilities and services, any special depreciation allowance,
and any other applicable deduction or credit). Prior years' depreciation, plus current year's
depreciation, can never exceed the depreciable basis
For additional credits and deductions that may affect the CAUTION! of the property.
depreciable basis, see section 1016. Also, see section 50(c)
to determine the basis adjustment for investment credit
property. Part III. MACRS Depreciation
The term “Modified Accelerated Cost Recovery System”
Line 16 (MACRS) includes the General Depreciation System (GDS)
Enter the total depreciation you are claiming for the following and the Alternative Depreciation System (ADS). Generally,
types of property (except listed property and property subject MACRS is used to depreciate any tangible property placed in
to a section 168(f)(1) election). service after 1986. However, MACRS does not apply to films,
• ACRS property (pre-1987 rules). See Pub. 534. videotapes, and sound recordings. For more details and
• Property placed in service before 1981. exceptions, see Pub. 946.
• Certain public utility property which does not meet certain
normalization requirements.
• Certain property acquired from related persons. Section A
• Property acquired in certain nonrecognition transactions.
• Certain sound recordings, movies, and videotapes. Line 17
• Property depreciated under the income forecast method. For tangible property placed in service in tax years beginning
The use of the income forecast method is limited to motion before 2023 and depreciated under MACRS (“MACRS
picture films, videotapes, sound recordings, copyrights, asset”), enter the deductions for the current year. To figure
books, and patents. the deductions, see the instructions for line 19, column (g).
If you take the special depreciation allowance for a
Note. If you dispose of a portion of a MACRS asset and are
! qualified film, television, or live theatrical production, required to (or elect to) take the basis of the asset into
CAUTION you must reduce the amount on which you figure your
regular depreciation deduction by the amount deducted. account, you must reduce the basis and depreciation reserve
of the MACRS asset by the basis and depreciation reserve
If you use the income forecast method for any property attributable to the disposed portion as of the first day of the
placed in service after September 13, 1995, you may owe tax year before you compute the depreciation deduction for
interest or be entitled to a refund for the 3rd and 10th tax the current year. To figure the depreciation deduction for the
years beginning after the tax year the property was placed in remaining MACRS asset and the disposed portion, see the
service. For details, see Form 8866, Interest Computation instructions for line 19, column (g). For more information, see
Under the Look-Back Method for Property Depreciated Regulations section 1.168(i)-8.
Under the Income Forecast Method.
For property placed in service in the current tax year, you Line 18
can either include certain participations and residuals in the To simplify the computation of MACRS depreciation, you can
adjusted basis of the property or deduct these amounts when elect to group assets into one or more general asset
paid. See section 167(g)(7). You cannot use this method to accounts. The assets in each general asset account are
depreciate any amortizable section 197 intangible. For more depreciated as a single asset.
details, see the instructions for section 197 intangibles, later. Each general asset account must include only assets that
• Intangible property, other than section 197 intangibles, were placed in service during the same tax year and that
including the following.

Instructions for Form 4562 (2023) 7

- 8 -

Page 8 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

have the same depreciation method, recovery period, and Generally, a like-kind exchange after December 31,
convention. However, an asset cannot be included in a ! 2017, is an exchange of real property.
general asset account if the asset is used both for personal CAUTION
purposes and business/investment purposes.
When an asset in an account is disposed of, the amount Lines 19a Through 19i
realized must generally be recognized as ordinary income. Use lines 19a through 19i only for assets placed in service
The unadjusted depreciable basis and depreciation reserve during the tax year beginning in 2023 and depreciated under
of the general asset account are not affected as a result of a GDS, except for automobiles and other listed property (which
disposition. are reported in Part V).
Special rules apply to passenger automobiles, assets Column (a)—Classification of property. Sort the property
generating foreign source income, assets converted to you acquired and placed in service during the tax year
personal use, certain asset dispositions, and like-kind beginning in 2023 according to its classification (3-year
exchanges or involuntary conversions of property in a general property, 5-year property, etc.) as shown in column (a) of
asset account. For more details, see Regulations section lines 19a through 19i. The classifications for some property
1.168(i)-1 (as in effect for tax years beginning on or after are shown below. For property not shown, see Determining
January 1, 2014). the classification, later.
To make the election, check the box on line 18. You must 3-year property includes the following.
make the election on your return filed no later than the due • A race horse that is more than 2 years old at the time.
date (including extensions) for the tax year in which the • Any horse (other than a race horse) that is more than 12
assets included in the general asset account were placed in years old at the time it is placed in service.
service. Once made, the election is irrevocable and applies • Any qualified rent-to-own property (as defined in section
to the tax year for which the election is made and all later tax 168(i)(14)).
years. 5-year property includes the following.
For more information on depreciating property in a general • Automobiles.
asset account, see Pub. 946. • Light general purpose trucks.
• Typewriters, calculators, copiers, and duplicating
Section B equipment.
• Any semi-conductor manufacturing equipment.
Property acquired in a like-kind exchange or involuntary • Any qualified technological equipment.
conversion. Generally, you must depreciate the carryover • Any section 1245 property used in connection with
basis of property you acquire in a like-kind exchange or research and experimentation.
involuntary conversion during the current tax year over the • Certain energy property specified in section 168(e)(3)(B)
remaining recovery period of the property exchanged or (vi).
involuntarily converted. Use the same depreciation method • Appliances, carpets, furniture, etc., used in a rental real
and convention that was used for the exchanged or estate activity.
involuntarily converted property. Treat any excess basis as • Any new machinery or equipment (other than any grain
newly placed in service property. Figure depreciation bin, cotton ginning asset, fence, or other land improvement)
separately for the carryover basis and the excess basis, if used in a farming business and placed in service after 2017,
any. in tax years ending after 2017. The original use of the
These rules apply only to acquired property with the same property must begin with you after 2017.
or a shorter recovery period or the same or a more 7-year property includes the following.
accelerated depreciation method than the property • Office furniture and equipment.
exchanged or involuntarily converted. For additional rules, • Railroad track.
see Regulations section 1.168(i)-6(c) and Pub. 946. • Any motorsports entertainment complex (as defined in
Election out. Instead of using the above rules, you can section 168(i)(15)).
elect, for depreciation purposes, to treat the adjusted basis of • Any natural gas gathering line (as defined in section 168(i)
the exchanged property as if it was disposed of at the time of (17)) placed in service after April 11, 2005, the original use of
the exchange or involuntary conversion. Generally, treat the which begins with you after April 11, 2005, and is not under
carryover basis and excess basis, if any, for the acquired self-construction or subject to a binding contract in existence
property as if placed in service on the date you acquired it. before April 12, 2005. Also, no AMT adjustment is required.
The depreciable basis of the new property is the adjusted • Any used agricultural machinery and equipment placed in
basis of the exchanged or involuntarily converted property service after 2017, grain bins, cotton ginning assets, or
plus any additional amount paid for it. See Regulations fences used in a farming business (but no other land
section 1.168(i)-6(i). improvements).
To make the election, figure the depreciation deduction for • Any property that does not have a class life and is not
the new property in Part III. For listed property, use Part V. otherwise classified.
Attach a statement indicating “Election made under section 10-year property includes the following.
1.168(i)-6(i)” for each property involved in the exchange or • Vessels, barges, tugs, and similar water transportation
involuntary conversion. The election must be made equipment.
separately by each person acquiring replacement property • Any single purpose agricultural or horticultural structure
(for example, by the partnership, by the S corporation, or by (see section 168(i)(13)).
the common parent of a consolidated group). The election • Any tree or vine bearing fruits or nuts.
must be made on your timely filed return (including • Any qualified smart electric meter property.
extensions). Once made, the election cannot be revoked • Any qualified smart electric grid system property.
without IRS consent.

8 Instructions for Form 4562 (2023)

- 9 -

Page 9 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

15-year property includes the following. Column (b)—Month and year placed in service. For lines
• Any municipal wastewater treatment plant. 19h and 19i, enter the month and year you placed the
• Any telephone distribution plant and comparable property in service. If you converted property held for
equipment used for 2-way exchange of voice and data personal use to use in a trade or business or for the
communications. production of income, treat the property as being placed in
• Any section 1250 property that is a retail motor fuels outlet service on the conversion date.
(whether or not food or other convenience items are sold
there). Column (c)—Basis for depreciation (business/invest-
• Initial clearing and grading land improvements for gas ment use only). To find the basis for depreciation, multiply
utility property. the cost or other basis of the property by the percentage of
• Certain electric transmission property specified in section business/investment use. From that result, subtract any
168(e)(3)(E)(v) placed in service after April 11, 2005, the credits and deductions allocable to the property. The
original use of which begins with you after April 11, 2005, and following are examples of some credits and deductions that
is not under self-construction or subject to a binding contract reduce the basis for depreciation.
in existence before April 12, 2005. • Section 179 expense deduction.
• Qualified improvement property, as defined in section • Deduction under section 179D for certain energy efficient
168(e)(6), placed in service by you after December 31, 2017. commercial building property.
20-year property includes the following. • Deduction for removal of barriers to the disabled and the
elderly.
• Farm buildings (other than single purpose agricultural or
horticultural structures). • Disabled access credit.
• Municipal sewers not classified as 25-year property. • Enhanced oil recovery credit.
• Initial clearing and grading land improvements for electric • Credit for alternative fuel vehicle refueling property.
utility transmission and distribution plants. • Credit for employer-provided childcare facilities and
services.
25-year property is water utility property, which is: • Any special depreciation allowance included on line 14.
• Property that is an integral part of the gathering, treatment, • Any basis adjustment for investment credit property. See
or commercial distribution of water that, without regard to this section 50(c).
classification, would be 20-year property; and • Any basis adjustment for advanced manufacturing
• Municipal sewers. investment credit property. See section 48D(d)(5).
This classification does not apply to property placed in
For additional credits and deductions that affect the
service under a binding contract in effect at all times since
depreciable basis, see section 1016 and Pub. 946.
June 9, 1996.
Residential rental property is a building in which 80% or Column (d)—Recovery period. Determine the recovery
more of the total rent is from dwelling units. period from the following table. See Pub. 946 for more
information on the recovery period for MACRS property.
Nonresidential real property is any real property that is
neither residential rental property nor property with a class
life of less than 27.5 years. Recovery Period for Most Property

50-year property includes any improvements necessary Classification Recovery period
to construct or improve a roadbed or right-of-way for railroad 3-year property . . . . . . . . . . . . . . . . . . . . 3 yrs.
track that qualifies as a railroad grading or tunnel bore under 5-year property . . . . . . . . . . . . . . . . . . . . 5 yrs.
section 168(e)(4). 7-year property . . . . . . . . . . . . . . . . . . . . 7 yrs.
There is no separate line to report 50-year property. 10-year property . . . . . . . . . . . . . . . . . . . 10 yrs.
Therefore, attach a statement showing the same information 15-year property . . . . . . . . . . . . . . . . . . . 15 yrs.
as required in columns (a) through (g). Include the deduction 20-year property . . . . . . . . . . . . . . . . . . . 20 yrs.
25-year property . . . . . . . . . . . . . . . . . . . 25 yrs.
in the line 22 “Total” and enter “See attachment” in the bottom Residential rental property . . . . . . . . . . . . . 27.5 yrs.
margin of the form. Nonresidential real property . . . . . . . . . . . . 39 yrs.
Determining the classification. If your depreciable Railroad gradings and tunnel bores . . . . . . . 50 yrs.
property is not listed above, determine the classification as
follows. Column (e)—Convention. The applicable convention
1. Find the property's class life. See the Table of Class determines the portion of the tax year for which depreciation
Lives and Recovery Periods in Pub. 946. is allowable during a year property is either placed in service
or disposed of. There are three types of conventions. To
2. Use the following table to find the classification in select the correct convention, you must know the type of
column (b) that corresponds to the class life of the property in property and when you placed the property in service.
column (a).
Half-year convention. This convention applies to all
(a) (b) property reported on lines 19a through 19g, unless the
Class life (in years) Classification mid-quarter convention applies. It does not apply to
(See Pub. 946.) residential rental property, nonresidential real property, and
4 or less . . . . . . . . . . . . . . . . . . . . 3-year property railroad gradings and tunnel bores. It treats all property
More than 4 but less than 10 . . . . . . . . 5-year property placed in service (or disposed of) during any tax year as
10 or more but less than 16 . . . . . . . . 7-year property placed in service (or disposed of) on the midpoint of that tax
16 or more but less than 20 . . . . . . . . 10-year property year. Enter “HY” in column (e).
20 or more but less than 25 . . . . . . . . 15-year property Mid-quarter convention. If the total depreciable bases
25 or more . . . . . . . . . . . . . . . . . . . 20-year property (before any special depreciation allowance) of MACRS
property placed in service during the last 3 months of your

Instructions for Form 4562 (2023) 9

- 10 -

Page 10 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

tax year exceed 40% of the total depreciable bases of • Water utility property, residential rental property,
MACRS property placed in service during the entire tax year, nonresidential real property, or any railroad grading or
the mid-quarter, instead of the half-year, convention generally tunnel bore. The only applicable method is the straight line
applies. method.
In determining whether the mid-quarter convention Column (g)—Depreciation deduction. To figure the
applies, do not take into account the following. depreciation deduction, you may use optional Tables A
• Property that is being depreciated under a method other through E, which begin later. Multiply column (c) by the
than MACRS. applicable rate from the appropriate table. See Pub. 946 for
• Any residential rental property, nonresidential real property, complete tables. If you disposed of the property during the
or railroad gradings and tunnel bores. current tax year, multiply the result by the applicable decimal
• Property that is placed in service and disposed of within amount from the tables in Step 3, later. Or, you may compute
the same tax year. the deduction yourself by completing the following steps.
The mid-quarter convention treats all property placed in Step 1. Determine the depreciation rate as follows.
service (or disposed of) during any quarter as placed in • If you are using the 200% or 150% declining balance
service (or disposed of) on the midpoint of that quarter. method in column (f), divide the declining balance rate (use
However, no depreciation is allowed under this convention for 2.00 for 200 DB or 1.50 for 150 DB) by the number of years in
property that is placed in service and disposed of within the the recovery period in column (d). For example, for property
same tax year. Enter “MQ” in column (e). depreciated using the 200 DB method over a recovery period
Mid-month convention. This convention applies only to of 5 years, divide 2.00 by 5 for a rate of 40%. You must switch
residential rental property (line 19h), nonresidential real to the straight line rate in the first year that the straight line
property (line 19i), and railroad gradings and tunnel bores. It rate exceeds the declining balance rate.
treats all property placed in service (or disposed of) during • If you are using the straight line method, divide 1.00 by the
any month as placed in service (or disposed of) on the remaining number of years in the recovery period as of the
midpoint of that month. Enter “MM” in column (e). beginning of the tax year (but not less than 1). For example, if
there are 6 / years remaining in the recovery period as of the 1 2
Column (f)—Method. Applicable depreciation methods are beginning of the year, divide 1.00 by 6.5 for a rate of 15.38%.
prescribed for each classification of property as follows.
Step 2. Multiply the percentage rate determined in Step 1
However, you can make an irrevocable election to use the
by the property's unrecovered basis (basis for depreciation
straight line method for all property within a classification that
(as defined in column (c)) reduced by all prior years'
is placed in service during the tax year. Enter “200 DB” for
depreciation.
200% declining balance, “150 DB” for 150% declining
balance, or “S/L” for straight line. Step 3. For property placed in service or disposed of
• 3-, 5-, 7-, and 10-year property. Generally, the applicable during the current tax year, multiply the result from Step 2 by
method is the 200% declining balance method, switching to the applicable decimal amount from the tables below (based
the straight line method in the first tax year that the straight on the convention shown in column (e)).
line rate exceeds the declining balance rate.
Half-year (HY) convention. . . . . . . . . . . . . . . . . . . . . 0.5
Note. The straight line method is the only applicable method Mid-quarter (MQ) convention
for trees and vines bearing fruits or nuts. The 150% declining
Placed in service Placed Disposed
balance method is the only applicable method for any (or disposed of) during the: in service of
qualified smart electric meter or any qualified smart electric 1st quarter . . . . . . . . . . 0.875 0.125
grid system property placed in service after October 3, 2008. 2nd quarter . . . . . . . . . 0.625 0.375
For 3-, 5-, 7-, or 10-year property eligible for the 200% 3rd quarter . . . . . . . . . . 0.375 0.625
declining balance method, you can make an irrevocable 4th quarter . . . . . . . . . . 0.125 0.875
election to use the 150% declining balance method,
switching to the straight line method in the first tax year that
the straight line rate exceeds the declining balance rate. The
election applies to all property within the classification for Mid-month (MM) convention
which it is made and that was placed in service during the tax Placed in service Placed Disposed
year. You will not have an AMT adjustment for any property (or disposed of) during the: in service of
included under this election. 1st month . . . . . . . . . . . 0.9583 0.0417
2nd month . . . . . . . . . . . 0.8750 0.1250
For 3-, 5-, 7-, or 10-year property used in a farming 3rd month . . . . . . . . . . . 0.7917 0.2083
business and placed in service after 2017, in tax years 4th month . . . . . . . . . . . 0.7083 0.2917
ending after 2017, the 150% declining balance method is no 5th month . . . . . . . . . . . 0.6250 0.3750
longer required. However, the 150% declining balance 6th month . . . . . . . . . . . 0.5417 0.4583
method will continue to apply to any 15- or 20-year property 7th month . . . . . . . . . . . 0.4583 0.5417
used in a farming business to which the straight line method 8th month . . . . . . . . . . . 0.3750 0.6250
does not apply or to property for which you elect the use of 9th month . . . . . . . . . . . 0.2917 0.7083
the 150% declining balance method. 10th month. . . . . . . . . . . 0.2083 0.7917
• 15- and 20-year property and property used in a 11th month. . . . . . . . . . . 0.1250 0.8750
farming business. The applicable method is the 150% 12th month. . . . . . . . . . . 0.0417 0.9583
declining balance method, switching to the straight line
method in the first tax year that the straight line rate exceeds
Short tax years. See Pub. 946 for rules on how to
the declining balance rate. For 3-, 5-, 7-, and 10-year
compute the depreciation deduction for property placed in
property used in a farming business and placed in service
service in a short tax year.
after 2017, see 3-, 5-, 7-, or 10-year property above.

10 Instructions for Form 4562 (2023)

- 11 -

Page 11 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

Section C Therefore, attach a statement showing the same information
required in columns (a) through (g). Include the deduction in
the line 22 “Total” and enter “See attachment” in the bottom
Lines 20a Through 20d margin of the form.
Complete lines 20a through 20d for assets, other than
automobiles and other listed property, placed in service only Column (b)—Month and year placed in service. For
during the tax year beginning in 2023 and depreciated under residential rental property and 40-year property, enter the
ADS. Report on line 17 MACRS depreciation on assets month and year placed in service or converted to use in a
placed in service in prior years. trade or business or for the production of income.
Column (c)—Basis for depreciation (business/invest-
Under ADS, use the applicable depreciation method, the
ment use only). See the instructions for line 19, column (c).
applicable recovery period, and the applicable convention to
compute depreciation. Column (d)—Recovery period. On line 20a, enter the
property's class life.
The following types of property must be depreciated under
ADS. Column (e)—Convention. Under ADS, the applicable
• Tangible property used predominantly outside the United conventions are the same as those used under GDS. See the
States. instructions for line 19, column (e).
• Tax-exempt use property. Column (g)—Depreciation deduction. Figure the
• Tax-exempt bond financed property. depreciation deduction in the same manner as under GDS,
• Imported property covered by an executive order of the except use the straight line method over the ADS recovery
President of the United States. period and use the applicable convention.
• Property used predominantly in a farming business and
placed in service during any tax year in which you made an MACRS recapture. If you later dispose of property you
election under section 263A(d)(3) to not have the uniform depreciated using MACRS, any gain on the disposition is
capitalization rules of section 263A apply. generally recaptured (included in income) as ordinary income
• Any nonresidential real property, residential rental property, up to the amount of the depreciation previously allowed or
or qualified improvement property held by an electing real allowable for the property. Depreciation, for this purpose,
property trade or business (as defined in section 163(j)(7) includes any of the following amounts taken during the 2023
(B)). tax year.
• Any property that has a recovery period of 10 years or • Any section 179 expense deduction claimed on the
more under section 168(c) that is held by an electing farming property.
business (as defined in section 163(j)(7)(C)). • Any special depreciation allowance available for the
property (unless you elected not to claim it).
Instead of depreciating property under GDS (line 19), you • Any deduction under section 179B for capital costs
can make an irrevocable election for any classification of incurred in complying with Environmental Protection Agency
property for any tax year to use ADS. For residential rental sulfur regulations.
and nonresidential real property, you can make this election
There is no recapture for residential rental and
separately for each property. You make this election by
nonresidential real property, unless that property is qualified
completing line 20 of Form 4562.
property for which you claimed a special depreciation
Column (a)—Classification of property. Use the following allowance (discussed earlier). For more information on
rules to determine the classification of the property under depreciation recapture, see Pub. 946.
ADS.
Under ADS, the depreciation deduction for most property Part IV. Summary
is based on the property's class life. See section 168(g)(3) for
special rules for determining the class life for certain property. Line 22
See Pub. 946 for information on recovery periods for ADS A partnership or S corporation does not include any section
and the Table of Class Lives and Recovery Periods. 179 expense deduction (line 12) on this line. Instead, any
Use line 20a for all property depreciated under ADS, section 179 expense deduction is passed through separately
except property that does not have a class life, residential to the partners and shareholders on the appropriate line of
rental and nonresidential real property, water utility property, their Schedules K-1.
and railroad gradings and tunnel bores. Use line 20b for
Line 23
property that does not have a class life. Use line 20c for
residential rental property. Use line 20d for nonresidential real If you are subject to the uniform capitalization rules of section
property. 263A, enter the increase in basis from costs you must
Residential rental property. The ADS recovery period capitalize. For a detailed discussion of who is subject to
for residential rental property placed in service after 2017 is these rules, which costs must be capitalized, and allocation
30 years. The ADS recovery period for residential rental of costs among activities, see Regulations section 1.263A-1.
property placed in service before January 1, 2018, is 30
Part V. Listed Property
years if the property is held by an electing real property trade
or business (as defined in section 163(j)(7)(B)) and section If you claim the standard mileage rate, actual vehicle
168(g)(1)(A), (B), (C), (D), or (E) did not apply to the property expenses (including depreciation), or depreciation on other
before January 1, 2018. Report depreciation for these assets listed property, you must provide the information requested in
on line 20c. For more information, see Pub. 946. Part V, regardless of the tax year the property was placed in
Water utility property and railroad gradings and service. However, if you file Form 2106, report this
tunnel bores. These assets are 50-year property under information on that form and not in Part V. Also, if you file
ADS. There is no separate line to report 50-year property. Schedule C (Form 1040) and are claiming the standard

Instructions for Form 4562 (2023) 11

- 12 -

Page 12 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

mileage rate or actual vehicle expenses (except For more information, including the definition of a 5%
depreciation), and you are not required to file Form 4562 for owner and related person and exceptions, see Pub. 946.
any other reason, report vehicle information in Part IV of
Listed property recapture. If you used listed property more
Schedule C and not on Form 4562.
than 50% in a qualified business use in the year you placed
Section A the property in service, and used it 50% or less in a later year,
you may have to include as income part of the depreciation,
The section 179 expense deduction should be including the special depreciation allowance, deducted in
! computed before calculating any special depreciation prior years. Use Form 4797, Sales of Business Property, to
CAUTION allowance and/or regular depreciation deduction. figure the recapture amount.
See the instructions for line 26, column (i).
Column (a)—Type of property. List on a
property-by-property basis all your listed property in the
Listed property used 50% or less in a qualified business following order.
use (as defined in the instructions for lines 26 and 27 below)
does not qualify for the section 179 expense deduction or 1. Automobiles and other vehicles.
special depreciation allowance. 2. Other listed property (computers and peripheral
equipment placed in service before 2018, etc.).
Line 25
In column (a), list the makes and models of automobiles,
If you placed in service certain qualified listed property during and give a general description of other listed property.
the tax year, you may be able to deduct the special
depreciation allowance. This property includes certain If you have more than five vehicles used 100% for
qualified property acquired after September 27, 2017, and business/investment purposes, you may group them by tax
placed in service before January 1, 2027 (before January 1, year. Otherwise, list each vehicle separately.
2028, for certain aircraft). See the instructions for line 14 for Column (b)—Date placed in service. Enter the date the
the definition of qualified property and how to figure the property was placed in service. If property held for personal
deduction. This special depreciation allowance is included in use is converted to business/investment use, treat the
the overall limit on depreciation and section 179 expense property as placed in service on the date of conversion.
deduction for passenger automobiles. See the tables for
limitations on passenger vehicles and trucks and vans, later. Column (c)—Business/investment use percentage.
Enter on line 25 your total special depreciation allowance for Enter the percentage of business/investment use. For
all qualified listed property. automobiles and other vehicles, determine this percentage
by dividing the number of miles the vehicle is driven for trade
Lines 26 and 27 or business purposes or for the production of income during
the year (not to include any commuting mileage) by the total
Use line 26 to figure depreciation for property used more than number of miles the vehicle is driven for all purposes. Treat
50% in a qualified business use. Use line 27 to figure the vehicles used by employees as being used 100% for
depreciation for property used 50% or less in a qualified business/investment purposes if the value of personal use is
business use. Also, see Limits for passenger automobiles, included in the employees' gross income, or the employees
later. reimburse the employer for the personal use. For more
If you acquired the property through a trade-in, information, see Pub. 463.
! special rules apply for determining the basis, For other listed property (such as computers placed in
CAUTION recovery period, depreciation method, and
service before 2018 or video equipment), allocate the use
convention. For more details, see Property acquired in a based on the most appropriate unit of time the property is
like-kind exchange or involuntary conversion, earlier. Also, actually used (rather than merely being available for use).
see Regulations section 1.168(i)-6(d)(3).
If during the tax year you convert property used solely for
Qualified business use. To determine whether to use personal purposes to business/investment use (or vice
line 26 or line 27 to report your listed property, you must first versa), figure the percentage of business/investment use only
determine the percentage of qualified business use for each for the number of months you use the property in your
property. Generally, a qualified business use is any use in business or for the production of income. Multiply that
your trade or business. However, it does not include any of percentage by the number of months you use the property in
the following. your business or for the production of income, and divide the
• Investment use. result by 12.
• Leasing the property to a 5% owner or related person. Column (d)—Cost or other basis. Enter the property's
• The use of the property as compensation for services actual cost (including sales tax) or other basis (unadjusted for
performed by a 5% owner or related person. prior years' depreciation). If you traded in old property, see
• The use of the property as compensation for services Property acquired in a like-kind exchange or involuntary
performed by any person (who is not a 5% owner or related conversion, earlier.
person), unless an amount is included in that person's For a vehicle, reduce your basis by any qualified electric
income for the use of the property and, if required, income vehicle credit you claimed for property placed in service
tax was withheld on that amount. before January 1, 2007, or by any alternative motor vehicle
Excluding these uses above from the numerator, credit allowed.
determine your percentage of qualified business use similar If you converted the property from personal use to
to the method used to figure the business/investment use business/investment use, your basis for depreciation is the
percentage in column (c). Your percentage of qualified smaller of the property's adjusted basis or its fair market
business use may be smaller than the business/investment value on the date of conversion.
use percentage.

12 Instructions for Form 4562 (2023)

- 13 -

Page 13 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

Column (e)—Basis for depreciation (business/invest- depreciation allowance) that is used 60% for business/
ment use only). Multiply column (d) by the percentage in investment, the limit is $7,320 ($12,200 x 60% (0.60)).
column (c). From that result, subtract any section 179 For purposes of the limits for passenger automobiles, the
expense deduction, any special depreciation allowance, any following apply.
credit for employer-provided childcare facilities and services, • Passenger automobiles are 4-wheeled vehicles
and half of any investment credit taken before 1986 (unless manufactured primarily for use on public roads that are rated
you claimed the reduced credit). For automobiles and other at 6,000 pounds unloaded gross vehicle weight or less (for a
listed property placed in service after 1985 (that is, transition truck or van, gross vehicle weight is substituted for unloaded
property), reduce the depreciable basis by the entire gross vehicle weight).
investment credit. • Electric passenger automobiles are vehicles produced by
an original equipment manufacturer and designed to run
Column (f)—Recovery period. Enter the recovery period.
primarily on electricity, placed in service after August 5, 1997,
For property placed in service after 1986 and used more than
and before January 1, 2007.
50% in a qualified business use, use the table in the
instructions for line 19, column (d). For property placed in Exception. The following vehicles are not considered
service after 1986 and used 50% or less in a qualified passenger automobiles.
business use, depreciate the property using the straight line • An ambulance, hearse, or combination ambulance-hearse
method over its ADS recovery period. The ADS recovery used in your trade or business.
period is 5 years for automobiles and computers. • A vehicle used in your trade or business of transporting
persons or property for compensation or hire.
Column (g)—Method/convention. Enter the method and • Any truck or van placed in service after July 6, 2003, that is
convention used to figure your depreciation deduction. See a qualified nonpersonal use vehicle. A truck or van is a
the instructions for line 19, columns (e) and (f). Enter “200 qualified nonpersonal use vehicle only if it has been specially
DB,” “150 DB,” or “S/L” for the depreciation method, and “HY,” modified with the result that it is not likely to be used more
“MM,” or “MQ” for half-year, mid-month, or mid-quarter than a de minimis amount for personal purposes. For
conventions, respectively. For property placed in service example, a van that has only a front bench for seating, in
before 1987, enter “PRE” if you used the prescribed which permanent shelving has been installed, that constantly
percentages under ACRS. If you elected an alternate carries merchandise or equipment, and that has been
percentage or if you are required to depreciate the property specially painted with advertising or the company's name, is
using the straight line method, enter “S/L.” a vehicle not likely to be used more than a de minimis amount
Column (h)—Depreciation deduction. See Limits for for personal purposes.
passenger automobiles, later, before entering an amount in Exception for leasehold property. The business use
column (h). requirement and the limits for passenger automobiles
generally do not apply to passenger automobiles leased or
For property used more than 50% in a qualified business
held by anyone regularly engaged in the business of leasing
use (line 26) and placed in service after 1986, figure column
passenger automobiles.
(h) by following the instructions for line 19, column (g). If
placed in service before 1987, multiply column (e) by the For a detailed discussion on passenger automobiles,
applicable percentage given in Pub. 534 for ACRS property. If including leased automobiles, see Pub. 463.
the recovery period for an automobile ended before your tax
year beginning in 2023, enter your unrecovered basis, if any, Table 1—Limits for Passenger Automobiles
in column (h). (including trucks and vans) Acquired Before
For property used 50% or less in a qualified business use September 28, 2017, and Placed in Service Before
(line 27) and placed in service after 1986, figure column (h) 2020
by dividing the amount in column (e) by the amount in column
(f). Use the same conventions as discussed in the AND the THEN the
instructions for line 19, column (e). The amount in column (h) IF you placed your number of tax years in limit on your
cannot exceed the property's unrecovered basis. If the automobile in service: which this automobile depreciation and
recovery period for an automobile ended before your tax year has been section 179 expense
beginning in 2023, enter your unrecovered basis, if any, in in service is: deduction is:
column (h). Jan. 1–Dec. 31, 2018 3 $9,600
For property placed in service before 1987 that was 4 or more $5,760
disposed of during the year, enter zero. Jan. 1–Dec. 31, 2019 3 $9,700
Limits for passenger automobiles. The depreciation 4 or more $5,760
deduction, including the section 179 expense deduction and
special depreciation allowance, for passenger automobiles is
limited. For any passenger automobile (including an electric
passenger automobile) you list on line 26 or line 27, the total
of columns (h) and (i) on line 26 or 27 and column (h) on
line 25 for that automobile cannot exceed the applicable limit
shown in Table 1, 2, 3, or 4. If the business/investment use
percentage in column (c) for the automobile is less than
100%, you must reduce the applicable limit to an amount
equal to the limit multiplied by that percentage. For example,
for an automobile (including a truck or van) placed in service
in 2023 (for which you elect not to claim any special

Instructions for Form 4562 (2023) 13

- 14 -

Page 14 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

Table 2—Limits for Passenger Automobiles Column (i)—Elected section 179 cost. Enter the amount
(including trucks and vans) Acquired After you elect to expense for section 179 property used more than
September 27, 2017, and Placed in Service Before 50% in a qualified business use (subject to the limits for
passenger automobiles). Refer to the instructions for Part I to
2024
determine if the property qualifies under section 179.
AND the You cannot elect to expense more than $28,900 of the
number of cost of any SUVs and certain other vehicles placed in service
tax years in THEN the limit on during the tax year. This rule applies to any 4-wheeled
which this your depreciation vehicle primarily designed or used to carry passengers over
IF you placed automobile has and section 179 public streets, roads, or highways, that is rated at more than
your automobile been in expense deduction
in service: service is: is: 6,000 pounds gross vehicle weight and not more than 14,000
pounds gross vehicle weight. However, the $28,900 limit
3 $9,600
Jan. 1–Dec. 31, 2018 does not apply to any vehicle:
4 or more $5,760 • Designed to seat more than nine persons behind the
3 $9,700 driver's seat;
Jan. 1–Dec. 31, 2019 • Equipped with a cargo area (either open or enclosed by a
4 or more $5,760
cap) of at least 6 feet in interior length that is not readily
3 $9,700
Jan. 1–Dec. 31, 2020 accessible directly from the passenger compartment; or
4 or more $5,760 • That has an integral enclosure fully enclosing the driver
3 $9,800 compartment and load carrying device, does not have
Jan. 1–Dec. 31, 2021 seating rearward of the driver's seat, and has no body section
4 or more $5,860
protruding more than 30 inches ahead of the leading edge of
2 $18,000
Jan. 1–Dec. 31, 2022 the windshield.
3 $10,800
Recapture of section 179 expense deduction. If you
1 $12,200*
Jan. 1–Dec. 31, 2023 used listed property more than 50% in a qualified business
2 $19,500 use in the year you placed the property in service and used it
* If you take the special depreciation allowance for qualified passenger automobiles 50% or less in a later year, you may have to recapture in the
acquired after September 27, 2017, and placed in service in 2023, the limit is $20,200. later year part of the section 179 expense deduction. Use
Form 4797 to figure the recapture amount.
Table 3—Limits for Passenger Automobiles
Section B
Placed in Service After 2003 and Before 2018
Except as noted below, you must complete lines 30 through
(excluding trucks and vans placed in service after 36 for each vehicle identified in Section A. Employees must
2002 and electric passenger automobiles placed in provide their employers with the information requested on
service before January 1, 2007) lines 30 through 36 for each automobile or vehicle provided
for their use.
AND the Exception. Employers are not required to complete lines 30
number of THEN the
IF you placed tax years in limit on your through 36 for vehicles used by employees who are not more
your automobile which this depreciation and than 5% owners or related persons and for which the
in service: automobile has section 179 expense question on line 37, 38, 39, 40, or 41 is answered “Yes.”
been in deduction is:
service is: Section C
Jan. 1, 2004–Dec. 31, 2005 4 or more $1,675 Employers providing vehicles to their employees satisfy the
Jan. 1, 2006–Dec. 31, 2011 4 or more $1,775 employer's substantiation requirements under section 274(d)
Jan. 1, 2012–Dec. 31, 2017 4 or more $1,875 by maintaining a written policy statement that:
• Prohibits personal use including commuting, or
• Prohibits personal use except for commuting.
Table 4—Limits for Trucks and Vans Placed in
Service After 2003 and Before 2018 An employee does not need to keep a separate set of
records for any vehicle that satisfies these written policy
AND the statement rules.
IF you placed number of THEN the
your truck or van tax years in limit on your For both written policy statements, there must be evidence
in service: which this truck or depreciation and that would enable the IRS to determine whether use of the
van has been in section 179 expense vehicle meets the conditions stated below.
service is: deduction is:
Line 37
Jan. 1, 2004–Dec. 31, 2008 4 or more $1,875
A policy statement that prohibits personal use (including
Jan. 1–Dec. 31, 2009 4 or more $1,775 commuting) must meet all of the following conditions.
Jan. 1, 2010–Dec. 31, 2012 4 or more $1,875 • The employer owns or leases the vehicle and provides it to
Jan. 1, 2013–Dec. 31, 2015 4 or more $1,975 one or more employees for use in the employer's trade or
Jan. 1–Dec. 31, 2016 4 or more $2,075 business.
• When the vehicle is not used in the employer's trade or
Jan. 1–Dec. 31, 2017 3 $3,450 business, it is kept on the employer's business premises,
4 or more $2,075 unless it is temporarily located elsewhere (for example, for
maintenance or because of a mechanical failure).

14 Instructions for Form 4562 (2023)

- 15 -

Page 15 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

• No employee using the vehicle lives at the employer's Line 42
business premises. Complete line 42 only for those costs you amortize for which
• No employee may use the vehicle for personal purposes, the amortization period begins during your tax year beginning
other than de minimis personal use (for example, a stop for in 2023.
lunch between two business deliveries).
• Except for de minimis use, the employer reasonably Column (a)—Description of costs. Describe the costs you
believes that no employee uses the vehicle for any personal are amortizing. You can amortize the following.
purpose. Geological and geophysical expenditures (section
167(h)). You must amortize geological and geophysical
Line 38 expenses paid or incurred in connection with the exploration
A policy statement that prohibits personal use (except for or development of oil and gas within the United States ratably
commuting) is not available if the commuting employee is an over a 24-month period, beginning on the midpoint of the tax
officer, director, or 1% or more owner. This policy must meet year in which the expenses were paid or incurred. For a major
all of the following conditions. integrated oil company (as defined in section 167(h)(5)), the
• The employer owns or leases the vehicle and provides it to costs paid or incurred after December 19, 2007, must be
one or more employees for use in the employer's trade or amortized ratably over a 7-year period (a 5-year period for
business, and it is used in the employer's trade or business. costs paid or incurred after May 17, 2006, and before
• For bona fide noncompensatory business reasons, the December 20, 2007).
employer requires the employee to commute to and/or from Pollution control facilities (section 169). You can elect
work in the vehicle. to amortize the cost of a certified pollution control facility over
• The employer establishes a written policy under which the a 60-month period (84 months for certain atmospheric
employee may not use the vehicle for personal purposes, pollution control facilities placed in service after April 11,
other than commuting or de minimis personal use (for 2005). See section 169 and the related regulations for details
example, a stop for a personal errand between a business and information required in making the election.
delivery and the employee's home). You can deduct a special depreciation allowance on
• Except for de minimis use, the employer reasonably ! a certified pollution control facility that is qualified
believes that the employee does not use the vehicle for any CAUTION property. However, you must reduce the amount on
personal purpose other than commuting. which you figure your amortization deduction by any special
• The employer accounts for the commuting use by depreciation allowance allowed or allowable, whichever is
including an appropriate amount in the employee's gross greater.
income.
Line 40 Also, a corporation must reduce its amortizable basis of a
pollution control facility by 20% before figuring the
An employer that provides more than five vehicles to its
amortization deduction.
employees who are not 5% owners or related persons need
not complete Section B for such vehicles. Instead, the Bond premium (section 171). For individuals reporting
employer must obtain the information from its employees and amortization of bond premium for taxable bonds acquired
retain the information received. before October 23, 1986, do not report the deduction here.
See the instructions for Schedule A (Form 1040), line 16.
Line 41 For taxpayers (other than corporations) claiming a
An automobile meets the requirements for qualified deduction for amortization of bond premium for taxable
demonstration use if the employer maintains a written policy bonds acquired after October 22, 1986, but before January 1,
statement that: 1988, the deduction is treated as interest expense and is
• Prohibits its use by individuals other than full-time subject to the investment interest limitations. Use Form 4952,
automobile salespersons, Investment Interest Expense Deduction, to compute the
• Prohibits its use for personal vacation trips, allowable deduction.
• Prohibits storage of personal possessions in the For taxable bonds acquired after 1987, you can elect to
automobile, and amortize the bond premium over the life of the bond. In
• Limits the total mileage outside the salesperson's normal general, you amortize bond premium on a bond by offsetting
working hours. the stated interest allocable to a tax year with the bond
premium allocable to that tax year and report the net amount
Part VI. Amortization of stated interest on your return. See section 171 and
Each year, you can deduct part of certain capital costs over a Regulations sections 1.171-1 through 1.171-5 for more
fixed period. information. Individuals, also see Pub. 550, Investment
Income and Expenses. A bond premium carryforward as of
If you amortize property, the part you amortize does
the end of a taxpayer’s final accrual period is treated as a
! not qualify for the section 179 expense deduction or deduction. See Regulations section 1.171-2(a)(4)(i)(C). For
CAUTION for depreciation.
an individual, do not report the deduction here. See the
instructions for Schedule A (Form 1040), line 16.
Attach any information the Code and regulations may
require to make a valid election. See the applicable Code Research and experimental expenditures (section
section and regulations for more information. 174). You must capitalize and amortize specified research
and experimental costs paid or incurred in tax years
beginning in 2023 ratably over a 5-year period (a 15-year
period for specified research and experimental expenditures
attributable to foreign research conducted outside the United
States, Puerto Rico, or any territory of the United States)

Instructions for Form 4562 (2023) 15

- 16 -

Page 16 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

beginning with the mid-point of the tax year in which the • A covenant not to compete entered into in connection with
expenditures were paid or incurred. This includes any the acquisition of a business.
amounts paid or incurred in connection with the development • A franchise, trademark, or trade name (including
of software. For more information, see section 174. renewals).
The cost of acquiring a lease (section 178). If you get A longer period may apply to section 197 intangibles
a lease for business property, you may recover the cost of leased under a lease agreement entered into after March 12,
acquiring the lease by amortizing it over the term of the lease. 2004, to a tax-exempt organization, governmental unit, or
The term of the lease for amortization purposes generally foreign person or entity (other than a partnership). See
includes all renewal options (and any other period for which section 197(f)(10).
you and the lessor reasonably expect the lease to be
renewed). However, renewal periods aren't included if 75% or A section 197 intangible is treated as depreciable
more of the cost of acquiring the lease is for the term of the ! property used in your trade or business. When you
lease remaining on the acquisition date (not including any CAUTION dispose of a section 197 intangible, any gain on the
period for which you may choose to renew, extend, or disposition, up to the amount of allowable amortization, is
continue the lease). See section 178. recaptured as ordinary income. If multiple section 197
Qualified forestation and reforestation costs (section intangibles are disposed of in a single transaction or a series
194). You can elect to deduct a limited amount of qualifying of related transactions, calculate the recapture as if all of the
reforestation costs paid or incurred during the tax year for section 197 intangibles were a single asset. This rule does
each qualified timber property. You can elect to amortize the not apply to section 197 intangibles disposed of for which the
qualifying costs that are not deducted currently over an adjusted basis exceeds the fair market value.
84-month period. There is no limit on the amount of your See section 197.
amortization deduction for reforestation costs paid or incurred Startup and organizational costs. You can elect to
during the tax year. amortize the following costs for setting up your business.
If you are otherwise required to file Form T (Timber), • Business startup costs (section 195).
Forest Activities Schedule, you can make the election to • Organizational costs for a corporation (section 248).
amortize qualifying reforestation costs by completing Part IV • Organizational costs for a partnership (section 709).
of the form. See the Instructions for Form T (Timber) for more For business startup and organizational costs paid or
information. incurred after September 8, 2008, you can elect to deduct a
See section 194. Partnerships and S corporations, also limited amount of startup or organizational costs for the year
see the instructions for line 44. that your business begins. You are not required to attach a
Optional write-off of certain tax preferences over the statement to make this election. Once made, the election is
period specified in section 59(e). You can elect to irrevocable. Any cost not deducted currently must be
amortize certain tax preference items over an optional period. amortized ratably over a 180-month period. The amortization
If you make this election, there is no AMT adjustment for period starts with the month you begin business operations.
these expenditures. The applicable expenditures and the See Regulations sections 1.195-1, 1.248-1, and 1.709-1.
optional recovery periods are as follows. For business startup and organizational costs paid or
• Circulation expenditures (section 173)—3 years. incurred after October 22, 2004, and before September 9,
• Intangible drilling and development costs (section 2008, you can elect to deduct a limited amount of startup and
263(c))—60 months. organizational costs for the year that your business begins. If
• Mining exploration and development costs (sections the election is made, you must attach any statement required
616(a) and 617(a))—10 years. by Regulations sections 1.195-1(b), 1.248-1(c), and
• Research and experimental expenditures paid or incurred 1.709-1(c), as in effect before September 9, 2008. Any costs
in tax years beginning before January 1, 2022 (section 174(a) not deducted currently can be amortized ratably over a
prior to amendment by section 13206(a) of P.L. 115-97)—10 180-month period, beginning with the month you begin
years. Amortization for these costs should be reported on business.
line 43.
See section 59(e). For information on making the election, Note. You can apply the provisions of Regulations sections
see Regulations section 1.59-1. 1.195-1, 1.248-1, and 1.709-1 to all expenses paid or
Certain section 197 intangibles. The following costs incurred after October 22, 2004, provided the period of
must be amortized over 15 years (180 months) starting with limitations on assessment has not expired for the year of the
the later of (a) the month the intangibles were acquired, or (b) election. Otherwise, for business startup and organizational
the month the trade or business or activity engaged in for the costs paid or incurred after October 22, 2004, and before
production of income begins. September 9, 2008, the provisions under Regulations
• Goodwill. sections 1.195-1(b), 1.248-1(c), and 1.709-1(c), as in effect
• Going concern value. before September 9, 2008, will apply.
• Workforce in place. For business startup and organizational costs paid or
• Business books and records, operating systems, or any incurred before October 23, 2004, you can elect an
other information base. amortization period of 60 months or more.
• A patent, copyright, formula, process, design, pattern, Attach any statements required by the appropriate section
know-how, format, or similar item. and related regulations to Form 4562 by the due date,
• A customer-based intangible (for example, composition of including extensions, of your return for the year in which the
market or market share). active trade or business begins. If you have both startup and
• A supplier-based intangible. organizational costs, attach a separate statement for each
• A license, permit, or other right granted by a governmental type of cost. If you timely filed your return without making the
unit. election, you can still make the election on an amended

16 Instructions for Form 4562 (2023)

- 17 -

Page 17 of 21 Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

return filed within 6 months of the due date, excluding 2. Multiplying the amount in column (c) by the percentage
extensions, of the return. Enter “Filed pursuant to section in column (e).
301.9100-2” on the amended return.
Creative property costs. These are costs paid or Line 43
incurred to acquire and develop screenplays, scripts, story If you are reporting the amortization of costs (other than
outlines, motion picture production rights to books and plays, research and experimental expenditures) that began before
and other similar properties for purposes of potential future your 2023 tax year and you are not required to file Form 4562
film development, production, and exploitation. You may be for any other reason, do not file Form 4562. Report the
able to amortize creative property costs for properties not set amortization directly on the “Other Deductions” or “Other
for production within 3 years of the first capitalized Expenses” line of your return.
transaction. These costs are amortized ratably over a 15-year
Note. The amortization deduction and research and
period under the rules of Rev. Proc. 2004-36, 2004-24 I.R.B.
experimental expenditures under former section 174(b) or the
1063.
dollar amount of research and experimental expenditures for
Column (b)—Date amortization begins. Enter the date which you elected to amortize over the 10-year period under
the amortization period begins under the applicable Code section 59(e) must be reported on line 43 of Form 4562.
section. The amortizable amount of a pollution control facility Attach a statement that shows (a) a description of the costs;
is reduced by any special depreciation allowance included on (b) the date amortization began; (c) the amortizable amount;
line 14 for that facility. (d) the applicable Code section; (e) the amortization period;
Column (c)—Amortizable amount. Enter the total amount (f) the accumulated amortization; and (g) the amortization
you are amortizing. See the applicable Code section for limits amount for this year.
on the amortizable amount.
Line 44
Column (d)—Code section. Enter the Code section under Report the total amortization, including research and
which you amortize the costs. For examples, see the Code experimental expenditures paid or incurred in 2023 and prior
sections referenced in the instructions for line 42, column (a), years and the allowable portion of forestation or reforestation
earlier. amortization, on the applicable “Other Deductions” or “Other
Column (f)—Amortization for this year. Compute the Expenses” line of your return. For partnerships and S
amortization deduction by: corporations, report the amortizable basis of any forestation
or reforestation expenses for which amortization is elected
1. Dividing the amount in column (c) by the number of
and the year in which the amortization begins as a separately
months over which the costs are to be amortized and
stated item on Schedules K and K-1 (Form 1065 or 1120-S).
multiplying the result by the number of months in the
See the instructions for Schedule K (Form 1065 or 1120-S)
amortization period included in your tax year beginning in
for more details on how to report.
2023, or

Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the
United States. You are required to give us the information. We need it to ensure that you are complying with these laws and to
allow us to figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act unless
the form displays a valid OMB control number. Books or records relating to a form or its instructions must be retained as long as
their contents may become material in the administration of any Internal Revenue law. Generally, tax returns and return
information are confidential, as required by section 6103.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden for
individual taxpayers filing this form is approved under OMB control number 1545-0074 and is included in the estimates shown
in the instructions for their individual income tax return. The estimated burden for all other taxpayers who file this form is shown
below.
Recordkeeping. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 hr., 44 min.
Learning about the law or the form. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 hr., 16 min.
Preparing and sending the form to the IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 hr., 55 min.

If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler, we would
be happy to hear from you. See the instructions for the tax return with which this form is filed.

Instructions for Form 4562 (2023) 17

- 18 -

Page 18 of 21  Fileid: … ions/i4562/2023/a/xml/cycle06/source                                       14:09 - 8-Jan-2024

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:
Ye r a              y   3 e s r a         y   5 e s r a                      y   7 e s r a          1 y   0 e s r a
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%
8                                                                            4.46%                  6.55%
9                                                                                                   6.56%
10                                                                                                  6.55%
11                                                                                                  3.28%

Table B—General Depreciation System
Method: 150% declining balance switching to straight line
Convention: Half-year
                                          If the recovery period is:
Year        5 years               7 years       10 years            12 years               15 years         20 years
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%
8                                 6.13%         8.74%               7.33%                  5.90%            4.522%
9                                               8.74%               7.33%                  5.91%            4.462%
10                                              8.74%               7.33%                  5.90%            4.461%
11                                              4.37%               7.32%                  5.91%            4.462%
12                                                                  7.33%                  5.90%            4.461%
13                                                                  3.66%                  5.91%            4.462%
14                                                                                         5.90%            4.461%
15                                                                                         5.91%            4.462%
16                                                                                         2.95%            4.461%
17                                                                                                          4.462%
18                                                                                                          4.461%
19                                                                                                          4.462%
20                                                                                                          4.461%
21                                                                                                          2.231%

       18

- 19 -

Page 19 of 21  Fileid: … ions/i4562/2023/a/xml/cycle06/source                                                                                            14:09 - 8-Jan-2024

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

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%
2–9                                 3.636%       3.636%       3.636%       3.636%       3.636%       3.636%       3.636%       3.636%       3.636%       3.636%       3.636%       3.636%
10,12,14,16,18, 20, 22, 24, 26      3.637%       3.637%       3.637%       3.637%       3.637%       3.637%       3.636%       3.636%       3.636%       3.636%       3.636%       3.636%
11,13,15,17,19,  21, 23, 25, 27     3.636%       3.636%       3.636%       3.636%       3.636%       3.636%       3.637%       3.637%       3.637%       3.637%       3.637%       3.637%
28                                  1.97%        2.273%       2.576%       2.879%       3.182%       3.485%       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
13,15,17,19, 21, 23, 25, 27, 29, 31 3.174%3.174% 3.175%3.175% 3.174%3.174% 3.175%3.175% 3.174%3.174% 3.175%3.175% 3.174%3.174% 3.175%3.175% 3.174%3.174% 3.175%3.175% 3.174%3.174% 3.175%3.175%
14,16,18, 20, 22, 24, 26, 28, 30    3.175%       3.174%       3.175%       3.174%       3.175%       3.174%       3.175%       3.174%       3.175%       3.174%       3.175%       3.174%
32                                  1.720%       1.984%       2.249%       2.513%       2.778%       3.042%       3.175%       3.174%       3.175%       3.174%       3.175%       3.174%

Table E—General Depreciation System
Method: Straight line
Convention: Mid-month
Recovery period: 39 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                                   2.461%       2.247%       2.033%       1.819%       1.605%       1.391%       1.177%       0.963%       0.749%       0.535%       0.321%       0.107%
2–39                                2.564%       2.564%       2.564%       2.564%       2.564%       2.564%       2.564%       2.564%       2.564%       2.564%       2.564%       2.564%
40                                  0.107%       0.321%       0.535%       0.749%       0.963%       1.177%       1.391%       1.605%       1.819%       2.033%       2.247%       2.461%

                                                                                                                                                                                               19

- 20 -

Page 20 of 21                                                                                                                                                                                                           Fileid: … ions/i4562/2023/a/xml/cycle06/source 14:09 - 8-Jan-2024

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

                                                                      Depreciation                                                                         Deduction

                                                                                                                                                                                                          %
                                                                      Rate or                               Table

                                                                      Recovery                                                                                      Period

                                                                               Method/                                                                                                Convention

                                                                      Basis for
                                                                                                                                                                          Depreciation

                                                                                                                                                                                      Years
                                                                               Depreciation Prior

                                                              Special                                                                                                                                                  Basis
                                                  Section 179                                    Allowance,                                                                                     and Other                   Reductions

                                                                                                                                                                                                           Use %
                                                                      Business/                                  Investment

Depreciation Worksheet (Keep for your records.)                       Cost or                                    Other                                                                                     Basis

                                                                      Date                                                                                                                                      Service
                                                                                                                           Placed in

                                                                                                                                    Description of Property

                                                20

- 21 -

Page 21 of 21           Fileid: … ions/i4562/2023/a/xml/cycle06/source                   14:09 - 8-Jan-2024

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

Index
 
                                            General asset accounts  7           Percentage of business or investment 
A                                           Income forecast method   7          use 12
Alternative Depreciation System:            Intangible property 7               Placed in service date 12
  Basis for depreciation 11                 Listed property 11                  Qualified business use  12
  Classification of property   11           Modified Accelerated Cost Recovery  Questions for employers on vehicle 
  Conventions  11                           System (MACRS)        7             use 14
  Depreciation deduction  11                Alternative Depreciation            Recapture of section 179 expense 
                                            System        11                    deduction    14
  Placed in service date 11                                                     Recovery period   13
                                            General Depreciation System     8
  Recovery period 11                                                            Section 179 expense deduction               14
                                            Involuntary conversion     8
Alternative minimum tax   3                                                     Special depreciation allowance              12
                                            Like-kind exchange     8
Amortization  15                                                                Type of property  12
                                            Other 7
  Amortizable amount   17
                                          Depreciation methods:
  Amortization deduction  17                                                   R
                                            Declining balance 10
  Amortization of costs from prior 
  year 17                                   Straight line 10                   Recapture:
  Amortization of costs in current        Depreciation tables   18 19,          Listed property 12 14, 
  year 15                                 Depreciation Worksheet    20          MACRS depreciation  11
  Applicable code section 17                                                    Section 179 expense deduction               3 14, 
  Certain bond premiums   15              E                                     Special depreciation allowance              6
  Cost of acquiring a lease    16         Election out:                        Recordkeeping  3
  Creative property costs 17                Involuntary conversion 8
  Date amortization begins     17           Like-kind exchange  8              S
  Description of costs 15                   Special depreciation allowance  6  Section 179 expense deduction                3
  Forestation and reforestation costs  16                                       Carryover of disallowed deduction             4
  Geological and geophysical              G                                     Election 3
  expenditures    15                      General Depreciation System:          Limitations:
  Optional section 59(e) write-off  16      Basis for depreciation 9            Maximum deduction       3
  Pollution control facilities 15           Classification of property 8        Sport utility vehicle (SUV)               14
  Research and experimental                 Conventions   9                     Taxable income     4
  expenditures    15                                                            Threshold cost of property                4
                                            Depreciation deduction  10
  Section 197 intangibles 16                                                    Listed property 14
                                            Determining the classification 9
  Startup and organizational costs  16                                          Recapture   3 14, 
                                            Placed in service date 9
C                                           Recovery period  9                 Special depreciation allowance               5
                                                                                Election out 6
Conventions:                              I                                     Figuring the allowance 6
  Half-year 9                                                                   Listed property 12
                                          Involuntary conversion   8
  Mid-month  10                                                                 Qualified property 5
  Mid-quarter 9                                                                 Recapture   6
                                          L
D                                         Like-kind exchange    8              U
                                          Listed property:
Definitions 1                                                                  Uniform capitalization rules              11
                                            Basis for depreciation 13
  Amortization 2                                                               Unit-of-production method                 7
                                            Convention    13
  Commuting   2
                                            Cost or other basis 12
  Depreciation 1                                                               W
  Listed property 2                         Depreciation deduction  13
                                            Information on vehicle use 14      Where to find additional 
  Listed property - Exceptions    2                                             information  1
                                            Method 13
  Section 179 property 2                                                       Who must file 1
                                            Passenger automobile limits  13
Depreciation:
                                            Definitions   13
  Accelerated Cost Recovery System 
  (ACRS)     7                              Exception     13
  Assets placed in service in prior         Leasehold property exception    13
  year 7                                    Tables    13

                                                                                                                              21

PDF file checksum: 1147662050

(Plugin #1/9.12/13.0)