Introduction

This chapter discusses the general rules for depreciating property. It is divided into seven major sections.

• Depreciation Defined. This section defines depreciation. It also defines the two types of property -- tangible and intangible -- and discusses real property and personal property.
• Who Can Claim Depreciation. This section identifies those who can claim depreciation and provides examples.
• What Can Be Depreciated. This section discusses what types of tangible and intangible property you can depreciate. It also discusses how you can depreciate partial business-use property. Finally, it discusses depreciation of land preparation costs, repairs and replacements, durable containers, cooperative apartments, and other special situations.
• What Cannot Be Depreciated. This section discusses the different kinds of property that cannot be depreciated. It specifically addresses the treatment of property placed in service and disposed of in the same year, inventory, leased property, term interests in property, and more.
• When Depreciation Begins and Ends. This section discusses when property is considered placed in service, when the basis of property is fully recovered, and when property is retired from service.
• How To Claim Depreciation. This section discusses when to use Form 4562, Depreciation and Amortization. It also contains a table that outlines the purpose of each part of Form 4562.
• Incorrect Amount of Depreciation Deducted. This section discusses what to do when you deducted the incorrect amount of depreciation. It covers amending your return and changing your method of accounting.

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