Introduction

If you buy or make improvements to farm property, such as machinery, equipment, livestock, or a structure with a useful life of more than a year, you generally cannot deduct its entire cost in 1 year. Instead, you must spread the cost over the time you use the property and deduct part of it each year. For most types of property, this is called depreciation.

This chapter gives information on depreciation methods that generally apply to property placed in service after 1986. For information on depreciating pre-1987 property, see Pub. 534, Depreciating Property Placed in Service Before 1987.

Topics This chapter discusses:

• Overview of depreciation

• Section 179 expense deduction

• Special depreciation allowance

• Modified Accelerated Cost Recovery System (MACRS)

• Listed property

• Basic information on cost depletion (including timber depletion) and percentage depletion

• Amortization of the costs of going into business, reforestation costs, the costs of pollution control facilities, and the costs of section 197 intangibles

Useful Items You may want to see:

Publication

463

534

544

551

946

463 Travel, Gift, and Car Expenses

534 Depreciating Property Placed in Service Before 1987

544 Sales and Other Dispositions of Assets

551 Basis of Assets

946 How To Depreciate Property

Form (and Instructions)

T (Timber), Forest Activities Schedule

3115 Application for Change in Accounting Method

4562 Depreciation and Amortization

4797 Sales of Business Property

See How To Get Tax Help for information about getting publications and forms.

It is important to keep good records for property you depreciate. Do not file

records of the depreciated property. They will help you verify the accuracy of the depreciation of assets placed in service in the current and previous tax years. For general information on recordkeeping, see Pub. 583, Starting a

38 Chapter 7 Depreciation, Depletion, and Amortization Publication 225 (2025)

Business and Keeping Records. For specific information on keeping records for section 179 property and listed property, see Pub. 946.