Qualified Reuse and Recycling Property

Unless you elect out, you must take a 50% special depreciation allowance for qualified reuse and recycling property. Qualified reuse and recycling property is any machinery or equipment (not including buildings or real estate), along with any appurtenance, that is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials (as defined in section 168(m)(3)(B) of the Internal Revenue Code). Qualified reuse and recycling property also includes software necessary to operate such equipment. The property must meet the following requirements.

• The property must be depreciated under MACRS.

• The property must have a useful life of at least 5 years.

• The original use of the property must begin with you after August 31, 2008.

• You must have acquired the property by purchase (as discussed under Property Acquired by Purchase in chapter 2) after August 31, 2008, with no binding written contract for the acquisition in effect before September 1, 2008.

• The property must be placed in service for use in your trade or business after August 31, 2008.

Excepted Property

Qualified reuse and recycling property does not include any of the following.

• Any rolling stock or other equipment used to transport reuse or recyclable materials.

• Property required to be depreciated using the Alternative Depreciation System (ADS). For other property required to be depreciated using ADS, see Required use of ADS under Which Depreciation System (GDS or ADS) Applies? in chapter 4.

• Other bonus depreciation property to which section 168(k) of the Internal Revenue Code applies.

• Property for which you elected not to claim any special depreciation allowance (discussed later).

• Property placed in service and disposed of in the same tax year.

• Property converted from business use to personal use in the same tax year acquired. Property converted from personal use to business use in the same or later tax year may be qualified reuse and recycling property.