Depreciation 101: Special Depreciation and the de minimis Election

To encourage business investment, Congress created Special Depreciation as a way for businesses to obtain an immediate tax break for purchasing long-lived assets.

This video tells you what does and what does not qualify for Special Depreciation and shows how Special Depreciation is reported on Form 4562 and the tax return.

The video also goes over the de minimis election, which allows business to deduct as an expense the cost of any asset with a price tag of up to $2,500.

2024 UPDATE: As stated in the video, the Special Depreciation Percentage for 2024is 60%. The remaining 40% may be taken as a Section 179 Deduction or depreciated using ordinary MACRS.

0:00 Introduction
0:50 Why Special Depreciation?
1:42 What is Special Depreciation?
3:25 How does Special Depreciation work?
4:30 The de minimis Election
5:24 Conclusion

Additional Information and Resources:

Image Sources:

Wikimedia Commons (CC-SA 2.0 - 4.0)
Kenneth C. Zirkel
Joshua Doubek

NOTE: Any 2022 tax forms represented in this video have yet to be released by the IRS, and may differ from the forms that will ultimately be released. The 2022 tax forms as depicted are expected to be very similar to their 2021 counterparts.

Intro Music: "Bluesy Vibes" - Doug Maxwell - YouTube Audio Library

Outro Music: "Modern Attempt" - Track Tribe via YouTube Audio Library

DISCLAIMER: This video is for educational and informational purposes only. It is not intended to render tax advice or investment advice for individual situations. If you have questions regarding your particular situation, please consult with a qualified tax or investment professional.

The information in this video is current as of date of publication, and is subject to changes.

[TheTaxGeek]

2024 UPDATE: As stated in the video, the Special Depreciation Percentage for 2024 is 60% The remaining 40% may be taken as a Section 179 Deduction or depreciated using ordinary MACRS.

[nosheetrader]

I feel blessed that I found you to increase my tax knowledge.

[AhamedIqbal]

Excellent video, very clear and right to the important points

[anthonyminniti]

Great explanation. Very well done, I actually understood it! Haha

[nosheetrader]

You mentioned watching part 1 before watching and learning from this video lesson. I suggest you put the link to that lesson in the description or somewhere for easy access. Thanks.

[victoriakurtz]

Thanks for the info! Question: Can a photographer write off their camera (100% business use) in full under the "supplies" category (line 22) in schedule C? Instead of depreciating the asset?

[camberos]

Can you deduct something that was purchased 5 years ago but not put in service until current year?

[gracyellenm]

Your videos are great!! Thanks for sharing. Still, something I don't understand is: is a business allowed to choose what method they wanna use it? For example, if a business by equipment, they can choose straight line or accelerated method, or is the IRS that decide that?

[orrd]

I'm confused about the part where he says that bonus/special depreciation can't be used for appliances in rental properties. It can and is often used for appliances in rental properties and that's allowed for items that have a depreciable time period of under 20 years, which appliances do. I believe that part of the video was incorrect.