Yes, you can certainly choose to depreciate the engine.
Yes, it should fall in the “Tools, Machinery, Equipment and
Furniture” category. And it would fall
in the “General purpose tools, machinery and equipment category”.
For 2016 you are allowed to take bonus 50%
depreciation. There is also an argument
for you to expense the amount as a repair.
BUT, if your aim is to have a consistent expense write off
over the next number of years, then you may want to decide against either of
these options and opt for regular depreciation with no bonus depreciation.
