I am in a similar situation. I installed a fence on land that I lease for grass/cattle (reported on Schedule E as passive income). I thought that I qualified for a Section 179 deduction (take 100% depreciation). However, Pub 946 and 225 have an exception:
Generally, you cannot claim a section 179 deduction based on the cost of property you lease to
someone else. This rule does not apply to corporations. IRS Pub 946
Since I lease the land out and am not a corporation, my fence does not qualify for special depreciation. I will end up depreciating over 7 years and report on Form 4562, Part III MACRS.
Am I missing anything?
