Can I depreciate 50% cost of a bus. equip purchased this year, and other half next year? I know I can depreciate whole amount this year, OR use 5yr MACRS. Thx

[mp565]

I would prefer to do 50% each year. Does IRS allow that?

[Bsch4477]

No, you can’t split the depreciation that way. You can, however, take some depreciation (like 50%) under Section 179 and depreciate the rest over 5 years. 

[Mike9241]

no. you can play with section 179, bonus depreciation (168k) and regular MACRS to take as much depreciation you want the first year. however, the remaining basis would be depreciated over its useful life for tax purpose. for a 5-year asset depreciation would be over 6 years including 2025. if its listed property like a vehicle it could be even longer 

[mp565]

Thank you both for your answers.   That does clear it up some.    I guess a follow-up question would be- if I do deduct 50% in year one, it appears I have to deduct the remainder over the following 5 years.   What rate in what year would/could that be deducted?   Does it have to then be straight line.   Is there a max/min percentage for each year?   Thank you again for the help.  

[Mike9241]

these numbers will vary depending on whether the 1/2 year convention or the mid-quarter (MQ) convention is used. 

Use the MQ convention if the total depreciable
bases of MACRS property you placed in service
during the last 3 months of the tax year (excluding nonresidential
real property, residential rental property, any railroad
grading or tunnel bore, property placed in service
and disposed of in the same year, and property that is being
depreciated under a method other than MACRS) are
more than 40% of the total depreciable bases of all
MACRS property you placed in service during the entire
year.
Under this convention, you treat all property placed in
service or disposed of during any quarter of the tax year
as placed in service or disposed of at the midpoint of that
quarter. This means that, for a 12-month tax year, 11/2
months of depreciation is allowed for the quarter the property
is placed in service or disposed of.

this only applies if business use is 100% all years

so for the 1/2 year convention 

year 2 -3 40% of the remaining tax basis at the start of the year 

year 4 remaining basis divided by 2.5

year 5 - 1.5

year 6 - the remainder

example 

year 1 cost $100

year 1 depreciation $50

year 2 remaining basis $50

year 2 depreciation 40% or $20

year 3 remaining basis $30

year 3 depreciation 40% or $12

year 4 remaining basis $18

year 4 $18 divided by 2.5 or $7,2

year 5 remaining basis $10.8

year 5 $10.8 divided by 1.5 or $7,2

year 6 remaining basis $3.6

you can also look at table A-1 in IRS pub 946. note that the %s are applied to the original cost reduced by section 179