Special depreciation input and elections in ProConnect Tax

In this article you'll find information about the special depreciation allowance (SDA), how Intuit ProConnect calculates special depreciation, and where to enter the SDA and related elections.

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What's new for tax year 2025

The One Big Beautiful Bill brings many changes to Section 179 and Special Deprecation Allowance. Here are some of the key updates:

• Qualified production property placed in service after July 4, 2025, the construction of which began after January 19, 2025, may be eligible for a 100% special depreciation allowance.
• Section 179 deduction dollar limits have been increased, including the amount for SUV's.
• For certain qualified property placed in service before January 20, 2025, a phase-down of the special depreciation allowance is in place.
• Certain qualified property placed in service after January 19, 2025 may be eligible for 100% special depreciation allowance or you can elect to take 40%.
• Domestic research and experimental expenditures may be amortized over either a 60 month, or 10-year period. Different periods apply for foreign research.

For full details, review the 4562 instructions.

Instructions for entering this in ProConnect Tax are coming soon.

What is special depreciation?

Generally, you can take a special depreciation allowance to recover part of the cost of qualified property placed in service during the tax year.

The allowance applies only for the first year you place the property in service. For qualified property placed in service in 2017 or newer, you may be able to take an additional special depreciation allowance, depending on the date you acquired the qualified property.

See IRS Pub. 946 for a full definition, additional details, and restrictions.

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How is special depreciation calculated in ProConnect Tax?

ProConnect Tax automatically calculates the additional first-year special depreciation for qualified assets. Your property is qualified if it's one of the following:

• Qualified reuse and recycling property.
• Qualified second generation biofuel plant property.
• Certain qualified property acquired before September 28, 2017.
• Certain qualified property acquired after September 27, 2017.
• Certain plants bearing fruits and nuts.

The program expenses depreciated assets in this order:

• Basis (reduced by ownership percentage)
• Less section 179 expense
• Special depreciation allowance (50% or 100% based on date placed in service)
• Regular depreciation

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How does special depreciation affect state returns?

ProConnect Tax automatically calculates state differences for states that don't conform to the federal special depreciation rules.

To override state special depreciation, enter an amount in the Current Special Depreciation field in the state column.

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Where to enter prior special depreciation:

1. Go to Input Return.
2. Open the Depreciation input.
   • For a 1040 return: on the left-side menu, select Deductions and then Depreciation.
   • For a 1041 return: on the left-side menu, select Deductions and then Depreciation.
   • For a 1120 return: on the left-side menu, select Deductions and then Depreciation.
   • For a 1120S return: on the left-side menu, select Ordinary Income and then Depreciation (4562).
   • For a 1065 return: on the left-side menu, select Ordinary Income and then Depreciation (4562).
   • For a 990 return: on the left-side menu, select Expenses and then Depreciation.
3. Enter any prior SDA in the Quick Entry table under Prior Special Depreciation Allowance.

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How to enter enter special depreciation items and elections:

Follow these steps to calculate special depreciation for an asset excluded by default:

1. Go to the Depreciation screen.
2. Select Details on the asset.
3. Locate the General subsection.
4. Enter a 1 in Special depreciation allowance: 1=yes, 2=no [Override].

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Follow these steps to suppress special depreciation on an asset:

1. Go to the Depreciation screen.
2. Select Details on the asset.
3. Locate the General subsection.
4. Enter a 2 in Special depreciation allowance: 1=yes, 2=no [Override], or select the checkbox by the field Elected out of SDA for this property (completing election statement required).
   • Use the former if the asset doesn't qualify for special depreciation, or the latter if the property qualifies but you're electing not to take the deduction.

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Follow these steps to override the amount of current special depreciation on an asset:

1. Go to the Depreciation screen.
2. Select Details on the asset.
3. Scroll to the Regular Depreciation subsection.
4. Enter the amount in Current special depreciation allowance (-1=none) [Override].

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Follow these steps to enter prior-year special depreciation:

1. Go to the Depreciation screen.
2. Select Details on the asset.
3. Scroll to the Regular Depreciation subsection.
4. Enter the amount in Prior special depreciation allowance.

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Follow these steps to elect not to claim additional special depreciation:

1. Go to Input Return ⮕ Other ⮕  Elections.
2. Locate the Election to Not Claim Additional Depreciation Deduction section.
3. Enter a 1 or 2 in Elect not to claim additional depreciation: 1=Section 1400N(d)(2), 2=Section 168(k)(7).

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Follow these steps to suppress special depreciation on all assets:

1. Go to the Depreciation screen.
2. Click the blue Misc./Sec. 179 [O] link at the top right of the screen.
3. Locate the Miscellaneous Override section.
4. Mark the checkbox Elect out of SDA (bonus) for all eligible asset classes and automatically generate the election statement.

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