Special depreciation input and elections in Lacerte

For more depreciation resources, check out our Tax topics page for Schedule C where you'll find answers to the most commonly asked questions.

Table of contents:

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 Lacerte are coming soon.

What is special depreciation (also called bonus depreciation) and how is it calculated?

The program automatically computes a special depreciation allowance for property placed in service during the year when the asset has MACRS depreciation method of 20 years or less. See Form 4562 instructions for Line 14 for more information.

To override this, use the Special depreciation allowance: 1=yes, 2=no[O] field in the Depreciation input screen.

• For qualified improvement property (QIP) of 39 years placed in service before January 1, 2018 enter 1 to calculate special depreciation allowance.
• Enter a 2 to shut off the allowance if the property does not qualify. Enter a 1 to force the program to compute the allowance on other property

Detailed information can be found here, IRS Pub. 946

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Special Depreciation State Considerations:

The program automatically calculates states that do not follow Federal special depreciation. To override the state special depreciation, enter an amount or -1 for none, in Current Special Depreciation (State Column). For states with prior special depreciation, enter an amount, or -1 for none, in Prior Special Depreciation Allowance (State Column).

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To include an asset not included by default:

1. Go to the Depreciation screen:
   • Screen 22 (Individual)
   • Screen 14 (Partnership)
   • Screen 21 (Corporate)
   • Screen 16 (S Corporate)
   • Screen 27 (Fiduciary)
2. Select the Asset being expensed.
3. Scroll down to the Federal Depreciation section.
4. Locate the General subsection.
5. Enter a 1 in, Special Depreciation Allowance: 1= yes, 2= no [O].

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To suppress special depreciation of an asset:

1. Go to the Depreciation screen:
   • Screen 22 (Individual)
   • Screen 14 (Partnership)
   • Screen 21 (Corporate)
   • Screen 16 (S Corporate)
   • Screen 27 (Fiduciary)
2. Select the Asset being expensed.
3. Scroll down to the Federal Depreciation section.
4. Locate the General subsection.
5. Enter a 2 in, Special Depreciation Allowance: 1= yes, 2= no [O].

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To override the amount expensed for special depreciation:

1. Go to the Depreciation screen:
   • Screen 22 (Individual)
   • Screen 14 (Partnership)
   • Screen 21 (Corporate)
   • Screen 16 (S Corporate)
   • Screen 27 (Fiduciary)
2. Select the Asset being expensed.
3. Scroll down to the Federal Depreciation section.
4. Locate the Regular Depreciation subsection.
5. Enter the amount in, Current Special Depreciation Allowance (-1 if none) [O].

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To enter prior year special depreciation:

1. Go to the Depreciation screen:
   • Screen 22 (Individual)
   • Screen 14 (Partnership)
   • Screen 21 (Corporate)
   • Screen 16 (S Corporate)
   • Screen 27 (Fiduciary)
2. Select the Asset being expensed.
3. Scroll down to the Federal Depreciation section.
4. Enter the amount in, Prior Special Depreciation Allowance.

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To elect not to claim additional special depreciation:

1. Go to the Elections screen.
   • Screen 46 (Individual)
   • Screen 33 (Partnership)
   • Screen 41 (Corporate)
   • Screen 38 (S Corporate)
   • Screen 50 (Fiduciary)
2. Select Election 1 or select Add from the left navigation panel.
3. Locate the Election to Not Claim Additional Depreciation Deduction section.
4. Enter a 1 or 2 in, Elect to not claim additional depreciation: 1= Sec. 1400N(d)(2), 2= Sec. 168(k)(7).

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