Depreciation
Chapter 6 of my Part 2 study notes — depreciation methods, Sec. 179 and bonus depreciation, amortization, depletion, and recapture on sale. The outline is as I wrote it in 2022–2023; every dollar figure and changed rule has been brought current to 2026 and tagged.
What changed since the exam
| Bonus depreciation | 100% and permanent for property acquired after January 19, 2025 (One Big Beautiful Bill Act). The 80/60/40/20 phase-down I studied now applies only to property acquired on or before that date. |
| Section 179 | $2,560,000 limit and $4,090,000 phase-out for 2026 ($2.5M / $4M for 2025) — up from $1,080,000 / $2,700,000. SUV cap $32,000. |
| Auto caps | 2026: $12,300 / $19,800 / $11,900 / $7,160 ($20,300 first year with bonus). |
| Research costs | Domestic R&E is deductible again for tax years beginning after 2024 (new Sec. 174A), with a catch-up for 2022–2024 amounts. |
| Qualified production property | New Sec. 168(n): 100% expensing for new U.S. manufacturing buildings started after January 19, 2025 and placed in service by 2030. |
| Sec. 179D | Energy-efficient commercial building deduction ends for construction beginning after June 30, 2026. |
| Unchanged | MACRS classes and conventions, Sec. 197 (15 years), start-up costs ($5,000 / $50,000), depletion, and all of Secs. 1231 / 1245 / 1250. |
MACRS, ADS, conventions, listed property, auto limits
Expensing limits, bonus depreciation, qualified production property
Sec. 197 intangibles, start-up costs, research costs
Cost and percentage depletion
Sections 1231, 1245, 1250
Problems from my depreciation worksheet
One-liners from the chapter and the practice questions
Sources used for the update
- Rev. Proc. 2025-32 — 2026 inflation adjustments (Sec. 179 limits, SUV cap, capital gain thresholds)
- Rev. Proc. 2026-15 — 2026 passenger automobile depreciation limits and lease inclusion amounts
- P.L. 119-21, One Big Beautiful Bill Act (July 4, 2025) — Secs. 168(k), 168(n), 174A, 179, 179D
- IRS Publication 946, How to Depreciate Property; Publication 535 (depletion rates, Sec. 613)
Private reference, not client advice. Original notes written 2022–2023 while studying for the SEE Part 2; figures updated October 2026 (Rev. Proc. 2025-32, Rev. Proc. 2026-15, P.L. 119-21). Verify current-year amounts before relying on them.