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Per IRS Publication 946 How to Depreciate Property, starting on page 22:

When Must You Recapture the Deduction?

You may have to recapture the section 179 deduction if, in any year during the property's recovery period, the percentage of business use drops to 50% or less. In the year the business use drops to 50% or less, you include the recapture amount as ordinary income in Part IV of Form 4797. You also increase the basis of the property by the recapture amount. Recovery periods for property are discussed under Which Recovery Period Applies? in chapter 4.

CAUTION! If you sell, exchange, or otherwise dispose of the property, do not figure the recapture amount under the rules explained in this discussion. Instead, use the rules for recapturing depreciation explained in chapter 3 of Pub. 544 under Section 1245 Property. For qualified real property, see Notice 2013-59 for determining the portion of the gain that is attributable to section 1245 property upon the sale or other disposition of qualified real property. You can find Notice 2013-59 at IRS.gov/irb/2013-40_IRB/ar14.html.

CAUTION! If the property is listed property (described in chapter 5), do not figure the recapture amount under the rules explained in this discussion when the percentage of business use drops to 50% or less. Instead, use the rules for recapturing excess depreciation in chapter 5 under What Is the Business-Use Requirement.

To figure the amount to recapture:

  1. From within your TaxAct return (Online or Desktop), click Federal, then click Income. Desktop users, click Basic Info, then click Income. On smaller devices, click in the upper left-hand corner, click Federal, then click Income.
  2. Click Review on the "Other gains or losses:" row, then click + Add Form 4797 to create a new copy of the form or click Edit to review a form already created.
  3. On the screen titled Asset Sale - Assets Sold, click No.
  4. On the screen titled Form 4797 - Other Topics, click Yes.
  5. On the second screen titled Form 4797 - Other Topics, check Check here to enter recapture amounts under sections 179 and 280F(b)(2) when business use drops to 50% or less, click Continue, then enter the amounts in the applicable fields.
  6. Continue with the interview process to enter all of the appropriate information.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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