Depreciation
The most frequently asked tax questions related to Depreciation
Depreciation - 3 year property
Asked Tuesday, October 03, 2000 by an anonymous userCPA Answer:
MACRS 3 year property includes race horses over 2 years old when placed in service, non-race horses more than 12 years old when placed in service,
qualified rent to own property,
special tools used in the manufacture of plastic products or rubber products, or motor vehicles. .
qualified rent to own property,
special tools used in the manufacture of plastic products or rubber products, or motor vehicles. .
Depreciation - 10 year property
Asked Tuesday, October 03, 2000 by an anonymous userCPA Answer:
Most tangible, depreciable property placed in service after 1986 is called MACRS property. MACRS 10-year property includes vessels, barges, tugs and similar water transportation equipment, any tree or vine bearing fruit or nuts, and single purpose agricultural or horticultural structures.
Depreciation - 7 year property
Asked Tuesday, October 03, 2000 by an anonymous userCPA Answer:
MACRS 7 year property includes office furniture and fixtures such as desks, files, safes, cellular phones, fax machines and any property that does not have a class life and not classified by the IRS.
Depreciation - listed property
Asked Tuesday, October 03, 2000 by an anonymous userCPA Answer:
Equipment that is used for personal and business purposes is called "listed property".
Listed property includes automobiles (weighing 6,000 lbs. or less), cellular telephones, computers and peripheral equipment,
property used for entertainment, recreation or amusement, such as boats, airplanes, and photographic, sound or video recording equipment.
There are certain limitations associated with listed property. Listed property deductions are reportable on IRS Form 4562, part 5.
Listed property includes automobiles (weighing 6,000 lbs. or less), cellular telephones, computers and peripheral equipment,
property used for entertainment, recreation or amusement, such as boats, airplanes, and photographic, sound or video recording equipment.
There are certain limitations associated with listed property. Listed property deductions are reportable on IRS Form 4562, part 5.
179 expense election - less than 50% use
Asked Tuesday, October 03, 2000 by an anonymous userCPA Answer:
A section 179 expense can only be elected on property used 50% or more in a trade or business.
Amortization
Asked Tuesday, October 03, 2000 by an anonymous userCPA Answer:
Amortization is similar to the straight line method of depreciation in that an annual deduction is allowed to recover certain costs over a fixed period of time.
Examples of amortizable items are costs of starting a business, goodwill, customer lists, franchise fees, licenses, trademarks and certain other intangibles, reforestation and pollution control facilities. Amortization is reportable on IRS Form 4562.
Examples of amortizable items are costs of starting a business, goodwill, customer lists, franchise fees, licenses, trademarks and certain other intangibles, reforestation and pollution control facilities. Amortization is reportable on IRS Form 4562.
Depreciation - definition
Asked Tuesday, October 03, 2000 by an anonymous userCPA Answer:
Depreciation is the annual deduction allowed to recover the cost or other basis of business or investment property having a useful life of more than one year. Land is not depreciable.
Depreciation and amortization deductions are reported on IRS Form 4562.
Depreciation - rental improvements
Asked Tuesday, October 03, 2000 by an anonymous userCPA Answer:
For a rental property with a class life of 27.5, the roof (improvement) would also use 27.5 as the recovery period. For a non-residential commercial building treated as 39 years MACRS property, the roof would also use 39 years.
Additions and improvements to a property are depreciated under MACRS in the same way as the deduction for the property would be figured if the property had been put in service at the same time as the addition or improvement.
Additions and improvements to a property are depreciated under MACRS in the same way as the deduction for the property would be figured if the property had been put in service at the same time as the addition or improvement.
Depreciation - rental property life
Asked Tuesday, October 03, 2000 by an anonymous userCPA Answer:
For rental property placed in service after December 31, 1986 the
depreciation cost is recovered over 27.5 years.
Only the cost of the structure is allowed as a depreciation deduction; the value of land cannot be depreciated.
If the property is used for commercial purposes, it must be depreciated over 39 years.
Only the cost of the structure is allowed as a depreciation deduction; the value of land cannot be depreciated.
If the property is used for commercial purposes, it must be depreciated over 39 years.