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Income Tax > Tax > Depreciation Deductible Depreciation Expenses - Tax Deduction Equipments and tools wear out in the day to day activities of your business. Depreciation is a deduction allowed for certain property used in your business. Depreciation is designed to offset the cost of acquiring the property or the tool.
Depreciation is an allowance for a portion of the cost of equipment or other properties owned by you and used in your business. The depreciation is claimed over the life of the property. To be depreciable, the property must be the kind that wears out, decays, get used up, became obsolete, or loses value from natural causes.
Accelerated depreciation is when a greater amount of the depreciation is claimed in the early years of ownership.
Amortization is an allowance for the cost of certain capital expenditures, such as goodwill and trademarks, acquired in the purchase of a business. Amortization can be claimed if it is specifically allowed by the tax law. Amortization is also allowed as an election for some types of expenditures that would otherwise not be deductible.
Depletion is a deduction allowed for certain natural resources. The tax law carefully controls the limits of this deduction.
You claim depreciation beginning with the year in which the property is placed in service. The length of the recovery period has nothing to do with how durable a particular item may be. Different types of assets are assigned to different recovery periods. As an example, recovery period under ADS is as follows: for cars, computers, light-duty trucks: 5 years; for furniture and fixtures: 10 years; personal property with no class life: 12 years; and real estate: 40 years.
Additional Links:
Deductible Repair & Maint.
Deductible Intangibles
Deductible Car Expense
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