General Rules for Depreciation
Depreciation is a deduction allowed for certain property used in your business. It is designed to offset the cost of acquiring it, so you cannot depreciate leased property. To be depreciable, the property must be the kind that wears out, decays, gets used up, becomes obsolete, or loses value from natural causes. The property must have a determinable useful life that is longer than 1 year.
If you convert personal property to business use (explained later in this chapter), the basis for purposes of depreciation is the lower of its adjusted basis (generally cost) or fair market value at the time of the conversion to business use. If you acquire replacement property in a like-kind exchange or an involuntary conversion, special rules govern basis for purposes of depreciation (see IRS Publication 946, How to Depreciate Property).
Property that can be expected to last for 1 year or less is simply deducted ...