Chapter 7 Depreciation Calculations
Depreciation is the periodic write-off of capital assets. According to the federal rules:
Depreciation is the annual deduction that allows you to recover the cost or other basis of your business or investment property over a certain number of years. Depreciation starts when you first use the property in your business or for the production of income. It ends when you either take the property out of service, deduct all your depreciable cost or basis, or no longer use the property in your business or for the production of income.21
When a business invests in long-term, or fixed assets (defined as assets with value exceeding one tax year and used in a trade or business), they are placed on the balance sheet as ...
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