Depreciation, Amortization, and Depletion (L4) Flashcards
1
Q
What CAN be Depreciated?
A
2
Q
What CANNOT be Depreciated?
A
3
Q
What can NEVER be Depreciated?
A
4
Q
Cost Recovery
A
4
Q
Depreciation
A
- Annual income tax deduction that allows you to recover the cost or other basis of certain property over time you use the property
- Depreciation BEGINS when you place the depreciable property in service for use in your trade or business OR for production of income
- Depreciation ENDS when the taxpayer has FULLY RECOVERED his cost or other basis or when the taxpayer retires the property from services (whatever happens first)
5
Q
Straight Line Method
A
6
Q
Accelerated Cost Recovery System (ACRS)
A
Based on Recovery Periods, NOT useful life
7
Q
Modified Accelerated Cost Recovery System (MACRS)
A
8
Q
MACRS Depreciation Methods
A
200% declining balance method over a GDS recovery period (Non-Farm Property)
150% declining balance method over a GDS recovery period (All Farm Property, EXCEPT Real Property)
Straight Line Method over a GDS recovery period
Straight Line Method over a ADS recovery period
9
Q
Method of Deprecation MACRS (Example)
A
10
Q
Election to Expense Assets - SECTION 179
A
11
Q
Intangible Assets
A
- Goodwill
- Trademarks
- Covenants not to compete
- Copyrights and patents used in trade or business
12
Q
2 Depletion Methods
A
