Depreciation is treated as a cost category in tax calculations. It is not a “cash cost” because no actual disbursement of cash takes place; depreciation is simply an entry in the books. But for tax purposes depreciation has a “cash consequence”: it reduces the actual tax liability of a...
A homeowner purchases a home for $400,000 which has a 30 year useful life. The homeowner can claim a depreciation expense of $13,333 every year for tax purposes. Legal Terms Similar to Depreciation Amortization: A process of spreading the cost of an intangible asset over its useful periods....
2. (Accounting & Book-keeping) accounting a modified amount permitted for purposes of tax deduction 3. the act or an instance of depreciating or belittling; disparagement 4. (Economics) a decrease in the exchange value of currency against gold or other currencies brought about by excess supply...
For tax purposes, businesses are generally required to use the MACRS depreciation method. It’s an accelerated method for calculating depreciation because it allows larger depreciation write-offs in the early years of the asset’s useful life....
Average lateral hydraulic conductivity for material in the screened interval of the test well is 216 feet per day. Specific yield of the material at water-table depth is about 0.10. Anisotropy, or ratio of lateral hydraulic conductivity to vertical hydraulic conductivity, is between 1 and 5 for...
An asset is property you acquire to help produce income for your business. For tax purposes, there are six general categories of non-real estate assets. Each has a designated number of years over which assets in that category can be depreciated. Here are the most common ones: three-year pr...
The total amount of depreciation that has been recorded for an asset since its date of acquisition. For example, a computer with a 5-year estimated life that was purchased for $2,000 would have accumulated depreciation of $800 [($2,000/5) × 2] and a book value of $1,200 ($2,000...
Section 179 lets business owners deduct a set dollar amount of new business assets for tax purposes, and bonus depreciation lets them deduct a percentage of the cost. Typically, both tax benefits can be used together, though you’ll often find businesses utilize bonus depreciation once they have...
Businesses also use depreciation fortaxpurposes—namely, to reduce their total taxable income and, thus, reduce their tax liability. Under U.S. tax law, a business can take adeductionfor the cost of an asset, thereby reducing their taxable income. But, in most cases, the cost of the asset...
Depreciation recapture is the gain realized by selling depreciable capital property reported as ordinary income for tax purposes.