CFP

AAA

Depreciation And Cost-Recovery Concepts - Expensing Policy

Expensing Policy Capital Expenditures versus Repairs:

Repairs:
A business repair generally does not prolong the life or add value to the property, and it typically maintains the property in its normal operating state. For these reasons it is deductible as a business expense.

Capital Expenditures:
The expense is not deductible as a business expense, but instead the cost is capitalized and depreciated over the property's useful life.

Capital Expenditures include:

  1. Adds value to the property
  2. Substantially prolongs the useful life of the property
  3. General plans of improving, altering or renovating the property

Business Use Versus Personal Use:
- If business use of the listed asset is greater than 50%, then the owner may use the statutory percentages for depreciation.
- If business use of the listed asset is equal or less than 50%, then the owner must use straight line depreciation.

Section 179 Deduction
comments powered by Disqus
Related Articles
  1. Six Things Bad Financial Advisors Do
    Investing Basics

    Six Things Bad Financial Advisors Do

  2. Fee-Only Financial Advisers: What You ...
    Investing Basics

    Fee-Only Financial Advisers: What You ...

  3. It Is Not Too Late To Hedge Against ...
    Stock Analysis

    It Is Not Too Late To Hedge Against ...

  4. Another Sound Lesson In Risk Management
    Investing News

    Another Sound Lesson In Risk Management

  5. 10 Characteristics of Successful Entrepreneurs
    Entrepreneurship

    10 Characteristics of Successful Entrepreneurs

Trading Center