Depreciation And Cost-Recovery Concepts - Expensing Policy

Expensing Policy Capital Expenditures versus 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
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