Class 2c Business Deductions Depreciation & Amortization

Class 2c Business Deductions Depreciation &...

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Taxation of the Business  Entity Online Lecture Series Cost Recovery Depreciation Presented by Akore Berliner, CPA
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Cost Recovery • Not all expenditures are immediately deductible – Assets that have a benefit of more than 1 year  are  capitalized ” instead  • Costs are deducted over a long timer period (greater than 1  year) Capitalized Assets may be subject to Cost  Recovery via: – Depreciation :   tangible assets – Amortization :   intangible assets – Depletion :   natural resources
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Key Terms Realty   •Real Estate property – Personalty   •personal property • Personalty is defined as any asset that is not realty – Personalty includes furniture, machinery, equipment, and many  other types of assets Personalty  should not be confused with  personal use  property – Personal use property is any property (realty or personalty) that  is held for personal  use NOT IN BUSINESS • Write-offs are not allowed for personal use assets
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Cost Recovery Decreases Basis • Basis in an asset is reduced by the amount of  cost recovery that is  allowed  and   by not less than  the  allowable  amount – Allowed cost recovery is cost recovery actually taken – Allowable cost recovery is amount that could have  been taken under the applicable cost recovery method – Example: Purchase a $100,000 asset. At the end of 3 
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This note was uploaded on 08/11/2011 for the course ACCT 103 taught by Professor Huxhold during the Spring '11 term at San Diego.

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Class 2c Business Deductions Depreciation &...

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