Depreciation is one of the most complicated or convoluted of all government laws. In all the years of our lives, we can almost count as many changes to this aspect of deduction. What I am going to suggest to all of my readers is to let it go till the end of the year or divide their asset purchases by seven years for internal purposes temporarily until your accountant gets around to doing your work, let the accountant decide upon this:
1) leaving the seven years alone, because during any year it can be reduced.
2) writing off the whole asset using the rule of Section 179, presently $108,000 for property, $25,000 for SUVs, $2,960 for cars.
3) using the MACRS rules—let your accountant do it, but usually equals a larger amount in the first years of the asset life and smaller as years pass.
Remember: You have the last say as to what the years life an asset can be depreciated. For example: If you buy big things and smash them against a wall to test their crash capabilities, then the life of those assets are only a few hours. IRS cannot deny you if you can prove your point.
Copyright © Michael G Thomas CPA.