#depreciation
Methods and strategies for depreciating fixed assets including straight-line, MACRS, and accelerated depreciation
Residential rentals depreciate over 27.5 years, commercial over 39 — claim the IRS straight-line deduction yearly, then plan for 25% recapture at sale.
Work that betters, restores, or adapts a unit of property is an IRS improvement you capitalize — everything else is a deductible repair.
IRS recovery periods set your tax deduction; book lives track real wear. Keep both schedules, revise prospectively, fix old errors via Form 3115.
Self-hosting beats LLM APIs past ~$20K/mo in API spend, then the cluster becomes a 5-year asset with Section 179 or bonus depreciation.
Depreciation shrinks the QBI behind your 20% Section 199A deduction, then returns as up to 25% recapture at sale — time both against your holding period.
Book profit and IRS taxable income differ by design — meals at 50%, fines at zero, MACRS timing gaps. Reconcile both before setting estimated payments.
A contra account offsets its parent without erasing it: accumulated depreciation, allowance for doubtful accounts, and sales returns show gross and net.
Price each rental off replacement cost — about 1/20 per day — capitalize the fleet under Section 179 or bonus depreciation, and track utilization per item.
The IRS gas guzzler tax charges $1,000 to $7,700 per new car under 22.5 mpg — baked into your sticker price, and non-depreciable for business cars.
Raised bison breeding stock carries zero IRS basis but still earns Section 1231 treatment at culling; purchased animals depreciate over five years.
Bid drainage tile by the foot: 30-foot spacing doubles footage per acre versus 60-foot. Price the outlet separately, and use Section 179 on the plow.
GPU rental income is Schedule C business income: deduct metered electricity, expense the card under 100% bonus depreciation, and pay quarterly estimates.
