You need to be alert. Tax law allows you to deduct depreciation, but the law turns your depreciation deduction into a snake in the grass that can bite you when you least expect it. This article will help you keep the snakes out of your tax life and help increase your profits.
These days, depreciation is simply the allocation of the cost of the asset over a statutory period of time. The business car, for example, has a five-year statutory life. IRS publications give you percentages to deduct each year.
But simple this is not. If you sell the car for more than its basis, you have ordinary income treatment on the portion of the profit attributable to depreciation. If you fail to claim the depreciation, the law takes ... Log in to view full article.