Depreciation/Amortization is an annual income tax deduction that allows you to recover the cost or other basis of certain property over the time you use the property. It is an allowance for the wear and tear, deterioration, or obsolescence of the property.

Which Properties Can Be Depreciated

You can depreciate most types of tangible property (except land), such as buildings, machinery, vehicles, furniture, and equipment.

Which Properties Can Be Amortized

You can amortize certain intangible property, such as patents, copyrights, capitalized research and experimental expenses, computer software, and purchased goodwill. Start up and organizational expenses to the extent incurred before business began operations are also amortized.

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