Tax Concepts

Depreciation

Depreciation is the process of deducting the cost of certain business or investment property over time rather than all at once.

Quick answer

Depreciation is the process of deducting the cost of certain business or investment property over time rather than all at once.

It matters because long-lived assets often cannot be fully deducted in the year they are purchased unless a special rule applies.

A business buying equipment may recover the cost over several years through depreciation.

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Plain-English Definition

What Depreciation means

Depreciation is the process of deducting the cost of certain business or investment property over time rather than all at once.

Why it matters It matters because long-lived assets often cannot be fully deducted in the year they are purchased unless a special rule applies.
Simple example A business buying equipment may recover the cost over several years through depreciation.
Related Questions

Questions people ask about Depreciation

What does Depreciation mean?

Depreciation is the process of deducting the cost of certain business or investment property over time rather than all at once.

Why does Depreciation matter?

It matters because long-lived assets often cannot be fully deducted in the year they are purchased unless a special rule applies.

What is a simple example of Depreciation?

A business buying equipment may recover the cost over several years through depreciation.

When should I ask a CPA about Depreciation?

Ask a CPA when the term affects your tax bill, estimated payments, deductions, or a planning move before year end.

How is Depreciation different from Amortization?

Depreciation means Depreciation is the process of deducting the cost of certain business or investment property over time rather than all at once. Amortization means Amortization is the gradual write-off of certain intangible costs or the scheduled repayment pattern of some debts, depending on context. The difference is that they apply to different tax, accounting, or business situations and should not be treated as interchangeable.

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