Question

For which of the following business properties may depreciation deductions be claimed?
A “Section 197 intangibles”
B Land
C Mineral deposits
D Property converted from personal use to business use

Answer 1

Explanation on certain key words :

Depreciation: Decrease in the value of an asset over time due to wear and tear

Depletion: depletion is a term used for a natural resource by drilling, quarrying, mining, etc

Amortization: It is term used for intangible assets such as know-how , patents, goodwill, etc

Answer

option A , C , and D

Reasoning

For Option A - Intangible assets acquired in connection to business would entitle for claiming amortization i.e. depreciation.

For Option B - Asset must have a determinable life period to claim depreciation , since land does not have life , land is not eligible for depreciation deduction.

For Option C - By  cost depletion method the depletion would be allowed to mineral deposits but to claim the depletion the owner of asset should have economic interest and legal to extract the minerals and cost depletion would be allowed only if there is activity of production and sale and providing income to tax payer

For Option D : Depreciation would be allowed as allowed as deduction from the date of recognition in business books