Reviewed and updated October 16, 2026
Rules and decisions to review
- Track cost, fees included in basis, purchase date and when the asset is ready and available for its intended use.
- Separate depreciable equipment and buildings from land, inventory, repairs and personal expenses.
- Section 179 and special depreciation allowances have different qualification rules and limitations. Federal law changes and state conformity can produce different deductions.
- Business-use changes or a later sale can create recapture or other tax adjustments. Keep the asset schedule after the purchase year.
A practical example
A machine purchased in December but not ready for use until the following year may have a different depreciation start year than the invoice suggests. Financing the machine also does not make each loan principal payment a separate deduction.
Records to gather
Gather purchase invoices, financing details, installation records, business-use percentages, prior depreciation schedules and disposition documents.
Your next step
Maintain an asset register that follows each item from acquisition through sale or disposal. Review available elections, state treatment and expected future income before deciding which eligible deduction approach to use.
Official sources
This guide provides general information. The rules depend on the tax year, jurisdiction and your circumstances. Ask our team which filing or planning steps apply to you.
