The annual IRS depreciation deduction for the industrial property is; $40,375.
IRS depreciation deduction
The amount of depreciation deduction is equal in each year over the serviceable life of the property. On this note, it follows that the formula is given by:
- Straight line depreciation each year = (Cost of the asset - Salvage value)/Serviceable lifetime
Hence, the depreciation deduction in each year is;
- Depreciation = ($475,000 × 0.85)/10
- Depreciation = $40,375.
Remarks: The serviceable lifetime of the property is 10 years and the value of the property is; $475,000.
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