What amount gets depreciated?

All the costs required to make an asset usable to a company are included in an asset's basis (the full cost of placing a fixed asset in service, used to calculate depreciation expense). You must enter the basis for each asset for which you calculate depreciation. To determine basis, add up all the costs to place this asset in service. Include:

• Asset cost
• Sales tax
• Shipping and delivery
• Installation charges
• Other incidental costs without which the asset would not be of service to your business

If you use the asset for both business and personal purposes, you will need to identify what portion is used for business purposes in order to determine basis.

You should check with your accountant if you make improvements or additions to an asset after its original purchase. Substantial changes can change the asset's basis.

If you acquired property by gift, or converted personal property to business use, other rules apply. Check with your accountant.