Per Diem Rates from the U.S. General Services Administration
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Rates are set by fiscal year, effective October 1 each year. Find current rates in the continental United States ("CONUS Rates").
Property that May and May Not be Depreciated
For property to be depreciable...
- You must own the property (not lease it).
- It must be used in a trade or business or in an income-producing activity.
- It must have a determinable useful life. For example, land and antiques don't wear out and therefore, they have no determinable useful life (they may last forever). Consequently, they're not depreciable.
- Exception: An antique actually used in the business may be depreciated because of wear and tear even though it may not have a determinable use life. If you can show an asset is subject to exhaustion, ware and tear or obsolescence the asset may be depreciated; useful life is irrelevant.
Patents and Copyrights
You may depreciate patents and copyrights using the straight-line method of depreciation only if they are not classified as section 197 intangibles (assets acquired in connection with the purchase of a business). Section 197 intangibles must be amortized over 15 years.
Example:
You acquired a patent that is not a section 197 intangible asset. It has a remaining useful life of 10 years. It cost you $10,000.
You may depreciate the patent over 10 years using the straight-line method. Your annual depreciation is $1,000 ($10,000/10).
- If the patent was purchased in connection with the purchase of a business it would be classified as a section 197 intangible. In this case, you must amortize its cost over 15 years. Your annual amortization would be $667 ($10,000/15)
- The useful life of patents is the lesser of:
- The life granted by the government, or
- The remaining life when acquired
- If a patent or copyright becomes worthless in any year, all remaining undepreciated cost may be depreciated in that year.
Property that May Not be Depreciated
Certain types of property must be amortized rather than depreciated. Other types of property may neither be depreciated nor amortized.
You Must Amortize Section 197 Intangibles:
Items that may not be depreciated:
- Trademarks and trade names may not be depreciated unless:
- They were acquired as part of the purchase of a business they would be classified as section 197 intangibles and their cost may be amortized over 15 years.
- Property purchased and sold in the same year:
- You must hold property purchased for your business more than one year to claim depreciation on such property.
- To be depreciable, the property intended for use in your business must be both ready and available for use in the year purchased.
- Land may never be depreciated
- Antiques are generally not depreciable since they have no determinable useful life.
- However, an antique actually used in the business may be depreciated because it will be subject to wear and tear. For example, an antique desk or a musical instrument used by a professional musician.