Question

explain the concepts of basis and adjusted basis and cost recovery; depreciation, amortization, and depletion. Discuss the use of IRS Form 4562, Depreciation and Amorization.

Answer 1

Depreciation, depletion, and amortization are ways an asset's cost is recovered. Adjusted basis is basis that is reduced for cost recovery deductions. • Annual cost recovery deductions provide tax savings and reduce the effective. after-tax cost of an asset. The shorter an asset's recovery period, the lower the.

Use Form 4562 to: Claim your deduction for depreciation and amortization. Make the election under section 179 to expense certain property. Provide information on the business/investment use of automobiles and other listed property.