depreciation of used asset – GAAP vs Tax

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  • February 20, 2017 at 12:30 pm #1493238
    ForgottenOne
    Participant

    To my understanding, if you buy a used depreciable asset, on your book, you could look at its current condition and estimate its useful life, salvage value and use a depreciation method and go from there.

    What about for tax purpose?
    Assuming Straight Line method is being used, if a new 7 yrs life $7000 asset is sold after 5 years of usage for $1000, how would the buyer treat and depreciate this used asset for tax purpose? continue the 6th and 7th year for $500 per year OR start from the beginning to year 1 $143, year 2 $143 etc…..

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