For assets to be depreciated, the IRS requires that the item in question has a definable useful life. In other words, it must wear out, deplete over time, become unusable or antiquated, or lose its value. Also worth noting, is that to qualify for depreciation, the item must have a useful life greater than 1 year.
Useful Life Standards
The IRS defines the useful life standards for many commonly owned and depreciable items.
The Useful Life Table below outlines these commonly depreciated items that have widespread applicability to businesses:
For items not specified in the above title, we recommend you consider the useful life of the item in question, and base that on comparable asset classes.
Use the above table to calculate salvage value of an asset.
When it’s time to select a depreciation method, consider enlisting the help of a CPA as depreciation can be complex, and this is merely an introduction. An experienced CPA will be able to guide you through the process, avoiding costly mistakes along the way.