Originally Posted by actaktmdt:
Tom - I also have a depr question. This doesnt concern my 2010 taxes but just looking ahead for the next few years. i want to make sure i understand this correctly. Let's say i have a couch (prior to opening my business in Jan 2010) that i placed a FMV of $100 on for 2010. My T/S% is 25%. So now my business basis for the couch would be $25.00. I will use the 7year 200%DB depreciation method so $25 x 14.29% (year 1) = $3.57 I am allowed to depreciate in 2010. Ok this is where i am confused a bit. I assume my FMV is locked in at $100 for the life of the couch and because i used the 7year 200%DB method, i'm locked into that as well. However, i know my t/s % is likely to change from year to year. If my t/s% changes to 30% in year 2, is the depr calculated by using a new business basis? i.e. 100 FMV x 30% = $30 business basis x 24.49% (year 2) = $7.35 depreciable in year 2011?
The $100 number will always stay the same. If your t/s% changes then this will affect the business basis. Your answer for year 2 is correct! Great work!