Depreciation and Asset Tracking

Determine the correct tax treatment for business assets: immediate expensing vs. capitalization and depreciation. Track each asset's basis, method, and accumulated depreciation.

The core question: expense or capitalize?

When you buy something for your business, the tax treatment depends on two factors:

1. Cost — Is it above or below $2,500?
2. Useful life — Will it last more than one year?

If the answer to both is "above $2,500" and "more than one year," you generally must capitalize the asset and depreciate it over time. But there are several ways to accelerate or fully expense the cost in year one.

Decision tree