While standard inventory tracking can be an arduous task without the proper solutions, depreciation calculations can be very difficult to keep in line with fixed asset accounting. Around tax season, improperly tracking the depreciation of assets could result in lost opportunities for breaks from the Internal Revenue Service.
The IRS allows companies to deduct the cost of owned properties in small portions over a set period of time. The agency notes that the full amount can never be deducted in one given year, but the full amount can often be recovered in deductions over a longer period of time under the section 179 deduction – though only up to a certain limit.
To meet the guidelines of the depreciation deduction, the items in question must be owned by the filer, have a projected lifespan of more than one year, be fixed assets, used to make income and have a clear timeframe of use.
This task can be made easy with the proper fixed asset accounting solution, used in conjunction with tax depreciation schedules. With these various forms of software, a manager can know he or she is getting the most possible money back from the IRS for the property they possess.