Depreciation: Part 1

Depreciation is an important tax writeoff used when acquiring new equipment. For our example in this series, we are going to use a lease written for $100,000 worth of computers and software for 5 years.

The first way to depreciate is the book value method. This method allows for equal depreciation each year, in this case 1/5 of the value new, or $20,000. This means a 20k writeoff each year for the 5 years of the lease. This is the simplest method but not the most common.

Next we will look at 179 and then the MACRS.