Deductions taken for depreciation or cost recovery on business or income-producing property reduce the adjusted basis of the property.

Question

Quizplus · Accepted Answer

Depreciation and cost recovery deductions are subtracted from the original cost or basis of income-producing property. Over time, these deductions reduce the adjusted basis of the property, which affects the amount of gain or loss when the property is sold or disposed of.

Deductions Taken for Depreciation or Cost Recovery on Business or Income-Producing