Practice Quiz

Financial Planner

Category - Tax Planning

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Your client owns a company within a building he own on a piece of land that he also owns. He is concerned with deprecation issues for tax purposes. What cannot be depreciated for taxes?
  1. Property used in a trade to produce income.
  2. Property that has loss value over time.
  3. Building expenditures.
  4. Land
Explanation
Answer: D - A client that owns a company within a building he owns on a piece of land that he also owns may not use tax depreciation on land. Property depreciation is for the property used in a trade or business or held to produce income; property must lose its value over time, and property must have a determinable life of greater than one year. Property placed in service and disposed of in the same year, land, inventory, and equipment used to build capital improvements cannot be deprecated.
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