Submitted By: someone
Answered: January 16, 2019 8:52 pm

I converted some personal items to business use in my home office. What is the basis of these items for depreciation?

The basis for depreciation is the lower of the adjusted basis of the property (usually cost) or its fair market value on the date it starts to be used for business. For equipment (e.g., a computer, furniture), typically this means fair market value; usually the value of these items decline over time below what they cost. For the portion of the home used for an office, basis is usually the allocable part of the adjusted basis of the home (cost plus capital improvements), assuming the home’s value is more as is typically the case.

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Tax Glossary

Private letter ruling

A written determination issued to a taxpayer by the IRS that interprets and applies the tax laws to the taxpayer’s specific set of facts. A letter ruling advises the taxpayer regarding the tax treatment that can be expected from the IRS in the circumstances specified by the ruling. It may not be used or cited as precedent by another taxpayer.

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