Numerous businesses need fences, whether it is a day care center keeping its young charges from charging off into danger or a garden center protecting its prized petunias from the hands of exuberant passersby.
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Choose 15 years as the useful life of the fence as dictated by the Internal Revenue Service as the useful life for improvements added to the land under the General Depreciation System. Make a separate record if your assessment of your fence's lifespan differs significantly, and keep the information for nontax purposes.
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Identify the date that you first put the fence into service. Choose either the midmonth or midquarter convention to account for the first and last years the fence is in service.
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Determine the cost of the fence. Include the price you paid for the fence, as well as items such as the cost to survey the land to place the fence and installation fees. Use the fair market value of the fence instead of the cost if you are converting it from personal to business use.
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Calculate the expected sale value of the fence at the end of its useful life, the salvage value.
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Subtract the salvage value from the total cost of the fence. Divide that figure by the useful life of the fence to determine the amount of annual depreciation for your fence. Adjust your values for the first and last years in accordance with the midmonth or midquarter convention.
The Drip Cap
- Fences are practical additions to property that help some businesses to thrive; however, fences lose value and function as they age.
- Make a separate record if your assessment of your fence's lifespan differs significantly, and keep the information for nontax purposes.
- Identify the date that you first put the fence into service.