Starting Your Business

What Are Business Assets

Business assets include property used in the conduct of a trade or business, such as business machinery and office furniture. The assets can be tangible or intangible.

Basis of Assets. Your cost or purchase price of property is usually its basis for figuring gain or loss from its sale or other disposition. However, if you got the property by gift, inheritance, or in some way other than buying it, you must use a basis other than its cost.

Adjusted basis. The adjusted basis of your property is your original cost or other basis plus certain additions, and minus certain deductions such as depreciation and casualty losses.

Depreciation.  Depreciation is a loss in the value of property over the time the property is being used. Events that can cause property to depreciate include wear and tear, age, deterioration, and obsolescence. You can get back your cost of certain property by taking deductions for depreciation. This includes equipment you use in your business or for the production of income.

Sale or Other Disposition of Assets.  A sale is a transfer of property for money or a mortgage, note, or other promise to pay money. An exchange is a transfer of property for other property or services.

Ordinary or Capital Gain or Loss for Business Property

Forms to file. When you dispose of property, you will usually have to file one or
more of the following forms:

Schedule D (Form 1040), Capital Gains and Losses.
Form 4797, Sales of Business Property.
Form 8824, Like-Kind Exchanges.