Problem:
My company bought a new factory building last tax filing year (in 2004) for $10,000,000. Due to computer crashes, hurricanes and a string of ill-begotten issues, we are just now finalizing that year's accounting and tax entries, as well as this year's (2005). We are fortunate to have the necessary federal extensions.
What would be your advice as far as depreciation and cost recovery? What do these concepts mean and how do they compare to amortization and depletion?
Considering that the building was purchased in 2004, what would be the cost recovery deduction for the year 2005? Would anything change if the current tax filing year was 2006?
Would there be differences when considering the accounting perspective, and when considering the tax perspective? Compare and contrast this.