However, you cannot exclude the portion of the gain equal to depreciation allowed or allowable for periods after May 6, 1997. Report the amount of exclusion you qualify for on the line directly below the line on which you report the gain. Only property used in a trade or business or to produce income can be depreciated. Additionally, the property must be something that wears out or becomes obsolete and it must have a determinable useful life substantially beyond the tax year. The kinds of property that can be depreciated include machinery, equipment, buildings, vehicles, and furniture.
Depreciation is a very complex subject.
I if the business had taxable income at least as great as the section 179 deduction claimed. I purchased a computer last year to do online day trading part-time from home for additional income. This would include depreciation on the portion of your computer used for investment purposes, and the portion of your internet access charges used for investment purposes. You cannot claim section 179 expensing of the computer since it is not a business asset. I purchased a computer to support my job related activities.