Identify the difference between real depreciation and income tax depreciation.

Identification should include

• the concept of depreciation and asset valuation (e.g., when deciding to buy new vs. used farm equipment)
• differentiation between depreciation of assets for value and tax purposes.

Process/Skill Questions:

• How would a farm owner construct a plan to depreciate farm assets for tax purposes?
• Why would a farm owner depreciate farm assets?
• What types of property can be depreciated for tax purposes?