Can You Depreciate Value of New Air Compressor Given to You & Transferred to Business Use?

tobby

If I purchased a new air compressor for businesses purposes then I would be able to depreciate the cost.

If a parent purchased a new air compressor for me and I then transfer that personal asset to my business then can I then still depreciate the cost of the air compressor even though I did not initially pay for it?

Its 99.9% for business use. The other 0.1% would be for occasionally inflating tires on two vehicles. One vehicle is used for business and personal use, with the standard mileage deduction taken for business miles. The other vehicle is almost entirely used for personal use, with a few trips used for business, although we do deduct anything for those business miles.

kiarab

Hello tobby,

According to the IRS: "Business property. If you hold the gift as business property, your basis for figuring any depreciation, depletion, or amortization deduction is the same as the donor's adjusted basis plus or minus any required adjustments to basis while you hold the property."

So the basis for the gifted asset would be your parents' adjusted basis for the asset. Usually, this is the cost of the asset plus some adjustments (like if you had made improvements to the asset or claimed some sort of credit for it). You can review the Adjusted Basis section in the link provided, but if your parents just bought it and immediately gave it to you, there are probably little to no adjustments to the cost basis.

As for business percentage, you can enter 99.9% as the amount of business use it had. You can try and calculate the business use beyond that, but it will likely have a minimal affect and you will need to keep records of how you came to figure out the percentage.

https://www.irs.gov/publications/p551#en_US_202512_publink1000257004