Thanks for your insight. I can understand why depracation can go down a certain amount (second hand resale market value demonstrated that etc) but going all the way to zero? like even beyond scrap value (for a ship)? It seems that its not uncommon for people to be able to deduct things that far while still demonstrably making income with them elsewhere on the books.
For example a residential property depracated entirely for 1/27.5 its value every year for 27.5 years, but still being rented out after that period. Presumably it can no longer be deducted from tax, but the accounting idea is that the house has degraded to being worthless but is demonstrably not?
The way I think about that part (which is valid) is:
What would I do if someone tasked me to sit down and try to write a universally applicable tax code that closed that "loophole" without introducing a bunch of other waste/complexity/cost of compliance?
I'd probably wrestle with it a while and then say "screw it; let it go to zero; we're going to recapture it upon sale anyway, so given the projected/hopeful lifespan of the government versus the taxpayer, it doesn't really matter; we'll eventually get our money."
For example a residential property depracated entirely for 1/27.5 its value every year for 27.5 years, but still being rented out after that period. Presumably it can no longer be deducted from tax, but the accounting idea is that the house has degraded to being worthless but is demonstrably not?