ABSTRACT
Basis is an extremely complicated subject, as you saw in the breakdown of business entities. Because depreciation wears down on the basis, the number after you subtract depreciation is book value. Repairs and maintenance for your equipment are deductible expenses that have no impact on basis. But if you send your computer tower in for repairs, and you get substantially more memory and other upgrades that made it better rather than just restoring it to a usable state, you’d have to treat that cost as a capital improvement. Capital improvements then make for an adjusted basis. A vast majority of equipment you’ll use is five-year property, furniture and fixtures get seven years if you’re going to buy them for an office or convention gear. Since it’s doubtful that most game developers are going to use fruit-bearing trees or race horses in making a game, we’re going to stick with five turns when discussing equipment.
