book-1798In the tax world, the term asset can have several different meanings.

For businesses, an asset is generally a major purchase of something that will last for more than one year. In other words, equipment, machinery, vehicles, buildings.

For individuals, an asset is things such as stocks; houses, buildings and land; investments in partnerships; and personal possessions (TVs, electronics, jewelry).

The purchase of an asset by a business may be deductible. Generally a full deduction is not allowed in the year of purchase. Instead the purchase price must be deducted over a series of years, through a process called depreciation.

Individuals generally don’t get to take depreciation deductions unless the purchase relates to a rental property the person owns.

Remember, you can find definitions of dozens of tax terms on the Glossary page of this website.