The cost of disposing of a Unit of Property (UOP) or component of a UOP must be depreciated if the cost was incurred due to an improvement. If the cost was incurred due to a repair, the disposal cost can be currently deducted.
Taxpayers can write-off the adjusted basis of the UOP or component that was disposed of. In order to do so, however, you must actually know the adjusted basis of the UOP or component, meaning you need to have a cost segregation study performed or you must have replaced that property at some earlier point.
See also Partial Dispositions and Classifying Expenses as Repairs vs. Improvements for more information.
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