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Scenario $1$: Demolition Costs & Land Improvements

A company demolishes an old building on a property purchased for $$600,000($land: $$400,000,$ building: $$200,000).$

Demolition costs: $$35,000$

New landscaping and fencing are added to the property for $$20,000.$

A new building will be constructed on the property in the future.

Analyze:

How are the demolition costs of the old building treated for tax purposes?

Are the landscaping and fencing costs depreciable? If so$,$ over what timeframe?

How does the allocation of the purchase price between land and building impact future cost recovery?

Scenario $2$: Switching Depreciation Methods

Equipment purchased for $$100,000$ with an estimated $10-$year useful life.

Initial depreciation method: $200\%$ Declining Balance

After $4$ years, the company wants to switch to Straight$-$Line depreciation for the remainder of the asset's life.

Calculate:

Accumulated depreciation at the time of the switch.

Depreciation deduction with the straight$-$line method going forward.

Requirements$/$justifications for switching depreciation methods?