Your cost basis in real property is likely your cost when purchasing the property.
I think a radon system or fencing added to an existing business asset would likely qualify as improvements that may be capitalized. The date of the improvement which has been capitalized is the date of the purchase, or date of completion of the project or the date placed in service rather than the date of the original asset.
The improvement to a business asset may be depreciated on its own depreciation schedule which is determined when the asset is entered into the tax software.
These assets are depreciated separately from the existing business asset. Upon disposal of the business asset, the improvements need to be recorded as sold or disposed of when the business asset is recorded as sold or disposed of.
What counts as an improvement?
Amounts paid are considered an improvement if it results in at least one of the following:
- a betterment to the property
- restoration of the property
- adaptation of the property to a new or different use
Improvements that you make to a property include all direct and indirect costs of the project, including otherwise deductible repairs, that directly benefit the improvement.
See also here.
@sandrawa
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