Which statement about land depreciation is true?

• A. Land depreciates on a straight-line basis
• B. Land is fully depreciated after 10 years
• C. Land never depreciates
• D. Land depreciation is deductible for tax purposes

Answer: (C)

Depreciation is used for assets that wear out or become obsolete over a finite period. Land doesn’t wear out in that way; it’s considered to have an indefinite useful life. Because of that, land itself isn’t depreciable. In practice, you allocate the purchase price between land and the buildings or improvements, and only the buildings/improvements are depreciated over their expected lives for tax and accounting purposes. That’s why the statement that land never depreciates is true. The other options don’t fit: depreciation isn’t applied to land on a straight-line basis, there isn’t a fixed period after which land is “fully depreciated,” and tax deductions come from depreciating the non-land components (buildings and improvements), not the land itself.