How to Find Salvage Value
Salvage value is the estimated value that a particular asset will be worth at the end of its useful life. It is a commonly used term for determining depreciation expense for an asset. It is also used in the IRS tax code to determine deductions. There are many ways to find salvage value. In the end, your argument for choosing one value over the other will need to withstand any test from the IRS. Higher depreciation equals lower net income which equals a lower tax bill. The IRS knows this. They also know that salvage value is one way companies can manipulate depreciation expense.
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Instructions
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Determine the current fair market value of the asset. Salvage value can mean different things for different people. For one person the useful life of a car is until it breaks down. To another, the useful life is 3 years. The salvage value will likely be higher for the latter.
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Request a quote from at least three brokers that deal in the asset. Brokers connect buyers and sellers, and they make money from making the deal. Look for brokers in trade associations or in your local newspaper. Ask your professional network for referrals.
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Look in sales publications for that asset. Kelly Blue Book is a great place for cars. eBay and other auction websites are also good for obtaining current fair market values for assets that are not commonly traded.
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Hire an appraiser. If the asset value is more than $10,000 you might want to hire an appraiser. Ask your friends and family for referrals. Be sure to exclude fees from the value of the asset.
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