Final answer:
The answer is True. Land improvements are generally not eligible for cost recovery as land itself does not depreciate.
Step-by-step explanation:
The answer to the question is True.
Land improvements are generally not eligible for cost recovery. Cost recovery refers to the process of recouping the expenses incurred for an asset over its useful life through deductions or depreciation. While land itself is not depreciable, improvements made to the land, such as buildings or landscaping, can be depreciated. However, land improvements are typically depreciated over a longer period of time compared to other assets.
For example, if a company constructs a parking lot on a piece of land, the cost of the parking lot can be depreciated over a certain number of years. This depreciation expense can be deducted from the company's taxable income, reducing its tax liability. However, land itself does not depreciate and therefore cannot be depreciated for cost recovery purposes.