What does "placed in service" refer to in taxation?

"Placed in service" refers to the point in time when property is ready and available for its intended use in a business or for income-producing activities. This is a critical moment in taxation because it marks the commencement of the property's depreciation period. For tax purposes, entities can begin to recover their investment in the property by claiming depreciation deductions starting from this point.

When property meets the criteria of being "placed in service," it indicates that the asset is not just acquired but also operationally ready for income-generating activities. This definition is important to understand for tax planning and reporting because claiming depreciation or other related tax benefits is contingent upon the property being in service.

The other choices do not accurately capture this essential aspect of asset usage within the context of taxation. For example, selling the property or simply acquiring it does not provide eligibility for deductions until it is actually placed in service. Furthermore, the status of property being fully depreciated does not pertain to the timing of when it was first available for use, but rather to how much depreciation has been claimed against its value over time.