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SWEAT THE SMALL STUFF, TOO.(ISSUES & INSIGHTS)(EDITORIALS)
Tax cut talk is typically focused on visible targets such as income, capital gains and corporate taxes. More obscure measures in the tax code, though, matter as well. Depreciation rules, for instance, can make or break investment decisions.
Depreciation of capital assets is key to unlocking business investment, which is vital to economic health.
How so? As any Accounting 101 student knows, capital investments can't be fully deducted in the year they were made. Instead, by law the deductions are spread out over a number of years, vaguely tracking the investments' expected life spans. The time periods are divided into six groups, ranging from three years to 20.
By grouping them in classes, the rules make assets in the short-term groups more appealing than those in the long-term groups. This isn't fair to the companies that make the items in the long-term groups and the companies that need them.
It also steers companies to buy items that might not be the most productive for their company. Broad misallocation of capital is a drag on the economy.
Depreciation rules also ignore the effects of inflation. A $1 write-off this year is worth more than a $1 write-off five years from now. Overlooked, as well, is the importance of cash flow. Firms often need cash right away, not years in the future.
Moreover, technology has made ...
- Depreciation rules under the Tax Reform Act of 1986.
- Magazine article from: Lotus McClure, Elise F. January 1, 1987 700+ words
...Accelerated Cost Recovery System (ACRS) depreciation rules for property placed in service after...January 1, 1981. In applying the new depreciation rules, you will typically deal with the...Salvage, or residual value: The new depreciation rules treat salvage values as before...
- Asset depreciation rules can apply beyond eateries.(Small Business)
- Magazine article from: Crain's Cleveland Business DeMarco, Peter A. April 12, 2004 700+ words
...owners and IRS agents over depreciation rules, the IRS recently issued...clarify any confusion over how depreciation rules apply to specific assets found in the typical restaurant. Depreciation rules are complex by any measure...
- ANALYSIS - JAPAN INVESTORS MISLED ON NEW DEPRECIATION RULES?
- News wire article from: AsiaPulse News April 9, 2007 700+ words
...among investors by citing the new depreciation rules as a reason for conservative earnings...rules. Under the old corporate asset depreciation rules, 95 per cent of a fixed-asset...calculated the effect that the revised depreciation rules will have on corporate earnings...
- JAPAN'S CEMENT MAKERS DREAD STING FROM NEW DEPRECIATION RULES.
- News wire article from: AsiaPulse News April 20, 2007 700+ words
...sluggish earnings from domestic operations this fiscal year because changes in depreciation rules are expected to raise their costs. Under previous asset depreciation rules, 95 per cent of a company's fixed-asset investments could be written...
- Updated depreciation rules.
- Newspaper article from: The Kiplinger Letter August 18, 2000 700+ words
Updated depreciation rules are on the horizon. Action is likely in Congress in next few years to allow faster write-offs for used assets, commercial buildings...
- CHANGES IN DEPRECIATION RULES FOR INFRASTRUCTURE PROJECTS SOUGHT (as...
- News wire article from: Asia Africa Intelligence Wire December 27, 2002 700+ words
...Associated Chambers of Commerce and Industry of India (Assocham) has urged the Government of India to amend the depreciation rules related to infrastructure projects. The amendments have been suggested to allow deduction of the cost for obtaining...
- Archer Plans Bill To Update Equipment Depreciation Rules.
- Magazine article from: Congress Daily AM April 6, 2000 700+ words
...been created and matured--such as computers and telecommunications. Archer expressed hope that a revision of depreciation rules could be undertaken without partisan rancor, saying, "This is one of the things I want to do as Ways and Means...
- Biz Lobby Calls for Change in Japan's Depreciation Rules.
- Newspaper article from: Jiji September 19, 2006 700+ words
...Nippon Keidanren, said no other industrialized nation limits the depreciation rate to below 100 pct. Japan's depreciation rules should be revised in order to boost the international competitiveness of Japanese companies, the federation said...
- New depreciation rules for capital expenditures.(Breaking News You Should Know...
- Magazine article from: Modern Materials Handling August 1, 2003 700+ words
While most of us have been focused on what the latest Federal tax relief act means to our paychecks, there are implications for materials handling equipment, systems and related software too. Under the act, assets purchased and placed into service on or after May 6, 2003 and before January 1, 2005
- Luxury automobile depreciation rules offer obstacles and opportunities.
- Magazine article from: The Tax Adviser Derochie, Kathy J. Hopkins, James M. April 1, 1997 700+ words
Prior to the Deficit Reduction Act of 1984 (DRA), the business and investment use portion of an automobile could be depreciated over three years under Sec. 168 without a cap on the annual deduction. For example, a Mercedes Benz purchased on Jan. 1, 1984 for $60,000 and used 75% for business yielded
