(1888PressRelease)
February 26, 2007 - Depreciation is an allowance for wear and tear on fixed assets.
Assets with a useful life of more than one year carry a requirement that the cost of the asset be allocated, or prorated, in some fashion over the entire useful life. These assets (called variously long-term assets, fixed assets, or capital assets) produce income over an extended period of time; therefore the cost of acquiring the assets (the accounting principle of matching expenses to revenues) is also spread over a period of time following that. The current method of computing depreciation is the modified accelerated cost recovery system (MACRS), which assigns a life span to different kinds of equipment.
Aircraft used for qualified business purposes or for the production of income and not held as inventory or stock in trade are listed property and usually may be depreciated under the modified accelerated cost recovery system over a recovery period of five years. You report this prorated cost deduction on your company’s tax return as a business expense called “depreciation expense,” otherwise known simply as depreciation.
Depreciation offsets income produced by your business, and results in a lower tax bill.
Most tax payers have yet to conclude what astute wealth builders have known for years. Taxation is the most aggressive enemy of wealth building for someone that truly desires savings, growth, and financial gains. It is estimated that 40% plus of every dollar made by the US tax payer goes to pay some form of tax.
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Disclosure Under IRS Circular 230: To ensure compliance with requirements recently imposed by the IRS, we inform you that any tax advice contained in this communication, including any attachments, was not intended or written to be used, and cannot be used, for the purpose of avoiding federal tax related penalties or promoting, marketing or recommending to another party any tax related matters addressed herein.
