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Why one depreciation method for financial; another for tax

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Why would a taxpayer choose one depreciation method for financial statement preparation and a different depreciation method for income tax purposes?

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Solution Summary

The response to the question lists five reasons for why depreciation methods might be different for book and for tax. Each reason has a short paragraph of explanation. Total word count is 324.

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There could be a variety of reasons including:

1. Using a faster method for tax reporting will increase deductible expenses and decrease taxable income. With less taxable income, the company will pay less income tax. Most companies like that a lot. The very generous Section 179 of the Internal Revenue Code allows the first $250,000 of equipment purchased in any one year to be expensed in full, subject to a couple of conditions that are not hard to meet.

2. GAAP requires standards ...

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