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    Why is borrowing advantageous to taxes for companies?

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    Briefly explain why borrowing is advantageous to taxes for companies, as they do not seem take on very large proportions of debt.

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    https://brainmass.com/business/capital-structure-and-firm-value/borrowing-advantageous-taxes-companies-481283

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    Borrowing is advantageous to taxes for companies because the company is able to use the fees and finance charges associated with the debt as 100% write-offs (expenses). Although the actual debt payments are carried as a liability, the interest expenses and fees lower taxable income because they are treated as ordinary expenses. This lowers the company's taxable income, so the company ends up paying ...

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    The solution explains why borrowing is advantageous to taxes for companies, as they do not seem take on very large proportions of debt.

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