Timing Ideas

Corporate Income Tax - Lecture 4

This week we will address the timing ideas of which taxable year can a firm deduct expenditures. We will discuss the tax rules that distinguish between deductible expenditures and the expenditures that must be capitalized. We will also address the concept of capitalized cost as the tax basis of business assets. In addition, we will focus on the various methods by which firms recover basis as a cost of goods sold or through depreciation/amortization/depletion deductions. One of the critical concepts associated with depreciation is the MACRS framework. In addition, you will learn how to apply 179 expensing. Depreciation also plays a critical role in the computation of the NPV. Finally, you will learn how to compute the costs associated with intangibles through amortization and distinguish between depletion and percentage depletion. Please review the following YouTube Presentation for further understanding of tangible business assets and the MACRS framework. To make the YouTube video larger, click on the [ ] in the lower right corner.
MACRS Explanation.wmv