From a simple straight line depreciation method the IRS has done the following for businesses:

1) Allow them to use S-L on their books and MACRS on the tax return.

2) With MACRS, companies can use D-D method but later in the asset life S-L is higher so the IRS allows automatic changes to S-L.

3) They allow a section 179 deduction where they can expense assets directly up to a threshold amount capital expenditures.

4) They also allow a 50% first year additional depreciation deduction after taking the section 179 deduction

5) Then, whatever capital base is left after 179 and 50% bonus depreciation deductions. the IRS allows companies normal MACRS depreciation that first year on the residual capital based.

QUESTION TO YOU STUDENTS

Do you agree with all of the above depreciation tax perks , some of them, or none of them. Explain briefly your choice (s) and why or why not!