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Sometimes for really dumb stuff like real estate agents Awesome Beware Of Offshore Drilling Shirt in. It wouldn’t be the best business move. Then they would never actually make money if they just continued to buy assets to avoid paying taxes. Even though the the cost of the asset is depreciated, they still use money to purchase it in the first year. At the end of the day its an expense. Companies are taxed on net income (profit minus expenses). If they use all of their money to buy an asset, but have to depreciate it over several years, how do you expect them to come up with the cash flow to pay income taxes. This allows them to expense it all in the year they purchased it, just like any other expense.

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In the following years they wont get to take the depreciation expense on the asset, thus having less expenses, Awesome Beware Of Offshore Drilling Shirt. It’s a business accounting method that is used to explain the cost of doing business. The government accepted this as a legitimate accounting method for tax purposes because it also encouraged large capital purchases. It’s all about paperwork transparency and overall is a better method. Let’s say you buy a sedan to start an Uber business for $12,000 and expect it to last 10 years. After five years you decide you’re going to sell it. That makes the asset to be valued $6,000 and if you sell it for $2,000 you are incurring a loss of $4,000. Since assets are sellable and assessable they are something that you need to measure in terms of value.

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