A Single Year Depreciation Deduction on the Basis of Present Value

Abstract:     
Depreciation deduction is an old, well-established institution in the income tax regime and an intrinsic part of it. The main method of depreciation operative in many countries is the straight line deprecation method. This method involves a multi-year depreciation deduction, that is, the capital cost recovery is spread over a number of years. In this article, an alternative approach is analyzed: a single-year depreciation deduction based on present value, to be effected immediately upon commencement of use of the property. The capital cost will therefore be recovered in the course of a single year. It will not be affected at the full cost of the property, but rather, according to the present value of the multi-year depreciation deductions.

Number of Pages in PDF File: 28

Keywords: Tax, Depreciation Deduction, Income Tax

Accepted Paper Series