Cash flow is equal to earnings before taxes minus depreciation?
Q. Cash flow is equal to earnings before taxes minus depreciation 1) false 2) true
Asked by mary j - Thu Feb 5 13:21:44 2009 - - 1 Answers - 0 Comments

A. False - you add back depreciation to get cash flow since depreciation is a non cash expense. This is a bad finance question - to get cash flow just look on the cash flow statement
Answered by Jenna M - Thu Feb 5 23:09:22 2009

What is the proper way to claim a Range Rover on taxes for depreciation & do they pay for themselves?
Q. I bought a Range Rover brand new. Do I report the full purchase price and depreciate a certain amount yearly? Also I heard that by doing so the Range Rover pays for itself...Does that mean that I get a refund from irs for the depreciation each year?
Asked by MIKE D - Sat Jul 19 21:19:27 2008 - - 5 Answers - 0 Comments

A. Did you buy it for a business you own, for business driving you do, or is it for your personal use? If for personal use, you don't do anything on your taxes with it. If it's for driving for business, yes you can claim either a flat rate for mileage of 58.5 cents per business mile, which would include depreciation, or claim actual expenses prorated for the amount of your driving that is business miles, In any case, no they don't pay for themselves. Sounds like something a dishonest salesman would tell you. Even if it's used only for business, the depreciation means that much of your income isn't taxed, so your tax savings is the depreciation times your tax bracket. You don't say just what model you bought, or what your income is. But… [cont.]
Answered by Judy - Sat Jul 19 21:34:05 2008

Do I have to include an annual depreciation exp. for my rental property even if it does not reduce my taxes?
Q. My concern is if I report depreciation I have to file a re-capture if and when I sell the rental property which in my case, I didn't really have the benefit since it didn't help reduce the tax I owe. Any help will be appreciated.
Asked by Arnel T - Tue Mar 17 17:13:38 2009 - - 1 Answers - 0 Comments

Depreciation of rental and taxes?
Q. I bought a home in Mar 2004 and rented it out 1/1/2006 for 5 months and ending up evicting the tenant and sold it 9/15/06. I'm getting ready for taxes and wanted to know, do I have to depreciate my home? I took a good loss on the home so there is no capital gains whatsoever.
Asked by I think its rude - Thu Jan 18 16:22:21 2007 - - 2 Answers - 0 Comments

A. Yes, you can take depreciation...and you should take depreciation. If you do not claim depreciation, when you were eligible to do so, the IRS will reduce your basis in the property by the depreciation you were allowed to take, even if you did not take it. Since you are first depreciating and also selling the house in the same year, all you are really doing is shifting some of the loss from Schedule D (capital loss) to Schedule E (rental loss) so it is really a wash. In total, you are not going to notice a difference.
Answered by jseah114 - Thu Jan 18 16:28:46 2007

How does depreciation and deduction of mortgage interest save a home owner money in taxes?
Q. What are the calculations that will show me how these two items affect cash flow for a home owner?
Asked by KL - Tue Feb 20 21:47:44 2007 - - 2 Answers - 0 Comments

A. Go to and look at the basic 1040 statement. You will see that line 22 is your total income and that line 37 is your total deductions to AGI (adjusted gross income). If you look on line 40 it will say itemized deductions which is deducted from AGI along with personal and dependency exemptions and other stuff which is subtracted from AGI to arrive at your taxable income. Mortgage interest is included in the itemized deductions (along with charity, casualty, medical ect.). So unless you chose the standard deduction over your itemized deduction, mortgage interest will lower your taxable income. As for deprecation, that deduction is only available to businesses.
Answered by prefrbly internet based - Tue Feb 20 22:13:49 2007

small business people excited about the new depreciation tax breaks?
Q. I'm totally ecstatic!! The government is sooo in tune with small business people!! Extra depreciation is sooo much better than eliminating anyone of the hundreds of unfair taxes levied against us!!! Why, here in CO you are actually taxed usage for giving something away free!!! But wow!!! Extra depreciation will save us during this recession!!!
Asked by EyeLuvSophie - Wed May 7 15:11:04 2008 - - 1 Answers - 0 Comments

A. First of all, you can't be in a recession if the GDP grows. Second of all, don't depend on the government to save your business.
Answered by avataz_99 - Wed May 7 16:21:34 2008

Can EBITDA (Earnings before interest, taxes, depreciation and amoritization) be shown as EBITDA%? % of what?
Q. Can EBITDA (Earnings before interest, taxes, depreciation and amoritization) be shown as EBITDA%? % of what?
Asked by kyledclifford - Mon Apr 24 17:00:26 2006 - - 1 Answers - 0 Comments

A. It's usually a Dollar-figure. If presented as a percentage, it will be a percentage of revenues.
Answered by brickellcomedy - Mon Apr 24 17:03:22 2006

I have 2 investment properties in Euclid, Ohio.How do I determine the basis and depreciation for tax purposes.
Q. I bought first property for $119,000 in September of 2005 and the second property for $127,000 in January of 2006. When I used tax filing software to do my taxes for 2005 and again for 2006,the software indicated that I had zero depreciation for both years.What am I doing wrong. It too late to do anything about last year taxes, but I have not filed my 2006 return as yet. I was told by people with investment propert that I could claim depreciation as soon as the houses became marketable.Is there a mistake that I made or is the mistake with the software?
Asked by moor questions - Tue Apr 10 01:22:42 2007 - - 2 Answers - 1 Comments

A. You must be doing something wrong with the software. Your basis is what you paid, plus the cost of any improvements. For depreciation purposes you must subtract the value of the land since land is never depreciated. You then divide the remaining basis by 27.5 to arrive at your annual depreciation amount. It's not too late to correct last year's return. File an amended return on Form 1040X to correct prior year returns.
Answered by Bostonian In MO - Tue Apr 10 01:42:57 2007

Taxes and depreciation of property?
Q. What does the IRS do if you accidentally flip flop on the method you use to depreciate your properties from year to year? I mean flip flop from straight line depreciation vs useful life depreciation?
Asked by gypsyecsa - Wed Oct 1 23:21:16 2008 - - 4 Answers - 0 Comments

Timing on Section 179 Asset Depreciation - Taxes?
Q. Do I have to take the section 179 asset deduction in the year the asset was purchased or can I take it in the first year the asset was placed in use? I purchased the equipment at the end of the calendar year but didnt use it until 3 months later in the next year. Thanks
Asked by Jordan - Thu Dec 31 12:38:29 2009 - - 4 Answers - 0 Comments

A. You get the deduction in the year that the asset was "placed into service"! For example... You buy a computer from a dealer and paid it (credit card) on Dec. 15 but it had to be custom made and wasn't available until Dec. 31. You can't deduct it until the current year! I never mentioned that you used it for business but just picked it up on Dec. 31. Using the same fact pattern above, you then use it on Jan 2. The second example was when you used the asset for your business not when you picked it up! Year 2 is when you get the deduction.
Answered by MrMojo1 - Thu Dec 31 22:19:19 2009

If I build on my own lot, will I have to realize the deferred tax from depreciation from a 1031 Exchange?
Q. I 1031 Exchanged into my properties. And I want to build townhouses on them and sell them. Do I have to realize the defrred tax from depreciation? I want to tear down 2 triplexes on my lot and build some townhouses on top and then sell them. Do I have to realize the deferred tax from depreciation?
Asked by Johnny C - Thu Jun 14 14:42:54 2007 - - 2 Answers - 0 Comments

A. Are you talking about depreciation on bare land ? You can't depreciate bare land. If your accountant did, you might be in trouble. You can only depreciate improvements to the property. If you are talking about the 'deferred depreciation' rolled into the transaction from the exchange, you will have to recapture if you build a personal residence for yourself. If you build more investment property, then not.
Answered by acermill - Thu Jun 14 15:56:40 2007

Are there any options to calculate tax depreciation on assets acquired in like kind exchanges?
Q. Are there any options to calculate tax depreciation on assets acquired in like kind exchanges?
Asked by Malcolm K - Fri Jun 8 15:53:03 2007 - - 2 Answers - 0 Comments

A. Yes, there is an election to treat the property as a disposition rather than an exchange. This is explained in IRS Publication 946. It's too involved to explain here, (at least I can't do it, maybe another answerer can do it in one or two paragraphs). Seek professional advice if you plan this election. Here is the publication:
Answered by ninasgramma - Fri Jun 8 16:56:45 2007

Taxes if taking back rental property and selling after 2 years?
Q. I have had a rental property for a few years. If I took it back and lived in it for 2 years, and then sold it, would I owe any taxes on the gain prior to taking it back? or any taxes on the depreciation I took while it was a rental property?
Asked by Barnie - Mon Oct 19 12:05:53 2009 - - 4 Answers - 0 Comments

A. the rules for this issue changed in 2008. Therefore the answer would be greatly different depending on when you began to live in the property as your primary home. If you are going to do this after 2008 you will only get a prorated exemption and in either case must adjust the basis for the depreciation you took when you were renting it out. If you have not sold the property yet do not do so until you have talked to a tax professional regarding the best way to handle this transaction.
Answered by Mathew - Mon Oct 19 12:30:10 2009

Defend this statement: Accelerated depreciation results in payment of less taxes over the asset s life?
Q. this answer is not so clear, need more ones
Asked by unknown - Tue Sep 22 03:14:51 2009 - - 3 Answers - 0 Comments

A. OK. You pay big bucks for a piece of equipment that has to be depreciated over five years. If you use straight line depreciation you would take only 20% per year. If you use some form of accelerated depreciation you will be taking more of the depreciation in the early years than in the last year or two. If inflation causes the value of a dollar to go down over time, then the further out you defer the depreciation the less it is of value in saving you tax dollars. So if you have 40% (DD) taken out the year after you purchase the asset you have recovered more of your original cost than you would if you had used straight line b/c the inflation rate isn't too dramatic and your depreciation is almost dollar for dollar to the purchase cost. [cont.]
Answered by Babe - Tue Sep 22 04:07:20 2009

What are my tax deduction for CA real estate sale on a loss and depreciation?
Q. Owned the property for 1.5 years, unable to rent, second home in area of primary, upgrades made and no depreciation taken for duration. Paid out any equity gain at close of escrow, repair costs from pest inspection and covered all sellers expenses. Of course, taxes and interest taken since purchase.
Asked by Voodude - Tue Sep 18 13:16:59 2007 - - 2 Answers - 0 Comments

A. If this was deducted as a 2nd residence, then your loss is personal and not deductible. In order to have deducted the loss, the property would have had to been held & operated as an investment (rental) property, Sorry. If you have any other questions, or need assistance, please contact me via my website or email me directly at Steve@SLarson.com
Answered by stevelarsondirect - Fri Sep 21 14:30:38 2007

How do I take depreciation on equipment that was purchased in a prior tax year?
Q. I purchased equipment for a new business 2 years ago, it wasn't added to the depreciation schedule in the tax year it was purchased. How do I add this to my current tax filing to take the depreciation without having to amended past tax returns?
Asked by jumpingrightin - Mon Oct 6 03:02:04 2008 - - 2 Answers - 0 Comments

A. Changing from an incorrect accounting method to a correct one does not require IRS approval. You still must file a 3115 then add the depreciation to the current tax return.
Answered by Mark S - Mon Oct 6 05:31:13 2008

Tax form 1065 for my LLC - do I need to complete the depreciation interview?
Q. I bought a business in 2005 and I closed it in 2006. I am trying to do my taxes for this business with Turbotax and it is asking me questions about depreciating everything. Why would I need to complete this step when everything was disposed of? Do I actually need to enter items in for depreciation? And do they want to know everything,,, down to the stapler that I inherited with the business? Please advise before I pull my hair out with these taxes!!! :-) Thanks!
Asked by az_dianeb - Thu May 17 00:06:42 2007 - - 2 Answers - 0 Comments

A. Yes you should answer those questions because the IRS will reduce the tax basis of your assets by the amount of depreciation "allowed or allowable". That means they can write down the value of the assets you disposed of (thereby increasing the gain you have to report) regardless of whether or not you ever claimed the depreciation deduction. As a simple example, lets say you bought an asset for $1000 and tax laws allowed $50 in depreciation during the time you owned the asset. You sell the asset for $1000 later. The IRS can say your asset was worth $950 for tax purposes and tax you on $50 in "gain" when you sell it, whether or not you claimed the $50 in depreciation in the first place. I know it sucks, but its an unintended consequence… [cont.]
Answered by Gooch - Thu May 17 00:28:53 2007

What is the difference between Accounting Depreciation & Tax Depreciation?
Q. What is the difference between Accounting Depreciation & Tax Depreciation?
Asked by rehanspk - Wed Nov 29 05:05:52 2006 - - 2 Answers - 0 Comments

A. Accounting depreciation is the method used by a company in preparing its financial statements. Tax depreciation is the method used in preparing the company's tax returns (both Federal and state). The theoretical purpose of accounting depreciation is to spread the cost of a fixed asset over its useful life. Depreciation methods include straight-line and accelerated. For tax purposes, an acquired fixed asset having a life greater than one year is allowed to be deducted over a time period approved by the government. This time frame may not bear any resemblance to the actual life of the asset acquired. Tax policy is modified from time-to-time to achieve certain ends, (such as to promote investment in fixed assets) and things such as bonus… [cont.]
Answered by Andreas - Wed Nov 29 10:09:19 2006

What is the difference between depreciation for accounting purposes, and depreciation for tax purposes?
Q. Is it because you can write off more in your accounts, than technically claim in your company tax return?
Asked by Rounder - Wed Oct 8 18:22:13 2008 - - 3 Answers - 0 Comments

A. Depreciation for accounting purposes is designed to reflect the economic life of an asset and so spread its value over that life. It is based on the principle of matching income with expenses incurred in the same period - so if you used 1/5 of the 'value' or 'life' of an asset then the idea is that you charge 1/5 of its cost to that financial period. The tax regime is driven by political and economic considerations, and as such any 'allowable depreciation' (called capital allowances in the UK) is designed to reflect different emphases - such as the desire to encourage investment by certain types of business incertain types of asset. For instance in the 2008 tax year in the UK companies can claim an Annual Investment Allowance of up to 50, [cont.]
Answered by certaxrugby - Thu Oct 9 01:36:49 2008

please, more detail to explain what is provision,depreciation and allowance?
Q. please, more detial to explain what is provision for annual leave,depreciation on non-current assets where tax depreciation rates differ from accounting rate and, allowance for doubtful dets? why those transaction that could result in a temporary difference? thank you ~
Asked by Leifishing - Thu Aug 30 09:17:10 2007 - - 1 Answers - 0 Comments

A. Accontindg Depericiation is charged on rates fixed by a company itself whereas tax depericiation is charged on rates fixed under tax laws.There is no particular ratio fixed under tax laws for allownce of bad debts.it is decided case to case considering the age and nature of debts,.These provisions are necessarty to work out correct profit of a business concern.
Answered by gnt t - Thu Aug 30 09:33:57 2007