The Financial Value of Early Tax Deductions for Depreciation.

The article focuses on financial value of early tax deductions for depreciation. The timing of depreciation allowances is of very little or no significance in terms of financial gain to a taxpayer. In the long run, only the tax basis can be deducted in arriving at net income subject to tax. The statement is a very familiar one and has not been challenged sufficiently to make those concerned aware of its inadequacy. Substantial financial gain or loss may accrue to the taxpayer in the timing of depreciation allowances. The allowance of special amortization on emergency facilities may be used to illustrate this point. It will be recalled that Section 124A of the 1939 Internal Revenue Code, as amended, provides for deductions over sixty months of the cost of facilities certified as necessary in the interest of national defense. Partial certification of such facilities is made possible and the cost of the certified portion is to be allocated evenly over sixty months without regard to the actual life of the facilities.