Tax depreciation

Tax depreciation

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can be listed as an expense on a tax return for a given reporting period under the applicable tax laws, used to reduce the amount of taxable income reported by a business. Depreciation is the gradual charging to expense of a fixed asset's cost over its useful life.

Pros

Accounts for the true value of a purchased asset.

Cons

You need taxable income to take advantage of this, i.e. a municipality can't use it.

Real Talk

Aligns the perishable nature of an energy asset with your tax basis.

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