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Minimum Tax, Recapture and Choice of Depreciation Methods *
Author(s) -
Sirmans C. F.
Publication year - 1980
Publication title -
real estate economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.064
H-Index - 61
eISSN - 1540-6229
pISSN - 1080-8620
DOI - 10.1111/1540-6229.00216
Subject(s) - depreciation (economics) , economics , tax basis , econometrics , microeconomics , monetary economics , tax reform , public economics , state income tax , financial capital , profit (economics) , gross income , capital formation
This paper examines the problem of the trade‐off between the possible minimum tax consequences of accelerated depreciation, the recapture of excess depreciation, and the choice of depreciation methods for maximizing investor wealth. The model is simulated for various ranges of the inputs to which the depreciation selection decision is sensitive. The results indicate that for high marginal tax rates, reasonably long holding periods, and reasonably high discount rates, the investor should select the accelerated methods after considering the minimum tax and recapture consequences.