The agency would be required to determine the fair market value of "the integrated utility system" by calculating its "modified net book value" by deducting the "accumulated book depreciation
of the asset" or depreciation equal to 80 percent of the original cost of the asset, whichever is lower.
Exhibit 1: Depreciation allocation in Example 1, Scenario 1 A B Partnership 704(b) Tax 704(b) Tax 704(b) Tax Capital account, 500 300 500 500 1,000 800 1/1/12 Step 3: Allocate (25) (25) (50) book depreciation
according to Sec.
This is the difference between tax depreciation ($100,000) as compared to book depreciation
Most companies use the lives authorized for tax depreciation for the book depreciation
, thus avoiding deferred tax entries.
Accordingly, the taxable income allocated to the Dutch banks was greater than their book allocation by the amount of book depreciation
for that year.
With regard to the second summation, they write: "The second term, relating to book depreciation
is not so easily interpreted.
Also reported here, and separately identified, is any difference in depreciation to the extent book depreciation
exceeds tax depreciation.
We also demonstrate that the value of the DTL is not equal to the present value of future deferred tax expenses because the value of the DTL only depends on cash flows associated with tax depreciation, whereas the changes in the DTL depend on both tax and book depreciation
Resistance is strong to the proposal to remove allowances for investment in plant and machinery in excess of book depreciation
The remaining portion of th partnership's book basis ($150) will be depreciated over the new recovery perio of 10 years, for total annual book depreciation
of $25 (tax depreciation $10 plus additional depreciation of $15) The book depreciation
would be allocated $12.
Features include: an pull-down menu system; support of all depreciation methods including ACRS and MACRS and those for pre-ACRS assets, book depreciation
, or amortizable assets; unlimited number of companies to maintain depreciation schedules for; unlimited number of assets for a company; up to five depreciation calculations possible for each asset entered; user-determined number of methods and descriptions for each method when creating a depreciation file; calculation of monthly, annual, next-year's, prorated, short-year and projected depreciation; automatic application of listed property limitations and the provisions of the mid-quarter convention where appropriate; a wide variety of reports; and more.
The Company believes Adjusted EBITDA facilitates operating performance comparisons from period to period and company to company by backing out potential differences caused by variations in capital structure (affecting relative interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses) and the age and book depreciation
of facilities and equipment (affecting relative depreciation expense).