Actually Mike, the purpose of depreciation is to match expense with revenue and not to reflect wear and tear on equipment or it's decrease in value. The whole concept was to prevent the deduction of an item in year one because it would distort net income dramatically in that year and, to a lesser extent, every year of the life of the asset. It also would understate the Balance Sheet assets. Now, that is Financial Accounting. If you were to account for things on a tax basis then we all know that IRC Sect 179, as amended numerous times, will allow you to do just the opposite. There is also the matter of bonus depreciation. The other issue is whether or not you could reclass an item as an investment to avoid depreciation. You can do this but would it be correct...no. There are items which legitimately fall into this category, though. I had a client who owned (to keep the privacy laws happy) I will say "a couple of unrelated businesses". He was a rich guy and liked to collect old trains. Not toy trains, but real trains. He bought these thru his legitimate businesses but we classified them as "other investments" so they did not affect income. As an investment, it would be a capital asset and any gains would be capital gains. A depreciable asset such as I believe we are talking about here is only subject to capital gain rules to the extent the gain exceeds depreciation taken. It is ordinary income up to that point. Not going to make the IRS happy if you start reclassing the assets I would think. Hope this makes sense, I typed it awfully fast.
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Today's Featured Article - Talk of the Town: How to Remove a Broken Bolt - by Staff. Another neat discussion from the Tractor Talk Discussion Forum. The discussion started out with the following post: "I have an aluminum steering gear housing with a bolt broken off in it. The bolt is about a 3/8" x 1 1/2" bolt. I've already drilled the center of the bolt out with about 7/64" drill bit the entire length of the bolt. Only one end of the bolt is visible. I tried to use an easy out but it wasn't budging and I didn't want t
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