This paper studies how the difference between technical depreciation and tax depreciation affects the firm’s optimal investment strategy. The objective is maximization of shareholder value. When tax depreciation differs from technical depreciation, an additional investment not only generates value due to the fact that the firm can produce more, but also due to the fact that an additional deferr...

Firms can use capital that they either purchase or lease, but these alternatives are treated differently for tax purposes. This paper derives the demand for leased capital as a function of tax parameters, and uses the model to estimate the responsiveness of leasing to the introduction of bonus depreciation in 2002, finding strong evidence that depreciation allowances influence leasing patterns....

phase-in of federal income taxes, Congress allowed oil and gas companies to deduct 27.5 percent of gross revenues (up to half of net income) for corporate income tax purposes. Characteristically, a tax policy that began as a technical adjustment of the tax code turned into a deliberate measure to stimulate oil and gas production. The deduction was a big hit with the industry because it far exce...

R&D depreciation rates are critical to calculating the rates of return to R&D investments and capital service costs, which are important for capitalizing R&D investments in the national income accounts and harmonizing BEA statistics with those of the productivity program of BLS. Although important, measuring R&D depreciation rates is extremely difficult because both the price and output of R&D ...

This paper, considering revenue and cost exposure channels, investigates the effects of exchange rate behaviour on fixed capital investment in Mexican manufacturing sector over 1994-2002. We find that i) currency depreciation has a positive (negative) effect on fixed investment through the export (import) channel; ii) exchange rate volatility impacts mostly export oriented sectors; iii) the sen...

We consider a discrete-time two-sector Cobb-Douglas economy with positive sector specific external effects and partial depreciation of capital. We show that local indeterminacy of steady states and cycles can easily arise with constant social returns to scale, and very small market imperfections. However these properties of equilibrium paths become less likely in the case of partial depreciatio...

This paper extends the Q-theory of investment to capital goods with arbitrary efficiency profiles. When is non-geometric, firm’s stock and replacement cost its assets are fundamentally different aggregates history. If have constant over a finite useful life, simple proxies readily available for both in place stock. Under this assumption, we decompose total rate along two dimensions: into net co...

The Review of Business Taxation chaired by Mr John Ralph has suggested sweeping changes to business taxation in Australia. In particular it has been proposed that accelerated depreciation provisions be removed to finance a reduction in the company tax rate. If some degree of accelerated depreciation is to be retained, it is suggested that this should involve a uniform loading on depreciation ra...

ABSTRACT The increasing use of data analytics in the accounting profession necessitates development instructional cases that teach students how to tools solve common problems. While there has been an emphasis on for graduate education, we recognized a need such at undergraduate level prepare internships, careers, and education. This case meets this important by introducing Alteryx typical tax s...