The applicant stared; grinned at Newman Noggs, who appeared highly entertained; looked slightly round the shop, as if in depreciation
of the pomatum pots and other articles of stock; took his pipe out of his mouth and gave a very loud whistle; and then put it in again, and walked out.
Iron, if kept at the ironmonger's, will rust; beer, if not brewed in the right state of the atmosphere, will sour; timber of ships will rot at sea, or if laid up high and dry, will strain, warp and dry-rot; money, if kept by us, yields no rent and is liable to loss; if invested, is liable to depreciation
of the particular kind of stock.
There was an easy negligence in his manner and even in his dress (his hair carelessly disposed, and his neckkerchief loose and flowing, as I have seen artists paint their own portraits) which I could not separate from the idea of a romantic youth who had undergone some unique process of depreciation
. It struck me as being not at all like the manner or appearance of a man who had advanced in life by the usual road of years, cares, and experiences.
For that reason, the substantial amount of allowable depreciation deductions on the building produced minimal tax benefits for her.
Yet, even had she done so, there was long-standing judicial precedent holding basis reduction was mandatory even if the corresponding depreciation deduction produced no tax benefits for the taxpayer.
Thus, the purpose of the article is to expose the inequities of the Basis Reduction Tax Trap and to advocate the amendment of the Code by incorporating tax benefit components to eliminate it without compromising the integrity of the depreciation deduction.
THE FOUR WAYS THE SECTION 1016(A)(2) BASIS REDUCTION 570 PRESERVES THE INTEGRITY OF THE DEPRECIATION DEDUCTION A.
Pursuant to section 1016(a)(2) (1) of the Internal Revenue Code (Code), (2) the basis of depreciable property is reduced by all depreciation deductions including those that produce no tax benefits for the taxpayer.
This is because all the recognized gain would be attributable to the useless tax depreciation deductions that reduced the asset's basis (3) below its original cost (hereinafter referred to as the "Basis Reduction Tax Trap").
(7) Because the apartment building generated minimal rental income over that period, only $3,307 of the $28,000 of allowable depreciation deductions actually produced any tax benefits for Beulah.
One explanation for this phenomenon is that Beulah's novel reporting position (rejected by the Supreme Court) completely nullified the role of depreciation and basis reduction in the computation of her taxable gain.
Another explanation is that in its disapproval of Beulah's reporting position, though inconsistent with the facts contained in the Record of the case, (14) the Supreme Court cast Beulah as a tax villain creating the myth that her ultimate purpose was to enjoy the unwarranted benefit of double depreciation deductions.
Current property depreciation methodologies are outmoded and need to be revised, argues Deloitte & Touche.
The Deloitte study suggests that tax depreciation should be updated to reflect the actual rates at which building investments lose value as they age.
Under current tax law, found in Section 168 of the Internal Revenue Code, the depreciation deduction for structures doesn't provide appropriate tax benefits because investors are forced to recover their costs more slowly than the structures' actual loss of value.