So how is any of this good news for accelerated depreciation?
Here’s how. The worst case scenario with accelerated depreciation is that the tax is deferred to a later year. You take the bigger deductions now, enjoy the tax savings now and then pay tax on it later in the form of more gain.
If you’ve heard me speak, then you probably know deferral is my least favorite type of tax planning, so you may be wondering why I think accelerated depreciation is so important in a tax strategy.
The reason is that deferral is the worst case outcome, and as far as tax planning goes, while deferral isn’t my favorite, it can still help minimize taxes. So even the worst case scenario is still good for tax planning.
But even better, there are other possible outcomes that can reduce or eliminate the future tax impact of accelerated depreciation.
A long term strategy is the solution to minimizing or eliminating the future tax impact of accelerated depreciation.