The accelerated write-off of capital costs in MACRS depreciation provides a taxable expense that reduces taxes at a faster rate than with straight-line depreciation.Therefore,according to ________ concepts,we can surmise that bigger tax cuts in the earlier years and lower tax cuts in the later years are better than a steady tax cut each year.
A)time-value of money
B)depreciation and sunk costs
C)depreciation and opportunity costs
D)interest rate

Question

Quizplus · Accepted Answer

The statement mentions "accelerated write-off" which is a concept in MACRS depreciation that recognizes the time value of money. By taking bigger tax cuts in the earlier years, taxpayers can reduce their tax liability sooner and benefit from the time value of money. Therefore, the choice (A) time-value of money is the best option. The other choices, depreciation and sunk costs (B), depreciation and opportunity costs (C), and interest rate (D), do not directly relate to the concept mentioned in the statement.

The Accelerated Write-Off of Capital Costs in MACRS Depreciation Provides