Abstract
tions. In some cases the correct choice is readily apparent. In others, it is not so obvious. For example, because accelerated depreciation provides for earlier tax deductions, it is generally a better alternative than straight-line depreciation. However, firms and individuals whose rapidly growing income pushes them quickly from relatively low tax rates to higher rates may prefer to delay the deductions until they offset taxes at higher rates. In such cases, accelerated depreciation may provide a smaller present value of tax savings than straight-line depreciation. Other things equal, the best choice will be the alternative that maximizes the present value of tax savings from credits and deductions,
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