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After-tax benefit The amount of net cash inflow realized from a taxable cash receipt after income tax effects have been considered. The amount is determined by multiplying the taxable cash receipt by (1 - Tax rate). (p. 727) After-tax cost The amount of net cash outflow resulting from a tax-deductible cash expense after income tax effects have been considered. The amount is determined by multiplying the tax-deductible cash expense by (1 - Tax rate). (p. 726) Depreciation tax shield A reduction in tax that results from depreciation deductions. The reduction in tax is computed by multiplying the depreciation deduction by the tax rate. (p. 728) Half-year convention A requirement under the Modified Accelerated Cost Recovery System (MACRS) that allows a company to take only a half year's depreciation in the first and last years of an asset's depreciation period. (p. 730) Modified Accelerated Cost Recovery System (MACRS) A method of depreciation required for income tax purposes that depends on which of nine property classes an asset belongs to. (p. 729) Optional straight-line method A method of computing depreciation deductions under MACRS that can be used instead of the MACRS tables. (p. 732) |
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