The Section 179 Deduction
Q: What net income number do we use for cash flow purposes – $608,995 or $585,058?
A: We use the GAAP accrual profitability of $585,058.
In the United States we measure all credits against Generally Accepted Accounting Principals (GAAP). A tax return records only taxable income against tax deductible expenses, specified by IRS regulations and guidelines. As such, the purpose of the tax returns is to determine taxable income in a given year according to the United States Tax Code and is not a fair representation of company’s actual net income.
Course overview: The Section 179 Deduction