Note on Taxes

Susan Smart has assumed that Tasha can use the tax benefits of the depreciation allowances and the lease payments. This may not always be the case. If Tasha were losing money, it would not pay taxes and the tax shelters would be worth less (unless they could be shifted to someone else). As we mentioned before, this is one circumstance under which leasing may make a great deal of sense. If this were the case, the relevant lines in Table 26.2 would have to be changed to reflect a zero tax rate. We will return to this point later.

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