 Most of this information comes from publication 946, How to Depreciate Property Tax Year 2022. You can find on the IRS website, irs.gov, irs.gov. Looking at the income tax formula, we're focused on line one income. Remember, in the first half of the income tax formula is an essence and income statement. Although it's just an outline of scaffolding other forms and schedules flowing into these line items. One of those, the Schedule C, business income, in essence an income statement in and of itself with business income minus business expenses, the net business income, rolling into line one of the income tax formula. Page one, 1040, noting the Schedule C would roll into the Schedule One, which would roll into the first page of the form, 1040, line number eight. The Schedule C format is the profit or loss from business, has an income section and expenses section like an income statement. We're focused on the expenses in particular, the depreciation. Remembering that even if you're on a cash-based system, you will have to do an accrual-based type thing when you purchase property, plant, and equipment because of the big difference between the time in which you consumed the goods in order to help generate revenue and the time that you paid for it possibly. So even if you use a cash-based system, we have to have that deviation generally. So once we do that, then we have to think about our depreciation schedules, how we're gonna be depreciating these fixed assets over their useful life, which lines up to some degree with accounting concepts. But remember the tax code will deviate from the accounting concepts. So we have to use the tax code to figure this stuff out. Sometimes we'll have similar concepts, the maker's methods now will be similar to like a double declining balance. Oftentimes, possibly using some kind of half year or mid-quarter convention or something like that. And sometimes the tax code will input some things that aren't bookkeeping conceptual ideas to stimulate the economy or do whatever they're trying to do. Those are represented with like 179 deductions and special deductions. All right, so now our focus is figuring depreciation under makers now. That's gonna be one of the general kind of conceptual frameworks for calculated depreciation under the tax law system, noting that you always wanna think about this as first starting from, I would think about it first starting conceptually from a straight line kind of depreciation method. And then layer on top of that some of these other concepts accelerated depreciation methods, double declining often in a maker's kind of situation and then other tax kind of related things to that, which would be the 179 deductions and the special depreciation and that kind of stuff. So introduction, the modified accelerated cost recovery system, the main kind of system you'll be dealing with oftentimes with taxes is used to recover the basis of most business and investment property placed in service after 1986. Makers consists of two depreciation systems, the general depreciation system, the GDS and the alternative depreciation system, the ADS. Generally, these systems provide different methods and recovery periods to use in figuring depreciation deductions. So if you have experience from a bookkeeping standpoint, generally accepted accounting principles, you might have more leeway in those cases to kind of figure what the useful life is for a particular piece of property and the related depreciation methods you're gonna use straight line, double declining and so on. Your objective there is to get your financial statements correctly aligned for reporting purposes and decision-making both in-total and external oftentimes for management and for external investors or banks or whatever as well. The tax code, however, you're concerned generally from a taxpayer standpoint to get as big a deduction as soon as possible and from the tax code side of things, then what they're gonna do is try to limit you in terms of assigning more strictly what kind of depreciation is available to you. So obviously the incentives are a little bit different. That also means that we might have different depreciation methods from a book standpoint and a tax standpoint, small business needing to decide whether or not they wanna have their depreciation just line up to the tax code or whether they wanna have different depreciation methods tax software often having the capacity to calculate both book and tax depreciation. So that's just something to keep in mind when talking to your tax professional or doing taxes and kind of integrating the bookkeeping side of it.