Tampa, FL, IBEX Show
9/18 Basic NMEA 2000® Installer Training
NMEA Conference & Expo: 9/26 - 9/28
NMEA/ABYC Combined Training Event
9/26 ABYC Marine Electrical Certified Training
9/27 ABYC Marine Electrical Review & Testing
9/28 NMEA Basic Marine Electronics Installer
9/29 Basic NMEA 2000® Installer Training
9/26 Basic Marine Electronics Installer
9/27 Basic NMEA 2000® Installer Training
9/28 Advanced Marine Electronics Installer
9/29 Advanced NMEA 2000® Installer Training
East Greenwich, RI
NMEA/ABYC Combined Training Event
11/28 ABYC Marine Electrical Certified Training
11/29 ABYC Marine Electrical Review & Testing
11/30 NMEA Basic Marine Electronics Installer
12/1 Basic NMEA 2000® Installer Training
Sidney, BC Canada
12/6 Basic Marine Electronics Installer
12/7 Basic NMEA 2000® Installer Training
12/8 Advanced Marine Electronics Installer
Schedule subject to change.
2017 NMEA Training Program Schedule
For a full training schedule or to enroll
online, please click on the NMEA
2017 Training Schedule at
September/October 2017 Marine Electronics Journal 43
reported evenly over the five-year life. This leaves a value of $80,000 to
be spread out evenly (straight line depreciation) over a period of five years.
In each of the years 2017 through 2021, the company’s income statements will report $16,000 of depreciation expense, thereby matching
$16,000 of depreciation expense with the revenues earned in each of
those years. However, the company will not pay out any cash for this
expense during those years. The company’s net income before income
taxes will be reduced in each of the years 2017 through 2021 by
$16,000—but the cash account will not be reduced. The depreciation on
the financial statements will likely be legitimately different from the
depreciation on the company’s tax returns.
A popular example of depreciation is a company vehicle used 100%
for business. While the IRS has a lot of rules for depreciation and vehicles, one popular rule falling under the Sec. 179 deduction is for vehicles
over 6000 lbs., often an SUV (not including large trucks and long-bed
pickups, which have their own rules). Currently the IRS has special rules
for the depreciation of these “heavy SUV” vehicles.
If your company purchases a Jeep Grand Cherokee for $50,000, the
first-year depreciation could be $40,000 based on the following: $25,000
Sec. 179 deduction, $12,500 bonus depreciation (half of the remaining
purchase price after the Sec. 179 deduction), and $2,500 regular depreciation (20% of the remaining purchase price after the above two deductions). The first-year deduction of $40,000 will reduce your businesses
net income. While you still need to write a check for $50,000 to the car
dealer, you are reducing the business taxable income, and if you have a
30% tax rate, you are saving $12,000 at tax time in the first year—which
could in turn be thought of as a $38,000 Grand Cherokee. Alternatively,
suppose you buy a new $50,000 sedan light truck or light van, and use
it 100% for business. With this smaller vehicle, your first-year depreciation write-off would be only $11,160.
There are many types of depreciation schedules that vary by asset type
and should be reviewed with a tax accountant to decide what is best for
your business situation. Some popular depreciation schedules include:
Straight-line depreciation, Doubling declining balance method, Annuity
depreciation and Sum-of-years-digits method.
Through the use of good business practices, continually acquiring cap-
ital equipment and taking advantage of depreciation can help to raise your
company asset base while reducing its tax burden, presenting a healthy
business picture to satisfy bankers, investors or potential buyers. MEJ
About the author
Steven Katz is the owner of Steve’s Marine Service Inc., serving Annapolis and
Ocean City, MD, for over 20 years. He holds credentials from NMEA, ABYC, and
the USCG as well as B.S. and M.B.A degrees. Steve’s corporate experience
includes management positions in engineering and technology. He is currently Vice
Chairman of NMEA and has served on the Board of Directors since 2012.
What information do I need
to compute depreciation on
my capital assets?
What is basis? It is your original cost in the asset, including sales tax,
freight and installation. The cost of the property includes: cash, the
amount of money borrowed to purchase the asset, and the value of
any items you traded for the new asset the value of bartered services.
Your basis will increase by the amount of major improvements you
make to the property and will decrease by the amount of depreciation deductions you take on your tax return. This adjusted basis is
used to measure your gain or loss when you sell the property.
What is class life? It is the number of years over which an asset can
be depreciated. The tax law has defined a specific class life for each
type of asset. Real Property is 39 year property, office furniture is 7
year property and autos and trucks are 5 year property. See IRS Publication 946, How to Depreciate Property.
Why is the term "placed in service" important? Property is
placed in service when it is ready and available for use in your business
even if you have not begun using it. This date determines when you
can begin to depreciate the asset.
What method of depreciation should I use? The method used by
most taxpayers is the Modified Accelerated Cost Recovery System
(MACRS). MACRS provides a uniform method for all taxpayers to
compute the depreciation. Using the basis, class life, and the MACRS
tables, you can compute the deduction for each asset in the year it is
placed in service and each subsequent year of its class life.
• Class Life
• Placed in Service
• Method of Depreciation