How do you think depreciation could help you AND how could it hurt you personally as it relates to buying a ca

Question

i could think of some bad things, but how can it be a bad thing.

oh.. and its supposed to say "car" at the end

Answer 1

It could be a bad thing if they find out the fraud you committed, and lead to jail time and maybe reposession of the car. The credit report will tell alot. Do some serious thinking before doing something dumb that you may not be able to afford to pay for.

Answer 2

I don't know what a ca is.
Depreciation must be recaptured when you sell an asset so if you have a building or piece of equipment that is on the books at nearly nothing and sell it your profit might be huge if it appreciated.
Depreciation makes it look like you made less profit for all the years until you sell the asset that is appreciating so you pay less taxes.
Take a rental property for example you depreciate the building but not the land. If you paid $100,000 for the building and deprecate it every year you could be losing money renting it out after depreciation, interest and taxes and operating expenses so for year you offset other income then you go to sell and find out you have the building on the books now at 10,000 so you have 90K additional profit from the sale but don't get 90K more in your pocket. If you refinanced you might owe more than 100K still so even selling for 110K you would have 100K profit to pay tax on. If you didn't have other income to offset your rental loses you go no tax benefit from the depreciation but still pay tax on the gain.