Reference no: EM133555186

Question 1. The question I had was why is good will tax able to be depreciated over 15 years instead of doing a tax deduction in the current year? also does it change in regard to cash vs accrual base accounting?

Question 2. Firms prefer to categorize expenses as deductible period costs instead of capitalizing them as product costs in their inventory. Tax laws have explicit Uniform Capitalization (UNICAP) rules, which are strict and complex. Under UNICAP, companies must capitalize direct manufacturing, purchasing, and storage costs, along with certain indirect costs related to production or resale activities. Examples of these indirect costs include officer compensation, rent on production facilities, insurance premiums on production assets, and more. The Tax Cuts and Jobs Act, effective from 2018 onward, exempts businesses with average annual gross receipts of $25 million or less from UNICAP rules and accrual method accounting for inventory transactions. How did the Tax Cuts and Jobs Act affect businesses with average annual gross receipts of $25 million or less in terms of the Uniform Capitalization (UNICAP) rules and accounting methods for inventory transactions?