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Module Four examined employee business expenses, deferred compensation plans, qualified plans and nonqualified plans, and retirement plan options. Module Five will assess the economic impact on taxable income for the business tax entity and discuss accrual methods.DepreciationBusiness assets can be used for an extended period of years but will suffer wear and tear throughout that usage period. The Internal Revenue Code (IRC) allows for depreciation expense deductions for tangible business-use property that benefit tax years beyond the current tax year. Depreciation promotes the concept of matching by reflecting asset costs to the years that benefit from the asset’s usage. The type of asset and the asset’s corresponding useful life determine the method of depreciation and the years of cost recovery. For property to be depreciable, the property must be owned and not leased. Further, the property must be placed in service and available for use.Modified accelerated cost recovery system (MACRS) is the general tax depreciation method used. Assets are first classified to determine their useful life in years. Then the appropriate table is referenced in order for the percentage to apply to the depreciable basis amount. The depreciable basis multiplied by the appropriate percentage is the depreciation expense for that