SELECTING AMONG ALTERNATIVE DEPRECIATION METHODS: A STOCHASTIC DOMINANCE APPROACH

James W. Richardson and Clair J. Nixon

No 279113, 1983 Annual Meeting, July 31-August 3, West Lafayette, Indiana from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: A whole-firm simulation model (FLIPSIM V) was used to simulate the net present value probability distributions for sixteen alternative tax strategies on equipment depreciation for a rice farm in Texas. Stochastic dominance was used to determine the utility maximizing tax strategy for decision makers in alternative risk preference classes. The most preferred income tax strategy for both risk loving and averse decision makers utilized straight-line cost recovery, Section 179 expensing, maximum I.T.C. with resulting basis reduction, and trade rather than sell on disposition of old equipment.

Keywords: Crop Production/Industries; Farm Management; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 18
Date: 1983-08
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea83:279113

DOI: 10.22004/ag.econ.279113

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