Tax Considerations and Depreciation n Depreciation represents the systematic allocation of the cost of a capital asset over a period of time for financial reporting purposes, tax purposes, or both Generally, profitable firms prefer to use an accelerated method for tax reporting purposes MACRS) 12-1012-10 Tax Considerations and Depreciation Generally, profitable firms prefer to use an accelerated method for tax reporting purposes (MACRS). Depreciation represents the systematic allocation of the cost of a capital asset over a period of time for financial reporting purposes, tax purposes, or both