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Online Airline Management Simulation
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Author Topic: [ok] Tax Payments  (Read 2072 times)

Offline LemonButt

  • Members
  • Posts: 1895
Re: Tax Payments
« Reply #20 on: August 21, 2012, 09:10:57 PM »
Lemon,

the purchase of phisical assets like airplanes are treated as capital expendatures (CAP-EX) under virtually all taxation regimes. CAPEX is not counted against operating profit for tax purposes, the depreciation of capital assets however is. This would be relatively easy to model in AWS since there is already a valuation scheme for used aircraft. Purchase of aircraft should have no impact on the tax deducted from an airline, although tax should be calculated with the depreciation of the exsisting fleet accounted for. Forward lease payments should be handled in a similar way as depreciating assets. If sami is interested in actually persuing a tax system that includes a balance sheet I'd be glad to help walk through how CAP-EX, amortization, and depreciation are handled under the US tax code. A brief sample calculation is below along with a link to a source.

Start of Period Cash                                                                    $100,000,000
Pre CAP-EX Profit                                                                        $40,000,000
Purchase of Planes                                                                      $10,000,000
Decrease in value of all planes owned (and other capital assets)     $5,000,000
Taxible Income                                                                           $35,000,000
Tax Owed (25% rate)                                                                  $8,750,000
End of Period Cash                                                                      $131,250,000

http://www.taxwiki.ca/IT-143+Meaning+of+Eligible+Capital+Expenditure

Yes, but in the real world you can also finance aircraft purchases, which means you aren't forced to accumulate and only spend the cash you have in the bank.  That is the key difference imo.

sbond101

  • Former member
Re: Tax Payments
« Reply #21 on: August 22, 2012, 01:25:22 PM »
Lemon,

I agree that the inability to realistically finance aircraft purchase is a big problem with the game in it's current form. That being said I don't think the two issues are really related except that one makes the game harder and the other makes the game easier. In a properly organized taxation system it doesnt matter whether you are acumulating cash or purchasing assets, the growth in balance sheet assets for the company will lead to taxation.

The need for a proper system of purchasing aircraft on credit as a seperate borrowing activity then the current methods (which are similar to methods used to raise working capital in real business) is another important (though less important in my opinoin) feature that AWS should have in order to become a better simulation.

Stephen Bond.

exchlbg

  • Former member
Re: Tax Payments
« Reply #22 on: August 22, 2012, 03:12:26 PM »
Please donīt forget we have to keep the balance between reflecting reality and playability. Tax systems are very complicated throughout the world, noone running a business can cope with those systems without professional help. This is a game, not running a real business. We have to keep it simple. The tax system even now is hard to understand for most of the players, remember all those remarks over being "surprised" when taxes hit.
Main reason for complaints is always the slowing of potential growth. But exactly that IS one essential thing to balance this game. Still there seems to be too much money in the system if you regard complaints about delivery queues of aircrafts. Apparently a lot of companies have the financial abilities to order big aircrafts in ridiculously high numbers. Do you want to fire that process even more ?
« Last Edit: August 22, 2012, 03:29:10 PM by exchlbg »

Offline LemonButt

  • Members
  • Posts: 1895
Re: Tax Payments
« Reply #23 on: August 22, 2012, 03:47:24 PM »
The problem with this theory of taxes being a tool to restrict growth is that some countries such as UAE have a 0% tax and are completely uneffected.

exchlbg

  • Former member
Re: Tax Payments
« Reply #24 on: August 22, 2012, 04:19:17 PM »
This is right. Maybe the game shouldnīt reflect this either. So companies based ingame there behave like EMIRATES, able to flood routes to EVERYWHERE.

dasherhalo

  • Former member
Re: Tax Payments
« Reply #25 on: August 24, 2012, 04:45:55 AM »
IRSsim.com?

Talentz

  • Former member
Re: Tax Payments
« Reply #26 on: August 24, 2012, 08:31:59 AM »
IRSsim.com?

AWSv1.5

Fear NOW!



Talentz

Offline LemonButt

  • Members
  • Posts: 1895
Re: Tax Payments
« Reply #27 on: September 06, 2012, 01:15:39 AM »
This is why losses need to be carried forward when calculating taxes:

 

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