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  • cpataxweb cpataxweb Oct 14, 2012 12:59 PM Flag

    Amazon Buys $1 Billion Of Real Estate

    They are trying to reduce expenses on books as profit is going down. One way to do it is to stretch an expense over a longer term. So by buying the building, they will show a depreciation expense equal to 1/39 of the purchase price (less value of land). This will be much lower than the current rent expense

    Sentiment: Strong Sell

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    • Except that commercial real estate, of which there is an extraordinary excess, will drop in value over the next 10 years. It will be fun to see the increased property tax bills for Amazon as the taxable value is almost always reassessed after a purchase. Thus, Amazon's tax burden will likely increase as its share of assessed value within those taxing districts increases. This will prove to be an extraordinarily stupid decision...

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