Prevent Phantom Income.
If depreciation exceeds amortization, then taxable income is larger than book income. With traditional financing, the tax depreciation of office improvements is typically less than the book amortization (i.e. cash expense). This scenario creates a higher taxable income, which means that partners will be taxed on an amount that is higher than the amount made available by the firm for partnership distributions. First American's leasing structures eliminate this phantom income drag.