CHAPTER 4

Equipment Tax Attributes for Certain Leases

Introduction

A lessor’s ability to write off, depreciate, the cost of the leased equipment can be a key income component in the profitability of an equipment lease transaction. Prior to 1986, another important equipment ownership tax benefit was available, a 10 percent equipment investment tax credit (ITC), eliminated completely by the 1986 Tax Reform Act (TRA), except for certain transition property. In recent years, however, an investment tax credit (ITC) up to 30 percent became available for limited types of equipment, such as wind and solar equipment, as well as fuel cells, often referred to as energy tax credits, which will at the time of this writing generally begin to wind down starting ...

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