Tax Aspects of Financing Transactions
Introduction
A lessor’s ability to write off, depreciate, the cost of the leased equipment can be a key income component in 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, an 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 in 2020. Like other tax credits, the ITC does not merely ...
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