Investment credit

Depreciation, amortization, depletion, and investment credit are all factors that affect the taxes a company must pay, and hence the profit that can be made. When the government wishes industry to change its direction, it can manipulate these factors to make certain options more profitable. The engineer must be aware of these changes, since they can be the deciding factor on whether a project should be continued. 

Source Depreciation, Investment Credit, Amortization, Depletion, Internal Revenue Service Publica-... 

The investment credit system for reducing taxes was devised in order to encourage companies to expand. This credit applies to machinery and equipment and does... 

Under certain circumstances the remaining 21,500 investment credit can be taken in the following year). 

Depredation, Investment Credit, Amortization, Depletion, Internal Revenue Service Publication 534 (10-69),U. S. Government Printing Office, Washington, D.C., 1969. 

The 1971 Revenue Act of the United States provided for a special first-year tax deduction on new investments for machinery, equipment, and certain other assets used in production processes, in the form of a 7 percent investment credit" for the first year of the life for assets with over 7 years of estimated service life. The investment credit rate was increased to 10 percent for the years 1975 and later, with the possibility of a higher rate. The investment credit amount was limited to the first 25,000 of the corporation s tax liability for the year plus 50 to 90 percent (depending on the year) of the corporation s tax liability above 25,000. This investment credit was repealed in 1986 for properties placed in service after December 31, 1985 with special transition rules applying to carry-forwards, carry-backs, and certain types of property. 

The prospectus or offer document for an issue provides investors with some information about the issuer so that some credit analysis can be performed on the issuer before the bonds are placed. The information in the oflFer documents enables investors themselves to perform their own credit analysis by studying this information before deciding whether or not to invest. Credit assessments take up time, however, and also require the specialist skills of credit analysts. Large institutional investors do, in... 

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