IRS issues regulations on taxing capital assets

Article Abstract:

A tax law enacted in 1981, under Section 179 of the tax code, gives companies two choices when writing off capital assets: companies may depreciate assets and take investment tax credits, or charge up to $5,000 in capital assets as expenses against earnings. If a corporation purchased more than $5,000 in capital assets during the year, it may charge to expenses up to $5,000 of the depreciable assets and depreciate the remainder. The new option is popular; however, for companies in the 46 percent tax bracket, charging capital assets as expenses is frequently as expensive as depreciating the assets and taking the investment tax credit. The amount that can be legally expensed will be raised to $10,000 in 1990, although President Reagan has proposed phasing out the Section 179 program. 10

Taxation, Laws, regulations and rules, Business enterprises, Depreciation, Investment tax credit

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Plant-site location: playing hardball with local governments

Article Abstract:

Government officials are often eager to strike deals with corporations considering locating plants in their community. Tax concessions and other incentives may lure corporations, but there are risks involved. Local taxpayers may view such deals as inappropriate public subsidy of private enterprises; in addition, the package offered by the local or state government may not be financially feasible, and the locality may cut back on attractive services to make up for lost tax revenue. Many companies promise to bring new jobs to a community, but then merely relocate within the area without providing a net increase in employment. If the local community perceives the corporation negatively, the cost of such a negative image may not be offset by the financial incentives.

Economic aspects, Marketing, Business relocation, Municipal government, Industrial locations, Industrial location, Tax incentives, column

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