Leasing and Taxes
- Investment tax credits
- ITCb ITCo + ITCu
- want to shift ITCs to where their value can be maximized
- Depreciation tax shields
- what if tb not equal to to?
- tb(DEPb) not equal to to(DEPo)
- watch out for "constructive sale" interpretation
of lease
- what if DEPb not equal to DEPo?
- Manufacturer versus Third-Party Lessors
- for a manufacturer lessor the basis for calculating depreciation
(and ITCs) is the manufacturing cost while for a third-party lessor the
basis for calculating depreciation (and ITCs) is the sale price of the
asset, but
- for manufacturer lessors the manufacturing profit (sale
price minus cost) can be realized over the life of the lease
