Tax Accounting Vs. Book Accounting for Small-Scale Sites: A Case History From Four Small-Scale Sitesby Douglas E. Keats, STS Consultants Ltd, Northbrook, IL, USA,
Daniel T. Stone, STS Consultants Ltd, Northbrook, IL, USA,
Abstract: The Public Utilities Regulatory Policies Act (PURPA) and the tax incentives the federal government granted in the early 1980's, rekindled interest in hydropower unlike anything else could possibly have done. The opportunity actually getting tax credits, accelerated depreciation and long term revenue were a blessing to those who were interested in developing hydropower. However, very little is shared about the actual benefits that have accrued on sites. This paper seeks to take four sites and review actual performance of each in terms of investment tax credits, energy tax credits, 'book' depreciation, and tax return depreciation. For investment of over 8,000,000 on these four sites, our company received total tax credits of 1,314,000. On our book financial statements, we showed depreciation of 751,000. Our tax depreciation capability was 3,190,000. The total difference was 2,439,000.
Subject Headings: Taxation | Hydro power | Electric power | Public policy | Federal government | Investments | Case studies
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