Current Tax Law and Economics of Industrial Projects

摘要

Income taxes play a major role in the economics of industrial projects, but tax laws frequently change, so bringing current material into the classroom can be difficult. Nonetheless, only teaching basic principles and requiring students to learn tax regulations on their own leaves a void, for understanding regulations can be a difficult challenge. An alternative to this is to teach principles using today's laws, or minimally to explain any changes from classroom presentations and provide handouts. This strategy motivates students to learn something that they can use, and it exposes them to realities of interpreting and implementing regulations. This paper reviews current legislation insofar as it impacts the taxation of engineering projects. Its objective is to keep professors up-to-date and to provide optional reading for students (via http://engrecon.home.att.net), rather than to present a more comprehensive treatment of taxes available elsewhere. The paper's coverage includes major modifications to the tax code, such as those involving the depreciation of business use assets under the Modified Accelerated Cost Recovery System (MACRS) and expensing the cost of business use assets under Internal Revenue Code Section 179, as well as routine ones, such as deductions, exemptions, and tax brackets. The final topic clarifies when the commonly used assumption of treating gains or losses on disposal as ordinary income is acceptable. This is particularly relevant to smaller organizations that operate as pass-through entities, where capital gains provisions can differ sharply from corporate regulations.