"EGPC added incentives to the new exploration agreements to encourage investors, as was done in the agreements for natural gas exploration," the source said, adding that incentives include the adjustment of the
cost recovery period and the share of IOCs in the production of crude oil from different concession areas across the country.
The Conference Committee's Report states that this new combined category continues to have a 15-year
cost recovery period.
Identifying the appropriate
cost recovery period can have a material impact on available tax deductions which shelter a project's taxable income.
Under the modified accelerated cost recovery system (MACRS), depreciable nonresidential real property placed into service after May 12, 1993, is generally subject to a 39year
cost recovery period, using the straight-line method and midmonth convention [IRC section 168(c)].
ATRA retroactively extends for two years, through 2013, a short seven-year
cost recovery period for motorsports entertainment complexes under Sec.
"While the upfront investment was considerable, solar technology has advanced to the point where the life expectancy of the solar system far exceeds the expected
cost recovery period on the project.
Remaining in the legislative grave (resurrection is possible when Congress returns from its summer recess in September) with the R&D tax credit extension were other business tax enhancements, such as a provision that would have allowed corporations to receive a refund of a portion of their AMT credits if they invest during 2010 in capital equipment for use in the United States and another giving retailers a one-year extension (through 2010) of the special 15-year
cost recovery period for certain leasehold improvements, restaurant buildings and improvements, and retail improvements.
Additionally, the measure would extend for one year, through 2010: the special 15-year
cost recovery period for certain leasehold improvements, restaurant buildings and retail improvements; active financing exception, from Subpart F of the tax code; five-year depreciation for farming business machinery and equipment that are used in a farming business; and new markets tax credit (NMTC) by permitting a maximum annual amount of qualified equity investments of $5 million.
15-year cost recovery--A temporary depreciation schedule shortens to 15 years the
cost recovery period for some improvements to retail property.
EPA said recovery periods and interest rates vary by industry, but typically one-time capital costs are amortized over a 10-year
cost recovery period at a rate of 7%.
Their efforts resulted in two major victories for the commercial real estate industry--the extension of the commercial buildings energy-efficient tax credit and an extension of the 15-year
cost recovery period for leasehold improvements.
Another issue of concern focuses on the
cost recovery period for "leasehold improvements" to non-residential real property (which, under current law, is 39 years).
