"The fund will provide grant finance to reduce the cost of advanced low-carbon technologies, such as those related to waste-to-energy schemes and smart grids, which often have initial high investment costs and long
cost recovery periods."
Such studies separate personal property (fixtures, lighting, etc.) that have shorter
cost recovery periods than real property, such as commercial buildings, assisted living facilities and residential rental units.
Other subjects touched on in TEI's comments include amount paid to terminate certain contracts or in connection with tangible property owned by another, defense of title, transaction costs, book-tax accounting conformity, and safe harbor
cost recovery periods.
One issue that will come up in 2001 is
cost recovery periods for corporate assets.
The General Accounting Office has recommended that purchased intangible assets, including goodwill, be amortized over specific statutory
cost recovery periods. Several alternative bills have been introduced in Congress.
The changes brought about by TRA 86 concerning capital gains taxation, the cost recovery periods and write-off methods for real property, and the deductibility of passive losses, were all at odds with good tax economics.
TRA 86 not only lengthened the cost recovery period of most real property--non-residential property to 31.5 years and residential rental property to 31.5 years and residential rental property to 27.5 years--it also eliminated the 175% declining balance write-off method.
By increasing the cost recovery period over 60% and by shifting much of the cost that could be recovered from the earlier to the later years, TRA 86 decreased the value of real estate both to current holders and to all prospective buyers.
Tying the cost recovery period to the "life" of the investment actually creates a bias against investment in "long-lived" capital, i.e.
