Tax Credits
You can automatically calculate an asset's Investment Tax Credit (ITC). You can use investment tax credit as specified in United States tax law that affects assets placed in service before 1987. Oracle Assets calculates the ITC amount and basis reduction amount and reduces the asset's depreciable basis.
An asset is eligible for ITC only if both the book and the category allow ITC. ITC only applies to assets depreciating under life-based depreciation methods.
Enter an asset's ITC
ITC rates vary according to asset life. You choose a rate from a list of rates that are defined for the asset life and date placed in service. After you enter the ITC Rate for your asset, Oracle Assets automatically calculates and displays the ITC Amount and the Recoverable Cost.
Oracle Assets calculates the ITC for an asset. The ITC Basis for an asset is the lesser of its original cost and the ITC Ceiling, if one is used.
ITC Basis Reduction Amount = ITC Basis X Basis Reduction Rate
ITC Amount = ITC Basis X ITC Rate
When you retire an asset for which you have claimed an Investment Tax Credit, Oracle Assets checks if the retirement is premature. If you retire an asset before it is fully reserved, the Calculate Gains and Losses program calculates the recapture amount.
ITC Recapture = ITC Amount X ITC Recapture Rate X (Cost Retired / Current Cost)
See Also
Assigning Tax Credits
Defining Investment Tax Credit Rates
Defining Depreciation Books
Setting Up Asset Categories
Investment Tax Credit Report
