Investment Tax Credit (ITC) Reduction Amount

For assets placed in service after 1982 but before 1986, a company has two choices if claiming the Investment Tax Credit:

• take the full ITC but reduce the depreciable basis of the asset, or

• take a reduced ITC without adjusting the basis.

Deciding which option is better depends on other tax and depreciation considerations. You choose the ITC option when you add or change the asset in Asset Detail by specifying whether to take a full credit (thus reducing the basis) or a reduced credit, or that the asset meets special ITC option rules for certain property types, such as certified and noncertified historic structures and energy properties.

When you take the ITC, by default the system automatically reduces the basis based on the date you placed a property in service and the ITC option (according to Code Sections 38, 46, and 48). See the following table for details. You can enter any adjustments needed by overriding the amount of ITC the system calculates. You can use the Book Overrides page on the Edit Company screen to override the ITC basis reduction.

ITC Basis Reduction*
Placed in Service	No Reduction	50% Reduction	100% Reduction
On or before 12/31/82	All but E and	None	E,
On or between 1/1/83 and 12/31/85	B, D	A, C, G, I,	E,
On or after 1/1/86	None	1, 2, 3, I, J,S,T,U,V,W,Y	4, A, C,G,H

* The numbers and letters in this table indicate Investment Tax Credit Options.