ANOTHER UTILITY files a back claim for investment tax credits for the period 1986 through 1990
The US used to allow companies investing in new equipment to claim as much as 10% of the cost as a credit against income taxes. The idea was to induce companies to invest in new plant and machinery, thereby creating more jobs. Congress repealed the investment credit at the end of 1985. However, a company could still claim investment credits as late as 1990 on any property that it could show it had to build “to carry out a written service or supply contract” in effect at the end of 1985.
A growing number of utilities have argued that they qualify for these tax credits on all their spending on power plants during the period 1986 through 1990 on grounds that their legal franchises to serve local ratepayers required them to invest in new power plants and other equipment. No one has won such a claim yet in court.
Nevertheless, Con Ed filed suit in September to claim back credits. The case is before a federal district in New York.