Tax advisors working on investment tax credit (ITC) transactions are often asked what is the “right” way to model the timing of the recognition of the ITC benefit in an after-tax cash flow model. There is not one answer to this question; further, some public companies in their after-tax cash flow models allow their financial statement accounting policy regarding recognition of the ITC to influence their treatment of the ITC benefit in after-tax cash flow models.

There appear to be two plausible approaches with respect to the timing of ITC benefit in an after-tax cash flow model. Click here to read this post: ITC Model 720290789_11 revised 6-23-16.