Abstract The Accounting Principles Board of the organization American Institute of Certified Public Accountants issued "Opinion No. 2," in December, 1962, which supported the thesis that the investment credit should be reflected in the net income of the firm over the productive life of the acquired property. The effect of the amendment is to provide an additional item to be used in the determination of the tax liability to the federal government. No longer does the tax law specify an alternative method of allocating the cost of plant and equipment in the determination of taxable income. The full cost of the asset is now deductible, in accordance with acceptable depreciation methods, in arriving at taxable income as it is in the determination of business income. In the jargon of the tax allocationist the investment credit is now a difference of specification rather than, as under the previous law, a combination of a difference of timing and a difference of specification. There is therefore no longer any deferral of the payment. The investment credit results in a permanent reduction barring unforeseen changes in the law in the total tax bill of the enterprise.
Thomas F. Keller (Fri,) studied this question.