2.311 Five-Year Amortization of Pollution Control Facilities

Origin: Due to Massachusetts' reliance on the Internal Revenue Code (Code) for purposes of determining income, taxpayers may elect to amortize the cost of a certified pollution control facility over a five-year period, allowing for potential accelerated recovery of these costs. See Code § 169. Five-year amortization is only available for pollution control facilities subsequently added to plants that were in operation before 1976. In the absence of Code § 169, taxpayers would be required to recover the cost of pollution control facilities using one of the depreciation methods that is generally available for machinery and equipment under Code § 167. To the extent that five-year amortization allows accelerated cost recovery, it results in a deferral of tax, which could be viewed as an interest-free loan. Such a deferral of tax constitutes a tax expenditure.

Origin: IRC § 169; M.G.L. c. 63, § 30.3