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Simple English definitions for legal terms
ITC
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A quick definition of ITC:
ITC stands for Investment Tax Credit. It is a type of tax credit that allows businesses to get a percentage of the purchase price of capital goods as a credit against their income taxes. This is meant to encourage businesses to invest in new equipment and technology. However, the Investment Tax Credit was mostly repealed in 1986.
A more thorough explanation:
ITC
ITC stands for Investment Tax Credit, which is a type of tax credit that allows a percentage of the purchase price of capital goods to be deducted from a taxpayer's income taxes. This credit is intended to stimulate business investment in capital goods.
- Under the Investment Tax Credit, a business that purchases new equipment for $100,000 may be able to deduct $20,000 from their income taxes.
- The Tax Reform Act of 1986 repealed the Investment Tax Credit for most property placed in service after January 1, 1986.
These examples illustrate how the Investment Tax Credit works and how it was affected by changes in tax law. The first example shows how a business can benefit from the credit by deducting a percentage of the purchase price of capital goods from their income taxes. The second example shows how the credit was repealed for most property placed in service after a certain date.