N.M. Admin. Code § 17.3.320.9 - PREAMBLE

A. Uniform accounting procedures shall be used by all public utilities for amounts certified by the federal government for accelerated amortization pursuant to Section 168 of the Internal Revenue Code and applicable regulations and for liberalized depreciation allowances pursuant to Section 167 of the Internal Revenue Code. Uniform accounting procedures shall be used by all public utilities for amounts certified by the federal government for federal investment tax credits pursuant to Section 46 of the Internal Revenue Code.

B. Pursuant to IRC Section 168 certificates of necessity were issued by the federal government only after evidence had been presented that the facilities were essential to the national effort and that there was probably future economic usefulness of the facilities. It is recognized that the amortization privilege assures only one thing, namely that the tax reduction will be realized during the period of amortization, which is usually five (5) years, instead of being spread over the life of the property.

C. Subsequently Congress and the Internal Revenue Service in IRC Section 167 and Treas. Reg. Section 1.167 have made provisions for liberalized depreciation allowances wherein the tax reduction benefits are similar in character to those of the accelerated amortization privilege. The tax reduction will be realized during the early years after the purchase and installation of the asset, and the taxes will increase in the later years of the asset's life.

Notes

N.M. Admin. Code § 17.3.320.9

Recompiled 12/30/01