Appendix table 2 — Land improvement tax simulations, North Dakota Prairie Pothole, continued 



Item 



No conversion, 

 with payments 



NPV 



Years 1-10 



With conversion, 

 vtfith payments 



NPV> 



Years 1-10 



With conversion, 

 no payments 



NPV 



Years 1-10 



Dollars 



Tax calculations 

 improvements: 

 5-year ACRS depreciation 

 18-year ACRS SL 



depreciation 

 Depreciation Sch F 1.53 

 Deductions less 1.50 

 Total deduction Sch F 1.55 

 Net farm income Sch F 1.56 

 Investment credit F3468 



1.22 

 Farm income 1040 1.19 

 Total income 1040 1.23 

 Adjusted gross 1040 1.32 

 Total taxes 1040 1.40 

 Business credit 1040 1.48 

 Taxes owed 1040 1.50 



Capital gains improvements 

 (long-term): 

 Capitalized S&WC 



investments 

 Basis of new land 

 Sale 



Long-term capital gain 

 Long-term capital loss 

 Loss carryover 

 Tax on capital gain 



Recapture improvements: 

 S&WC and clearing 4797 



1.23(c) 

 Years held 



Recapture percentage 

 Subject deductions 

 Recapture amount 1040 1.15 

 Investment credit 4255 

 Recapturable amount 

 Recapture amount 1040 1.53 

 ACRS depreciation 4797 



1.21(b) 

 Recapture amount 

 Total recapture 



After-tax income 





 



250,403 





 





 





 







331,603 



816 

 





 





 



258,918 



900 

 





 





 



341,540 





 





 





 



(115,737) 





 





 





 



(167,836) 



'Discounted net present value. 

 ^Section of tiie Internal Revenue Code. 

 'IRS form and line number. 



c 



34 



*«.$. Government Printing Office : 1986 -621-066/02015 



