CLFP FINAL STUDY GUIDE 2026
COMPLETE QUESTIONS AND ANSWERS.
⩥ ITC (Investment Tax Credit). Ans: *Created in 1962*
-Allowed purchasers of capital equipment to claim a tax credit they
could use to offset their total tax liability (tax credit started at 7%)
-Became a "give and take" with the government (when the government
needed more tax revenue= NO ITC/when government wanted businesses
to buy more equip & invest= YES ITC)
⩥ ADR (Asset Depreciation Ranges). Ans: *1972*
Law introduced by congress that:
-Created asset categories (medical devices, trucks)
-Officially decided how many years different types of equipment could
be depreciated over time
*later replaced by ACRS*
⩥ FASB 13. Ans: This set the accounting definition of a lease
-Set 4 criteria to classify a lease as either a capital lease or operating
lease
-Meeting just ONE of the 4 criteria= capital lease
(later replaced by ASC 842)
, ⩥ Safe Harbor Leasing. Ans: A method of transferring tax benefits from
an equipment user to an unrelated third-party investor, providing tax
shelters to investors & significantly impacting the growth of leasing
⩥ Accelerated Cost Recovery System (ACRS). Ans: -Only 5 asset
classes ranging from 3-15 year life spans
-Specified the percentage of the cost that could be written off each year
(no more estimating how long asset would last or what it would be
worth)
⩥ TEFRA (Tax Equity and Fiscal Responsibility Act). Ans: *1982*
-A tax law passed to increase federal tax revenue lose under ERTA
ERTA gave generously-TEFRA pulled back
⩥ DRA (Deficit Reduction Act). Ans: *1984*
-Tax law that increased tax revenue and required lessors to account for
the time value of money when taxing uneven lease payments
"hurt companies"...govt. said "the timing of payments matter" (account
for when each lease payment is rec'd not total amounts)
COMPLETE QUESTIONS AND ANSWERS.
⩥ ITC (Investment Tax Credit). Ans: *Created in 1962*
-Allowed purchasers of capital equipment to claim a tax credit they
could use to offset their total tax liability (tax credit started at 7%)
-Became a "give and take" with the government (when the government
needed more tax revenue= NO ITC/when government wanted businesses
to buy more equip & invest= YES ITC)
⩥ ADR (Asset Depreciation Ranges). Ans: *1972*
Law introduced by congress that:
-Created asset categories (medical devices, trucks)
-Officially decided how many years different types of equipment could
be depreciated over time
*later replaced by ACRS*
⩥ FASB 13. Ans: This set the accounting definition of a lease
-Set 4 criteria to classify a lease as either a capital lease or operating
lease
-Meeting just ONE of the 4 criteria= capital lease
(later replaced by ASC 842)
, ⩥ Safe Harbor Leasing. Ans: A method of transferring tax benefits from
an equipment user to an unrelated third-party investor, providing tax
shelters to investors & significantly impacting the growth of leasing
⩥ Accelerated Cost Recovery System (ACRS). Ans: -Only 5 asset
classes ranging from 3-15 year life spans
-Specified the percentage of the cost that could be written off each year
(no more estimating how long asset would last or what it would be
worth)
⩥ TEFRA (Tax Equity and Fiscal Responsibility Act). Ans: *1982*
-A tax law passed to increase federal tax revenue lose under ERTA
ERTA gave generously-TEFRA pulled back
⩥ DRA (Deficit Reduction Act). Ans: *1984*
-Tax law that increased tax revenue and required lessors to account for
the time value of money when taxing uneven lease payments
"hurt companies"...govt. said "the timing of payments matter" (account
for when each lease payment is rec'd not total amounts)
