What many people don’t know is that the sale price of an asset is not the purchase price. The purchase price is the price a company wants to pay for the asset. The purchase price is also the amount of money they want to pay for a plant, but they are not required to pay for all the services and environmental impact that goes along with buying the asset.
The most common example of this is what happens with the acquisition of a plant. Many companies, like Wal-Mart, are required to pay a certain percentage of their acquisition price (and their profits) to the public via a tax bill. This happens for a variety of reasons, mostly because they can get more tax dollars by providing services to the local community. The reason Wal-Mart has paid no tax is because the government doesn’t want them to.
That’s sort of true for a plant too. When an individual owns a plant, they typically are subject to a tax bill (often over $100,000). This is because the plant owner has to pay for the land and the infrastructure necessary to run a business. This is an environmental cost, especially if the plant generates a lot of greenhouse gases, so even though the plant is profitable for the plant owner, they still have to pay to the general public.
You can argue that you are actually paying the government for the infrastructure, but this is not much different than paying for the plant’s construction costs. The government is also charged an environmental tax which is almost always between 5 and 10 cents per ton of CO2 emitted. If the plant owner also wants to put in solar panels to generate the electricity required for the plant they would pay this tax too, plus also a fee or cost to be paid to the state.
This is one of the most common questions I get from readers. I have several clients who have had this issue with their new construction home. There are various different scenarios that can affect the tax. The most common scenario is that the owner of the plant wants to include investment in the plant in the purchase price of the house. The other common scenario is that the owner wants to include interest in the plant as part of the purchase price of the house.
That would be a mistake. Generally speaking, the state taxes are the least expensive to the owner of the plant. But the tax code itself is a very confusing mess. The most common scenario is that the state wants to increase the purchase price of the house by including the plant in the purchase price. But the owner can also include an investment in the plant in a lower cost for the house.
The fact is that the owner wants to include interest in the plant as part of the purchase price of the house. This is where the investment can add up.
The state tax system, which is what the owner of the plant wants to do, needs to be more rigorous than that of the investor. We think the state could increase the state tax for the home by at least 70%.
This is where the state tax could be even more onerous. The owners could deduct the state tax from the purchase price. The state tax is usually deductible for the same reason that the owner would be able to deduct the state tax from the sales price. But the state could be even more onerous by allowing the owner to deduct the state tax from the purchase price because the state tax is not deductible from the sales price.