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Machinery Replacement Decisions and the Tax Reform Act of 1986

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  • VanTassell, Larry W.
  • Nixon, Clair J.

Abstract

The decision to trade or sell equipment when purchasing new equipment is examined using a computer simulation model. Income and self-employment tax rates reflecting the current law are integrated into the model. The most profitable alternative prescribed is to sell, elect expensing, and use modified accelerated depreciation. The change in the optimum solution is also examined when various tax modeling methodologies are employed.

Suggested Citation

  • VanTassell, Larry W. & Nixon, Clair J., 1988. "Machinery Replacement Decisions and the Tax Reform Act of 1986," 1988 Annual Meeting, August 1-3, Knoxville, Tennessee 270199, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea88:270199
    DOI: 10.22004/ag.econ.270199
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    References listed on IDEAS

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    1. Donald W. Reid & Garnett L. Bradford, 1983. "On Optimal Replacement of Farm Tractors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 326-331.
    2. Anthony H. Chisholm, 1974. "Effects of Tax Depreciation Policy and Investment Incentives on Optimal Equipment Replacement Decisions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(4), pages 776-783.
    3. Ronald D. Kay & Edward Rister, 1976. "Effects of Tax Depreciation Policy and Investment Incentives on Optimal Equipment Replacement Decisions: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 58(2), pages 355-358.
    Full references (including those not matched with items on IDEAS)

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