Question:

Section 11 of the Internal Revenue Code of 1954 was modified by the Revenue Act of 1964 reducing corporate tax rates effective January 1, 1964. Deferrals of the tax benefits credited to Account 281, Accumulated Deferred Income Taxes - Accelerated Amortization, from accelerated amortization permitted by Section 168 of the Internal Revenue Code of 1954, were based on the superseded income tax rates. What tax rate should be used to credit the deferred amounts to income?

Answer:

Amounts accumulated in Account 281, Accumulated Deferred Income Taxes - Accelerated Amortization, shall be credited to Account 411, Income Taxes Deferred in Prior Years - Credit, at the same rate that was originally used to defer the amounts in Account 281. Therefore, the amounts previously deferred will be fully restored to income over the appropriate estimated remaining useful life allowable for tax purposes of the related property.