Accelerated depreciation for slump sale of wind assets

Venugopal (Student CFA) (25 Points)

07 January 2014  

Before March, 2012, a new wind power plant asset (excluding the land) could be depreciated by 80% in the first year alone. This incentive has been discontinued as of March, 2012. However, I am told that by acquiring wind farms installed prior to the discontinuation of the incentive under the "slump sale" banner, the buyer can write down the assets by 80% depreciation again in the first year. I would appreciate your valuable opinions in this context.


The article here ( with a few precedents expresses the opinion that depreciation should be allowed to the buyer at fair value. Going beyond the question of IF it should be allowed, since the accelerated depreciation benefit has been withdrawn (assumption here is depreciation IS allowed), will it be allowed at the current rate or the prevailing rate when the asset was created?