Suppose the U.S. Congress decides to stimulate business investment in new plant and equipment by providing a reduction in income taxes equal to 10% of the costs of eligible new investments. If a firm acquires $100 million in new plant and equipment and consequently receives a $10 million dollar reduction in income taxes, should the $10 million be interpreted

(a) as income,

(b) as a reduction in the cost of the acquired assets, or

(c) in some other manner? Discuss.P-698