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RCED-85-140 1 (1985-07-10)

handle is hein.gao/gaobabnsw0001 and id is 1 raw text is: RELEA ED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20648 NttJuly 10, 1985 to be roleased euttde t 0,pe, ei RECOC COMMCNITY, ACo~utntkf 0t4.0 except o bas cf S.3 of c va ,iil AND ECONOMIC DViEOPMl4by the Office 01 Coagressjo. ! , . B-219118 The Honorable Mike Synar Chairman, Subcommittee on Environment, 127614 Energy, and Natural Resources Committee on Government Operations House of Representatives Dear Mr. Chairman: Subject: Synthetic Fuels Corporation's Profit-Sharing Provisions with Six Proposed Projects (GAO/RCED-85-140) On October 26, 1984, you requested that we review the U.S. Synthetic Fuels Corporation's (SFC's) methodology for estimating federal receipts anticipated from profit-sharing provisions in proposed financial assistance agreements between SFC and sponsors of synthetic fuels projects. In subsequent discussions with your office, we agreed to --compare SFC's original profit-sharing revenue projections with the sponsors' projections for six projects; --compare SFC's original profit-sharing revenue projections with its January 1985 revenue projections; --convert the January 1985 profit-sharing revenue projections into their present-discounted value; --compute the potential net effect on the U.S. Treasury that could result from the proposed financial assistance agree- ments. For such an assessment we would consider federal outlays from price guarantee payments, project tax credits, and federal receipts from profit sharing and project income taxes (also converted into present-discounted value); --compare SFC's income tax projections for two projects, which were based on the 46-percent maximum corporate tax rate, with revised projections that use the sponsors' average effective tax rates for the 3-year period 1982 through 1984; and (308764)

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