Pdxrailtransit Wrote:
-------------------------------------------------------
> George Andrews Wrote:
> --------------------------------------------------
> -----
> > Oh yea -- Federal Tax rules of the day allowed
> a
> > rebuilt diesel locomotive to be re -
> capitalized
> > as a new unit - IF the cost of rebuild was more
> > than 50% of the original cost of the unit.
> Espee
> > would use this same tax rule to their advantage
> in
> > their many rebuilds of Geeps & SD's.
>
> Didn't the "E" as in G9E, SD9E actually stand for
> equipment company? Probably part of the
> re-capitalization plan.
Yea, it was a Tax Shell Game played by Espee, as described by Joe Strapac in his Southern Pacific Historic Diesels Volume 4 -- SD-7 & SD-9 Locomotives; " From an accounting standpoint, SP sold fully - amortized locomotives to its wholly - owned subsidiary Southern Pacific Equipment Company ( hence the SD-9 "E" designation). SPE in turn contracted with Sacramento General Shops ... to " upgrade " locomotives and return them to new or better-than-new condition. Once shop work was complete, the " Equipment " company would lease these locomotives back to the " Railroad " company as an in - house transaction. SPE thereafter paid the taxes on these re - capitalized machine, but the railroad reaped the benefits of more reliable equipment obtained at a lower cost than new locomotives. "
Also worth noting the word upgrading as described in the same text : " Upgrading was different than rebuilding, at least in the contractual sense. Salaries paid to employees were based, by agreement, upon what kind of work the employee was performing. People " upgrading " locomotives were paid differently ( presumably less ) than if they were " rebuilding " these same machines. Hairsplitting ? Yes, but certainly a fact of life. "