Transcript Document

Why change my Depreciation Schedule
for the Tangible Property Regulations?
Capitalize or Expense of an Invoice
What do I compare it to?
The Building? No, the Building System.
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
What Beanna Whitlock says about the
Tangible Property Regulations:
Capitalize or Expense of an Invoice
Thanks Eric,
I have coined a new explanation on the repair issue:
“If you don't have a roof identified, how can you
repair it - must all be capitalized.”
Beanna J. Whitlock, EA CSA
Proudly representing America's Taxpayers before the Internal Revenue Service for over 35 years - Enrolled Agents, "EAs" the taxpayer's
voice!
www.whitlocktax.com
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Cost Segregation Expert Breakdown
Into Building Systems
Building Elements/Units of Property
Building Components
$
6.00
Cabinets / Millwork
Moldings
Wood Paneling
Flooring - Vinyl Tile
Flooring - Carpet
Window Treatments
Air Curtain
Building Signage
Specialty Electrical - Kitchen Equip.
Communication / Data
$
$
$
$
$
$
$
$
$
$
20,085.41
8,286.30
2,062.22
519.68
9,084.00
187.90
1,709.08
122.56
15,216.78
32,356.35
Specialty Plumbing - Cooler Equip. / Kitchen Sinks
Security / Exterior Lighting
FRP Wall Panels
Rear Entry Canopy
Interior Overhead Doors - Security
Slatwall / Pegboard Paneling
Surveillance System
Interior Wood Trellis Systems
Liner Panels
Paging System
Windmill
Exhaust Hood
Fire Extinguishers
Cooler
Movable Storage Units
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
10,181.63
9,827.88
1,003.24
20,084.92
21,931.82
9,657.00
4,375.25
6,046.21
109,271.70
1,688.23
17,244.53
11,258.61
1,833.25
10,635.63
30,431.69
Site Work / Improvements
Water Well
$ 5,464,546.00
$
19,318.45
Site Drainage
$
48,990.57
Parking Lot
$
138,639.38
Exterior Signage Structure
$
17,790.84
Parking Lot Striping / Barriers
$
23,325.00
Sidewalks
$
711.12
Landscaping
$
68,635.17
Security Lighting Poles
$
6,374.77
Aggregate Base Paved Area
$
192,436.06
Exterior Fencing / Decking
$
31,986.93
Retaining Walls
$
16,024.07
Fabricated Steel - Bollards
$
2,926.12
Patio Concrete
$
10,848.65
Exterior Wood Trellis Systems
$
2,783.73
Gazebo
$
4,605.26
Building Structure
Structural Components
Roofing Systems
Foundations
HVAC
Electrical
Plumbing
Masonry
Doors & Windows
Insulation
Gas Distribution
Drywall
Painting
Fire Protection & Alarm
Gutters & Downspouts
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
8.00
559,508.38
66,975.93
234,535.89
179,747.78
242,472.40
68,844.81
40,657.35
17,063.50
43,168.87
4,989.84
13,092.14
23,796.64
15,192.82
12,335.58
Cost to Improve Tangible Property
Compare Invoice to
Building
Systems
Building
Structural
Components
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Cost to Improve Tangible Property
Building Systems
1.
2.
3.
4.
5.
6.
7.
8.
9.
Building and Structural Components
HVAC
Fire Protection & Alarm
Elevators/Escalators
Electrical
Plumbing
Gas Distribution
Security Systems
Any other systems identified in
published guidance
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Cost to Improve Tangible Property
Building
Structural
Components*
Building
Systems
Building & Structural
Components,
HVAC
Fire Protection Sys.
Elevators/Escalators
Electrical, Plumbing
Gas Distribution
Security Sys.
Other
•
•
•
•
•
•
•
Roof
Windows
Exterior
Framing
Insulation
Doors
Foundation
* - Discreet and Critical Function
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Cost to Improve
Tangible Property
HVAC
Compressor
Instruments
Blower
Ducts/Vents
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Cost to Improve
Tangible Property
Compare future Invoices to:
• Building Systems valuation
• Structural Components valuation
• Major Components valuation
Cost of
Items
HVAC
%
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
If interested, the last few slides will help you
understand Cost Segregation a bit more.
Do you want to know a little more about how this
powerful service works for you
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Explaining Cost Segregation
The process of analyzing and identifying commercial
building components that are eligible for accelerated
depreciation providing a significant tax benefit for the
taxpayer.
Personal Property is Segregated from Real Property
Worth $50k to $80k per $1 Million in Cost
Works on $250k buildings
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Explaining Cost Segregation
Straight-Line
• Hamburger
Cost Segregation
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•
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•
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2 All Beef Patties
Special Sauce
Lettuce
Cheese
Pickles
Onions on a
Sesame Seed Bun
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Explaining Cost Segregation
Straight-Line
Cost Segregation
• Looks at the building as a Whole
• Identifies Parts and Pieces of
the building
• Structural Building Components
• Non-Structural Building
Components
• Depreciated over 39yrs (27.5yrs)
• Depreciated over 5, 7 & 15 years
• Real Property Only
• Personal Property & Real
Property
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Explaining Cost Segregation
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5 & 7 Year Property
Decorative building elements, wallpaper
Specialty electrical, plumbing, mechanical
Carpet, flooring, crown moldings,
Built In cabinets, counter tops, millwork
Security, special lighting, window treatments
Communications, cable
Kitchen fixtures, refrigeration equipment
15 Year Property
Landscaping, paving, fencing, site utilities,
parking lot, signage, sidewalks, sprinklers,
walkways
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Explaining Cost Segregation
The Applications

Current Buildings Acquired after 1986

New Construction

New Acquisitions

Renovations / Leasehold Improvements
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Explaining Cost Segregation
• An Engineering-Based
Study of the building for
tax purposes.
• Produce a Report that
the Tax Professional
submits with the return.
• Automatically accepted
by IRS.
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Explaining Cost Segregation
Types of Commercial Buildings
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Apartment Complex, Condominium
Auto Dealership
Shopping Mall, Strip Center
Restaurant
Hotel/Motel
Medical/Dental/Veterinary Facilities/Surgical
Nursing Homes/Assisted Living
Office Buildings, Banks
Retail Chains/Franchises/Leasehold Space
Self Storage, Mini Warehouses
Supermarkets, Furniture Stores Etc…
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Information Needed
To Run Preliminary Analysis
• Depreciation Schedule is best
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•
•
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What type of Building?
What did they pay for the building? (without the land)
When did they purchase it?
Have there been any major renovations or
remodels?
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Cost Segregation vs.
Straight-Line Depreciation
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Cost Segregation vs.
Straight-Line Depreciation
Eighth Wonder of the World
This is the Tax Pro's "learning" curve”
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Financial Results of
Cost Segregation
Project #9501
Building Cost
$ 250,176
(with-out land)
Tax Savings Benefit:
$32,845
Study Fee Before Tax:
Study Fee After Tax:
$2,420
$1,549
ROI:
21:1
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Financial Results of
Cost Segregation
Building Cost
$324,000
(with-out land)
Tax Savings Benefit:
Study Fee Before Tax:
Study Fee After Tax:
ROI:
$52,856
$3,400
$2,176
24:1
©2014
Tax Savings. Delivered.
Cost Segregation - TPR Implementation
Thank You
For insights into your specific questions,
Please Contact:
[email protected]
205.837.2026
And Request:
• TPR Resource Implementation Guide
• Phases of Implementation Checklist
• Method Codes List RP 2014-16
www.CostSegServe.com
©2015
Tax Savings. Delivered.
Cost Segregation - TPR Implementation