personal - Linkenheimer LLP CPAs & Advisors

Could a Cost Segregation Study Help You Accelerate Depreciation Deductions?

Businesses that acquire, construct or substantially improve a building — or did so in previous years — should consider a cost segregation study. It may allow you to accelerate depreciation deductions, thus reducing taxes and boosting cash flow. And the potential benefits are now even greater due to enhancements to certain depreciation-related breaks under the Tax Cuts and Jobs Act (TCJA).

Real property vs. tangible personal property

IRS rules generally allow you to depreciate commercial buildings over 39 years (27½ years for residential properties). Most times, you’ll depreciate a building’s structural components — such as walls, windows, HVAC systems, elevators, plumbing and wiring — along with the building. Personal property — such as equipment, machinery, furniture and fixtures — is eligible for accelerated depreciation, usually over five or seven years. And land improvements — fences, outdoor lighting and parking lots, for example — are depreciable over 15 years.

Too often, businesses allocate all or most of a building’s acquisition or construction costs to […]

By Linkenheimer LLP|2020-09-03T20:04:28+00:00October 3rd, 2018|cost segregation, deductions, depreciation, New Tax Laws|0 Comments

Personal Exemptions Suspended

Under pre-Act law, taxpayers determined their taxable income by subtracting from their adjusted gross income any personal exemption deductions. Personal exemptions generally were allowed for the taxpayer, the taxpayer’s spouse, and any dependents. The amount deductible for each personal exemption was scheduled to be $4,150 for 2018, subject to a phaseout for higher earners.

New law. For tax years beginning after Dec. 31, 2017 and before Jan. 1, 2026, the deduction for personal exemptions is effectively suspended by reducing the exemption amount to zero.

By Linkenheimer LLP|2020-09-03T20:04:47+00:00January 8th, 2018|New Tax Laws, Uncategorized|0 Comments

“Heavy” Trucks and Vans Continue to Qualify for Fast Cost Recovery

Passenger autos used primarily for business (i.e., greater than 50 percent) are subject to significant federal depreciation limitations, e.g., $3,160 for passenger autos and $3,460 for light trucks or vans in the first year at 100 percent business use. However, the luxury auto depreciation limitations only apply to passenger autos. A truck or van escapes passenger auto status if its Gross Vehicle Weight Rating (GVWR-the manufacturer’s maximum weight rating when loaded to capacity) exceeds 6,000 pounds. A vehicle that is not classified as a passenger auto and used primarily for business is depreciated without limit under the MACRS rules. And, these vehicles also qualify for the Section 179 deduction. Under current 2015 tax law, you can expense a total of $25,000 for all eligible property placed in service in tax years beginning in 2015 using Section 179. However, Congress may extend the increased Section 179 ($500,000) and bonus depreciation (50 percent) that existed for 2014. It should be noted that qualified vehicles are likely subject to a $25,000 per vehicle limit for Section 179 expensing if Congress extends the increased deductions. And, you must have real-time records (such as a mileage log) that establish […]

By Linkenheimer LLP|2020-09-03T20:05:21+00:00November 5th, 2015|depreciation|0 Comments

Understanding the Value of Next-Gen Cost Segregation Studies

Cost segregation studies involve identifying personal property assets with shorter tax depreciation lives (i.e. 5 or 7 years) that have been grouped with real property assets (typically 39 year) and separating these out for tax depreciation purposes in order to accelerate depreciation deductions. The thought of cost segregation for real estate can be an overwhelming concept for most taxpayers, but thanks to the newly revised tangible property regulations that were passed in 2014, these next-generation cost segregation studies have become an even more powerful tool for real property owners. These detailed studies allow us to reduce tax liabilities for our clients and in turn, put more dollars back into our clients’ pockets and businesses, further stimulating growth and peace of mind. So while the value of these studies is unmistakably positive, understanding the details of it are a bit more complex. Heidi Henderson from Engineered Tax Services, published a detailed and thorough article on understanding and realizing the value of these next-gen studies. To view the complete article click here. As a general rule of thumb, if you own real property with a value greater than $750,000, it is very likely that you would […]

By Linkenheimer LLP|2020-09-03T20:05:31+00:00February 24th, 2015|cost segregation|0 Comments