Cost Segregation Studies
Cost segregation goes far beyond the identification of furniture, fixtures, and equipment (FF&E). It is a strategic analysis that identifies, segregates, and reclassifies property costs currently being depreciated over a longer term (such as 39 years) to shorter depreciable periods. This process allows businesses to take advantage of tax deductions that they would normally wait years to receive – thus, minimizing tax liability, liberating cash flows, and allowing for further investments in the business. Additionally, a taxpayer can utilize a properly prepared cost segregation study and reflect the tax benefits on a current return without amending prior year returns.
In 2013, the IRS released final tangible property regulations that require the capitalization of amounts paid to acquire, produce, or improve tangible property, while allowing amounts for incidental repairs and maintenance of property to be deducted. Plus, the regulations explain how to distinguish between capital expenditures and deductible business expenses. They are generally applicable to tax years beginning on or after January 1, 2014, and impact all businesses that own or lease tangible property—including buildings, machinery, vehicles, furniture and equipment.
The IRS threshold allows businesses to expense up to $2,500 per item, and businesses that conduct a financial statement audit can continue to utilize the higher $5,000 de minimis safe harbor amount.
Tax Credits & Incentives
The government is utilizing tax credits and incentives at both the Federal and state levels to encourage investments and conservation and to stimulate economic development. From general to industry-specific tax incentives, your CPA firm’s depth of knowledge – and ability to assess the tax implications of your potential future plans – is instrumental to the minimization of your taxes. Plus, since the taxpayer bears the burden of proof, the documentation of your tax credit qualifications is imperative. Our process will assist you in evaluating, identifying, and potentially qualifying for applicable tax credits and incentives.
Tax Due Diligence
During the tax due diligence process, the CRI team reviews historic tax profiles and filing histories to assess risks and opportunities. We are also available to evaluate acquisition structures and comment on the purchase agreement—plus executive compensation agreements, if needed. CRI can also review and evaluate potential tax credits and incentives that might be beneficial post-deal.