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A Message to Our Valued Clients

In the interest of public health and the safety of our community, and in compliance with Governor Cuomo’s executive order, Freed Maxick has suspended onsite client work and cancelled all office visits. Meanwhile, our team is working remotely to provide the same high-quality service you have come to expect. Utilizing the best technology at our disposal, we will continue to meet all of your audit, tax, and advisory needs and help you navigate the business implications of the pandemic as it unfolds. You can reach your Freed Maxick representative directly by email or phone, or contact our main line at 716.847.2651.

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Summing It Up

Keeping you ahead of the curve with timely news & updates.


Don Warrant, CPA

Recent Posts

Tax Update for Country Clubs| Golf Course Owners

It’s always a benefit to business and real estate owners to uncover ways to save money. Did you know that the tax depreciation records of golf course owners likely contain a tax deduction that can be claimed for the 2012 tax year?

The tax deduction is claimed by adopting specific sections of the temporary repair regulations that were issued in December 2011. The IRS is allowing taxpayers to adopt specific sections of these regulations for their 2012 tax year and to defer other sections that may result in income until the 2014 tax year.  Specific sections of these regulations allow taxpayers to claim a deduction for assets that are now reclassified as repairs, routine maintenance, or were disposed of before 2012.

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It’s a lot of information to wade through, but CSP 360 and their affiliate Freed Maxick CPAs can help country clubs and golf course owners navigate through the complex regulations.

Get the Tangible Property Q&A now to learn more!

Check out a few examples of how we can help:

1) Tax Deductions: Golf course owners that capitalized improvements to buildings and the course since 1987, likely removed or abandoned assets as a result. The remaining tax basis in these assets and perhaps, the costs of removal, can be claimed as a tax deduction for 2012 tax year. 

For another example, let’s assume during 2008 that $1 Million of structural improvements were made to a club house facility and $1 Million of land improvements were made to the golf course bringing the total investment to $8 Million. A cost segregation specialist identifies $1 Million of tax basis remaining in the real and personal property disposed of in conjunction with the improvements.

Result? The golf club owner is entitled to claim a $1 Million tax deduction for the 2012 tax year. 


2) Regulation Changes
: All golf course owners should prepare for other changes under these regulations which may affect current accounting policies and procedures. For example, a golf course owner that has historically expensed assets for tax purposes based on their book capitalization policy may need to act before 2014 to be able to continue to deduct assets under this policy beginning in 2014. In addition, all golf course owners will be required to review their treatment of materials and supplies and repairs in order to comply with the new repair regulations. 


3) Uncovering Cash Flow:
For example, let’s assume a club house was constructed and placed in service during 2004 with an original cost of $2 Million and the golf course was constructed with an original cost of $4 Million for a total capitalized cost of $6 Million. A cost segregation study reclassified $2.4 Million of the capitalized cost as land improvements and tangible personal property. 

Result? This reclassification results in a $1.5 Million tax deduction for 2012 providing additional cash flow from the federal and state income tax savings. 

CSP 360 is affiliated with Freed Maxick CPAs and is one of the nation's leading providers of cost segregation and consulting services to real estate owners. CSP 360 is the national leader in providing cost segregation services to the golf and hospitality industries. Our experienced team of Construction Engineers and CPAs work in the cost segregation service niche with no outsourcing.

Allow us to show you how our Cost Segregation and CapX services could result in a substantial income tax savings for the 2012 tax year. Contact Us today to learn more about how we can assist.

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Federal Tax Credit for Hiring Targeted Employees Extended

Employer’s (including tax exempt entities) that experience employee turnover or are expanding their workforce should continue to screen their new hires for federal tax credits.  Tax credits are a dollar for dollar reduction of the amount of tax that is owed.  If the tax credits exceed the tax liability, the excess can be carried back to the preceding tax year or forward for up to 20 years.  The result is a decrease in the employer’s cost of doing business.

The American Taxpayer Relief Act of 2012 extended the date by which employers can obtain a federal tax credit for hiring targeted individuals.  The tax credit, which is normally $2,400 per certified individual calculated based on eligible first year wages, can be as much as $9,600 for U.S. veterans.  The Tax Act extended the deadline for hiring targeted indivduals to December 31, 2013.  The extended deadline applies to all catergories of targeted individuals including the groups that expired on December 31, 2011. 

In addition, certain tax exempt employers can continue to claim a federal income tax credit of up to $6,240 per targeted veteran.  Since tax exempt entities are exempt from federal income tax, the tax credit is applied against tax-exempt entities share of social security tax. 

In order to claim these federal income tax credits, the targeted individual must be certified by the State Workforce Agency within 28 days of hire. Freed Maxick CPAs, P.C. provides the training necessary to obtain the targeted certification as well as the preparation of the annual tax credit form necessary to claim the tax credits.  

To learn more about how we can help check our our website.

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IRS issues Technical Amendments to the Tangible Property Regulations

On Friday December 14, 2012, the IRS issued technical amendments to the tangible property regulations that were originally issued in December 2011.  These technical amendments change the effective date of the final regulations for complying with the new rules on capitalization and repairs of tangible property from taxable years beginning on or after January 1, 2012 to taxable years beginning on or after January 1, 2014. 

The technical amendments allow taxpayers to choose to apply sections of the temporary regulations to taxable years beginning on or after January 1, 2012 and prior to the release of the final regulations.  As a result, taxpayers have an opportunity to utilize the 19 method changes contained in the temporary regulations in their tax planning for the 2012, 2013, and 2014 tax years.

Since the final regulations are effective for taxable years beginning on or after January 1, 2014, all taxpayers should conduct a comprehensive review of their accounting methods for tangible property (including materials and supplies) before the start of their 2014 tax year to identify the method changes that may be necessary to comply with the final regulations. Favorable method changes can be made in 2012 or 2013 and method changes that are unfavorable can be deferred until 2014.

Our CapX Program

FreedMaxick's CapX (Capitalization or Expense) Consulting Service is a comprehensive program designed to quickly and efficiently bring you into compliance and optimal tax savings. Click here for more information or call Don Warrant at 716-847-2651.


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New Tangible Asset Regulations - ASC 740 Considerations

All About ASC 740 and the New Capitalization vs. Repair Regulations (Part 10)

Author: Don Warrant

In December of 2011, the IRS published comprehensive new regulations governing capitalization vs. deductible repair expenditures for tangible property. For many taxpayers this will mean making changes to accounting methods and systems, new tax compliance requirements, new tax planning opportunities, and on a positive note, the chance to expense items capitalized as improvements in prior tax years.

Taxpayers can implement method changes in 2012, 2013 or 2014 according to IRS Notice 2012-73.  Therefore, taxpayers should incorporate the method changes provided by the new regulations in their tax planning for 2012, 2013 and 2014.

Highlights

  • tangible asset regulationsTangible asset and repair regulations are prospective
  • Should not impact financial statement period prior to March 7, 2012
  • Taxpayers need to evaluate ASC 740 reserves based on intent to file Form 3115s pursuant to Rev. Proc. 2012-19 and Rev. Proc. 2012-20

Our CapX Program

FreedMaxick's CapX (Capitalization or Expense) Consulting Service is a comprehensive program designed to quickly and efficiently bring you into compliance and optimal tax savings. Click here for more information or call Don Warrant at 716-847-2651.

Click here for all the articles in this blog series.

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Capitalization vs. Repair Regulations - Accounting Method Changes

Understanding Accounting Method Changes under the New Tangible Asset Regulations (Part 9)

Author: Don Warrant

In December of 2011, the IRS published comprehensive new regulations governing capitalization vs. deductible repair expenditures for tangible property. For many taxpayers this will mean making changes to accounting methods and systems, new tax compliance requirements, new tax planning opportunities, and on a positive note, the chance to expense items capitalized as improvements in prior tax years.

Taxpayers can implement method changes in 2012, 2013 or 2014 according to IRS Notice 2012-73.  Therefore, taxpayers should incorporate the method changes provided by the new regulations in their tax planning for 2012, 2013 and 2014.

Highlights

  • capitalization vs repairIRS issues two new revenue procedures (Rev. Procs. 2012-19 and 2012-20)  that provide taxpayers with  automatic  accounting method changes under Rev. Proc. 2011-14
    • provides audit protection for prior years
    • waived scope limitation for taxpayers under exam, taxpayers who changed accounting methods for the same item in the last five years or in their last year of their business
  • Overview of method changes
CapX
  • Most changes made with a section 481(a) adjustment
  • May file single Form 3115 for two or more  concurrent changes under the respective procedure
  • Allowed to make late GAA elections only for their first or second taxable year beginning after Dec. 31, 2011
  • Two year window to accommodate changes!

Our CapX Program

Freed Maxick's integrated team of tax and accounting method specialists, and cost segregation engineers can help you comply with these complicated regulations. We’re pleased to bring you FreedMaxick's CapX (Capitalization or Expense) Consulting Service -- a comprehensive program designed to quickly and efficiently bring you into compliance and optimal tax savings. Click here for more information or call Don Warrant at 716-847-2651.

Click here for all the articles in this blog series.

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New Tangible Asset Regulations - General Asset Accounts

Guidance on General Asset Accounts and the New Capitalization vs. Repair Regulations (Part 8)

Author: Don Warrant

In December of 2011, the IRS published comprehensive new regulations governing capitalization vs. deductible repair expenditures for tangible property. For many taxpayers this will mean making changes to accounting methods and systems, new tax compliance requirements, new tax planning opportunities, and on a positive note, the chance to expense items capitalized as improvements in prior tax years.

Taxpayers can implement method changes in 2012, 2013 or 2014 according to IRS Notice 2012-73.  Therefore, taxpayers should incorporate the method changes provided by the new regulations in their tax planning for 2012, 2013 and 2014.

Highlights

  • tangible asset regulationsTaxpayers can elect to group one or more assets into a general asset account (GAA) if certain requirements are met
  • Many Taxpayers will make GAA elections for buildings
  • A GAA election allows a Taxpayer to continue to depreciate the entire GAA even though specific assets may be disposed of.  However any proceeds must be included in income
  • Alternatively, a GAA election can be terminated for each asset disposed of. Therefore, the tax basis in the disposed asset is available to offset proceeds or recognize a loss.
  • The GAA election is made on an original, timely-filed tax return (including extensions)
  • Taxpayers can make late GAA elections for 2012 and 2013 only using the automatic method change procedure
  • Accounting records must be updated and properly maintained for each GAA election.

Our CapX Program

FreedMaxick's CapX (Capitalization or Expense) Consulting Service is a comprehensive program designed to quickly and efficiently bring you into compliance and optimal tax savings. Click here for more information or call Don Warrant at 716-847-2651.

Click here for all the articles in this blog series.

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Capitalization vs. Repair Regulations - Disposing MACRS Property

What the New Tangible Asset Regulations Say About Disposing MACRS Property (Part 7)

Author: Don Warrant

In December of 2011, the IRS published comprehensive new regulations governing capitalization vs. deductible repair expenditures for tangible property. For many taxpayers this will mean making changes to accounting methods and systems, new tax compliance requirements, new tax planning opportunities, and on a positive note, the chance to expense items capitalized as improvements in prior tax years.

Taxpayers can implement method changes in 2012, 2013 or 2014 according to IRS Notice 2012-73.  Therefore, taxpayers should incorporate the method changes provided by the new regulations in their tax planning for 2012, 2013 and 2014.

Highlights

  • capitalization vs. repairDispositions of MACRS property include transfer of ownership of the asset, or permanent withdrawal of asset from trade or business
  • New provision: retirement of a structural component of a building  now constitutes a disposition of MACRS property – mandatory treatment
  • Taxpayers must recognize gain/loss on dispositions of components of buildings
  1. Consider implications for restoration rules
  2. Consider electing general asset account (GAA)
  • Taxpayers that own a building will likely make a late GAA election
    Taxpayers may recognize dispositions of components of personal property if componentization is applied consistently
  • The costs of removing a depreciable asset are generally deductible, special rules apply to components

Our CapX Program

Freed Maxick's integrated team of tax and accounting method specialists, and cost segregation engineers can help you comply with these complicated regulations. We’re pleased to bring you FreedMaxick's CapX (Capitalization or Expense) Consulting Service -- a comprehensive program designed to quickly and efficiently bring you into compliance and optimal tax savings. Click here for more information or call Don Warrant at 716-847-2651.

Click here for all the articles in this blog series.

View full article

New Tangible Asset Regulations - Elections

Taxpayers Need to Make Decisions and Elections Under the New Capitalization vs. Repair Regulations (Part 6)

Author: Don Warrant

In December of 2011, the IRS published comprehensive new regulations governing capitalization vs. deductible repair expenditures for tangible property. For many taxpayers this will mean making changes to accounting methods and systems, new tax compliance requirements, new tax planning opportunities, and on a positive note, the chance to expense items capitalized as improvements in prior tax years.

Taxpayers can implement method changes in 2012, 2013 or 2014 according to IRS Notice 2012-73.  Therefore, taxpayers should incorporate the method changes provided by the new regulations in their tax planning for 2012, 2013 and 2014.

Highlights

  • tangible asset regulationsTaxpayers need to consider the various methods and elections that are available under the new regulations
  • Materials and supplies:  De minimis rule or capitalize and depreciate
  • Rotables and temporary spare parts:  deduct upon disposition, capitalize and depreciate, or new optional method
  • De minimis rule: To apply or capitalize and depreciate specific assets
  • Acquisition of property:  capitalize or expense employee compensation and overhead
  • General asset accounts: make late GAA elections, terminate GAA elections for specific assets or all assets

Our CapX Program

FreedMaxick's CapX (Capitalization or Expense) Consulting Service is a comprehensive program designed to quickly and efficiently bring you into compliance and optimal tax savings. Click here for more information or call Don Warrant at 716-847-2651.

Click here for all the articles in this blog series.

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Capitalization vs. Repair Regulations - Routine Maintenance Safe Harbor

What You Need to Know About Routine Maintenance Safe Harbors Under  the New Tangible Asset Regulations (Part 5)

Author: Don Warrant

In December of 2011, the IRS published comprehensive new regulations governing capitalization vs. deductible repair expenditures for tangible property. For many taxpayers this will mean making changes to accounting methods and systems, new tax compliance requirements, new tax planning opportunities, and on a positive note, the chance to expense items capitalized as improvements in prior tax years.

Taxpayers can implement method changes in 2012, 2013 or 2014 according to IRS Notice 2012-73.  Therefore, taxpayers should incorporate the method changes provided by the new regulations in their tax planning for 2012, 2013 and 2014.

Highlights

  • Capitalization vs repairSafe harbor allows taxpayers to identify – and continue expensing – routine maintenance that is expected to occur more than once over the ADS class life of the property
  • Safe harbor applies to:
    • Rebuilding property to like-new condition after the end of its class life
    • Replacing a substantial structural part or major component
    • Safe harbor does not apply to buildings (structural components or building systems), betterments,  certain restorations, and rotables using the optional method
    • Opportunity to identify and expense amounts capitalized in prior years
    • Automatic accounting method change is provided to adopt safe harbor

Our CapX Program

Freed Maxick's integrated team of tax and accounting method specialists, and cost segregation engineers can help you comply with these complicated regulations. We’re pleased to bring you FreedMaxick's CapX (Capitalization or Expense) Consulting Service -- a comprehensive program designed to quickly and efficiently bring you into compliance and optimal tax savings. Click here for more information or call Don Warrant at 716-847-2651.

Click here for all the articles in this blog series.

View full article

New Tangible Asset Regulations - Section 263A Interplay

Understanding the Interplay of Section 263A Under the New Capitalization vs. Repair Regulations (Part 4)

Author: Don Warrant

In December of 2011, the IRS published comprehensive new regulations governing capitalization vs. deductible repair expenditures for tangible property. For many taxpayers this will mean making changes to accounting methods and systems, new tax compliance requirements, new tax planning opportunities, and on a positive note, the chance to expense items capitalized as improvements in prior tax years.

Taxpayers can implement method changes in 2012, 2013 or 2014 according to IRS Notice 2012-73.  Therefore, taxpayers should incorporate the method changes provided by the new regulations in their tax planning for 2012, 2013 and 2014.

Highlights

  • CapX263A Regulations are referenced throughout the regulations
  • Indirect costs, including repair and removal costs, may require capitalization under 263A
  • 263A requires taxpayers to capitalize indirect costs that directly benefit or are incurred by reason of an improvement to property
  • Taxpayers are not required to capitalize costs that do not directly benefit and are not incurred by reason of an improvement, even if incurred at same time
  • Revenue Procedures 2012-19 and 2012-20 require use of a proper 263A method for the item to make a method change, or require a concurrent 263A method change for the item
  • Non-automatic 263A method changes could affect the timing and method of complying with the new regulations

Our CapX Program

FreedMaxick's CapX (Capitalization or Expense) Consulting Service is a comprehensive program designed to quickly and efficiently bring you into compliance and optimal tax savings. Click here for more information or call Don Warrant at 716-847-2651.

Click here for all the articles in this blog series.

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