Using Accelerated Depreciation and Expensing to Reduce Tax

If you are anything like a typical CPA, you would be busy examining all corporate & partnership returns trying to come up with ideas to save some money off the tax bill. You or your clients don’t need to lose sleep over this.

Fortunately, there are ways to help your clients reduce their tax bills. Here are three crucial questions you must ask your client:

  1. Have you constructed, purchased, remodeled, or expanded a building with a cost basis of $500,000 or more since 1987?

    It could be that your client didn’t consider the benefit of having a cost segregation study before. However, with a hefty tax bill in front of them, the idea of this study may seem more appealing. In most cases, the tax savings can be more than 10 times the actual cost of the study.

  2. Have you had any energy efficiency improvements made to your commercial building between 2006 and 2014?

    The benefits of high-energy efficiency, both in the short and long term are many. 179D deductions can shave off a good portion of their tax, while efficiency enhancements give them lower energy costs in the long run. Any projects that were carried out between 2006 and 2014 are eligible.

  3. Have you had any repairs or improvements done to your commercial building?

    A large number of repair and maintenance, including certain renovation activities tend to qualify for current expensing under A 263 (a). A repair and maintenance review can unveil wealth of previous capitalized expenses that qualify for deductions now.

    In some cases, the tax savings can be as high as 20 times the cost of such a study.