Have you previously removed or replaced any structural components of your building(s) such as a roof, HVAC equipment, doors, windows, etc.?
If you have, you could substantially benefit from an Asset Retirement Study.
On December 23, 2011 the IRS and Treasury Department released the long awaited Temporary Regulations for Guidance Regarding Deduction and Capitalization of Expenditures Related to Tangible Property. The effective date for the repair regulations has been extended. The IRS and Treasury Department expect to publish final repair regulations in 2013 that will apply to taxable years beginning on or after January 1, 2014, and to permit taxpayers the ability to apply the provisions of the final regulations to taxable years beginning on or after January 1, 2012. Thus, allowing companies to take advantage of the cash flow opportunities presented by the Temporary Regulation for tax year 2012, or wait to apply the benefits until after the final regulations are presented in 2013.
“The regulations revise the definition of Disposition for property subject to section 168 to include the retirement of a structural component of a building.”
“This change allows a taxpayer to recognize a loss on the disposition of a structural component of a building before the disposition of the entire building, so that a taxpayer will not have to continue to depreciate amounts allocable to structural components that are no longer in service. Thus, under the temporary regulations, a taxpayer is not required to capitalize and depreciate simultaneously amounts paid for both the removed and the replacement properties.”
If you are still carrying the retired “Ghost” assets on your depreciation schedule, you now have the opportunity to write off those assets and realize a tax benefit for those assets. (See example here.)
The problem: How to determine or break-out the cost of the disposed asset.
At M&E Cost Segregation we determine specific asset costs on a daily basis. While performing our engineering based cost segregation services, we assign costs to every component of a building. An Asset Retirement Study is a limited scope in engagement in which we are applying engineering & costing methodologies to one or several large assets.
We will provide a No Cost, No Obligation, Asset Evaluation that will show an estimated range of benefit and our flat fee to conduct the study. This provides the opportunity to make an educated decision before moving forward with the study.
Furthermore, we will defend our findings at no charge to the client.
Contact Us today to get additional information or to start the evaluation process.