As 2011 comes to a close, Capital Review Group (CRG) stands ready to work with CPAs and other tax accounting professionals to reduce clients’ tax burden and discover capital. Our specialized consulting services are invaluable to tax professionals, as we make it our business to stay current on the latest in green tax incentives, energy tax deductions, IRS compliance regulations and energy strategies including renewables; working with you to provide maximum benefit to your business clients. Over the years we have seen dramatic financial advantages for clients emerge from our analyses and certification of energy projects.
§179d Analysis and Certification
We offer §179d analysis and financial recommendations for energy-related federal tax incentives, as well as providing the required third-party certification to claim those deductions. If energy efficient improvements (lighting, HVAC or building envelope) have been performed on an existing building or as part of a new construction (between 1/1/06-12/31/2013), the taxpayer footing the bill may be entitled to: $.60 per sq/ft for lighting, $.60 per sq/ft for HVAC and $.60 per sq/ft for building envelope, creating a potential deduction of $1.80 per sq/ft.
It’s important to note that IRS mandated software must be used and the qualification must be certified by an independent qualified individual such as CRG. The resulting deduction is a basis adjustment to the 39 year property. Any missed deductions for prior years can be taken by amending tax returns for open years or by filing a 3115 with a current year return. If the deduction is ever challenged, CRG represents the client directly before the IRS.
Architects, engineers and contractors may also benefit from §179d certification of government projects (public schools, colleges, military bases, government office, etc.). The deduction may be allocated to the architect/engineer/contractor or combination thereof of the energy efficient property. The deduction is taken as an M-1 item on the tax return of the designer being allocated the designer(s). Any missed deductions for prior years may be taken by amending tax returns for open years or by filing a 3115 with a current year return. If the deduction is ever challenged, CRG represents the client directly before the IRS.
CRG performs an engineering-based analysis of an existing property purchased or placed in service after 1987 or new construction, which can lead to a significant portion of the building value being reclassified, based on IRS explicit guidance, to short-lived assets (1245 property) as opposed to 39 year or 27.5 year property. CRG follows the IRS Audit Technique Guide, step by step, which ensures maximum value for the building owner and work performed exactly as the IRS prescribes. CRG provides a full report, identifying each and every asset that qualifies to be reclassified as personal property as well the updated depreciation schedules, reconciliation and a draft of Form 3115 if the assets were placed in service in a prior year. We also represent the client directly with the IRS if the report is ever challenged.
In replacing assets that exist within a building there may be a substantial opportunity to reduce tax burden through abandonment. If a building was purchased and the individual assets were never segregated out on the accounting records of the Company, the value of each individual asset is encompassed with the large asset on the books, generally called “Building”. This “Building” is typically being depreciated over 39 years for commercial property or 27.5 years for commercial residential. When certain assets in the building are replaced and are not separately stated within the accounting records, these assets have a certain value within the lump sum we have called “Building” and accordingly a tax deduction should be taken for all remaining value associated with those assets.
An abandonment study can help identify that value and ensure the proper deduction is taken and the tax burden is minimized. CRG issues a full report, with before and after photos as well as the calculation of the remaining depreciable value of the abandoned assets that acts as support for the deduction taken. We also represent the client directly with the IRS if the report is ever challenged.
Whether working with property owners or occupants, or architectural/design firms and builders, CRG’s specialized services provide assurance that clients receive maximum value from their commercial building projects, from the perspective of engineering and technical performance, federal tax incentives and enhanced financial performance.
Contact us today to find out how we can put our federal energy tax incentive expertise to work for you and your clients, and make the most of 2011 returns.