2019 Legislative Tax Updates for Real Estate

2019 Legislative Tax Updates for Real Estate

06/18/2019

Our technical team has been keeping tabs on the latest updates on the Hill in regards to tax extenders and technical corrections, given how they may impact Green Building Tax Incentives (45L and 179D) and the cost recovery of Qualified Improvement Property for 2018 and beyond. We will post our updates here to keep you … Read More

KBKG Tax Insight: The Impact of TCJA on Cost Segregation & Like-Kind Exchange

KBKG Tax Insight: The Impact of TCJA on Cost Segregation & Like-Kind Exchange

04/02/2019

Reproduced with permission from Daily Tax Report, 62 DTR 12, 4/2/19. Copyright _ 2019 by The Bureau of National Affairs, Inc. (800-372-1033) https://news.bloombergtax.com/daily-tax-report/insight-tax-insight-the-impact-of-tcja-on-cost-segregation-and-like-kind-exchange Like-kind exchange has been a popular tax deferral tool for decades. Under IRC 1031, a taxpayer can defer tax on gain from the sale of a business or investment property if it … Read More

Tax Insight: Senate and House Updates on Tax Extenders for 2018-2019

Tax Insight: Senate and House Updates on Tax Extenders for 2018-2019

03/07/2019

Senate Update Last Thursday, February 28, 2019, Senate Finance Committee Chairman Chuck Grassley (R. Iowa) and Ranking Member Ron Wyden (D. Oregon) introduced bipartisan legislation to retroactively extend tax extenders for 2018 and 2019 while also providing disaster tax relief benefits to those affected by major disasters in 2018. “Congress needs to get out of … Read More

Tax Insight: Tax Extender Update from Senator Chuck Grassley

Tax Insight: Tax Extender Update from Senator Chuck Grassley

02/22/2019

On Thursday, February 14, 2019, Senate Finance Committee Chairman Chuck Grassley (R. Iowa) addressed tax policy and various provisions that KBKG and the Real Estate Roundtable have been monitoring closely. In his speech, Senator Grassley expressed his commitment to pursue tax extenders and rejection of press reports suggesting that some provisions may no longer be … Read More

KBKG Tax Insight: R&D Tax Credits – Protective 280C(c)(3) Elections

KBKG Tax Insight: R&D Tax Credits – Protective 280C(c)(3) Elections

02/07/2019

Calculating and documenting the Internal Revenue Code Section 41 Credit for Increasing Research Activities (“Research Credit” or “R&D Credit”) is an intricate and often burdensome undertaking. This process is complicated during the throes of busy season. Fortunately, the Internal Revenue Service (“IRS”) has afforded taxpayers additional time to claim a R&D credit via making a … Read More

KBKG Tax Insight: Updates to “Qualified Improvement Property”

KBKG Tax Insight: Updates to “Qualified Improvement Property”

11/09/2018

With the 2017 tax year behind us, tax professionals are laser focused on the various new rules presented by the recent Tax Cuts and Jobs Act (TCJA) effective for the 2018 tax year. One of the most significant changes related to real estate improvements is the new eligibility criteria for qualified improvement property (QIP). The … Read More

KBKG Tax Insight: Utilize Statistical Sampling with Cost Segregation

KBKG Tax Insight: Utilize Statistical Sampling with Cost Segregation

09/04/2018

If you are a taxpayer that owns multiple building improvement properties which are similar in construction, utilizing a statistical sampling along with cost segregation can greatly reduce the fees and resources needed to allocate each property for tax depreciation. Pairing this with an accounting method change to claim missed cost segregation opportunities over multiple years … Read More

KBKG Tax Insight: Major PATH Act<sup>1</sup> Changes to the R&D Tax Credit

KBKG Tax Insight: Major PATH Act1 Changes to the R&D Tax Credit

08/27/2018

Major PATH Act2 changes to the R&D Tax Credit for the years beginning after December 31, 2015: The federal R&D Tax Credit has provided taxpayers conducting qualified research a significant tax benefit since it was first signed into law by President Reagan in 1981. Although billions of dollars worth of R&D credits were claimed each … Read More

KBKG Tax Insight: R&D Credit Opportunity – Improving an Existing Product

KBKG Tax Insight: R&D Credit Opportunity – Improving an Existing Product

06/11/2018

Businesses who are creating a brand-new product may be aware that the expenses associated with the cost of developing the prototype, or first article, of that product can qualify for the Research & Development (R&D) tax credit1. Qualifying expenses can include employee wages, materials used in the construction of the prototype and any third-party contractors … Read More

KBKG Tax Insight: 179D Energy Efficiency Deductions Extended through 2017

04/03/2018

The 179D energy efficiency tax deduction has been extended retroactively for improvements completed by the end of 2017. This financial incentive is geared towards: 1) building owners (commercial or multifamily), 2) tenants making improvements, and 3) architects, engineers, and other designers of government buildings. The tax deduction is worth up to $1.80 per square foot … Read More

KBKG Tax Insight:  IRS Penalizes Cost Segregation Provider for Aiding and Abetting

KBKG Tax Insight: IRS Penalizes Cost Segregation Provider for Aiding and Abetting

03/06/2018

Tax preparers and their clients often cannot recognize quality differences among cost segregation service providers, leading to buying decisions based on who proposes the lowest fee or promises the highest tax benefit. However, the real test of quality is how the cost segregation results stand up in an IRS audit. What are the consequences of … Read More

45L: The Energy Efficient Home Credit – Extended through 2017

03/05/2018

Homebuilders and multi-family developers have a unique opportunity to capitalize on an energy efficient home credit that is often overlooked. Low-rise apartment developers and homebuilders are eligible for a $2,000 tax credit for each new or rehabbed energy efficient dwelling unit that is first leased or sold by the end of 2017. Taxpayers also have … Read More

Tax Insight: How to Co-ordinate Cost Segregation with Like-kind Exchange

Tax Insight: How to Co-ordinate Cost Segregation with Like-kind Exchange

01/23/2018

The Tax Cuts and Jobs Act (TCJA) was signed by the President on December 22, 2017. The TCJA is the most significant overhaul of Internal Revenue Tax code since the 1986 Tax Act under President Reagan. The Committee Report has over a thousand pages of modifications to many areas of the tax code. One piece … Read More

KBKG Tax Insight: Avoid Common R&D Expense Documentation Errors

KBKG Tax Insight: Avoid Common R&D Expense Documentation Errors

01/14/2018

Business owners are often surprised to learn they may be able to claim the Research & Development (R&D) tax credit. The credit was originally created as way to encourage American companies to conduct R&D activities domestically. While initially thought to apply to large companies with formal R&D departments, “smaller businesses” in a wide range of … Read More

Minimize Gains on Sale of Condos in Mixed-Use Developments. Condo Tax Basis Allocation Studies

Minimize Gains on Sale of Condos in Mixed-Use Developments. Condo Tax Basis Allocation Studies

01/09/2018

Traditional cost accounting for mixed-use residential projects often does not properly allocate all construction costs to each section of the property. Consequently, there may be a significant understatement of cost basis for residential condominium units resulting in higher taxable gains upon sale. This is most common within vertical mixed-use developments where residential condos are stacked … Read More

KBKG Tax Insight: Tax Reform & The R&D Tax Credit

KBKG Tax Insight: Tax Reform & The R&D Tax Credit

12/21/2017

It’s been over thirty years since the tax code has been modified to this extent. It has been a talking point for politicians since the Reagan administration brokered the bipartisan Tax Reform Act of 1986. However, the divide between the political parties have kept it a talking point since then, until now. The Tax Cuts … Read More

Reduce Taxes on Condo Sales in Mixed-Use Developments with Tax Basis Allocation Studies

Reduce Taxes on Condo Sales in Mixed-Use Developments with Tax Basis Allocation Studies

12/01/2017

Traditional cost accounting for mixed-use residential projects often does not properly allocate all construction costs to each section of the property. Consequently, there may be a significant understatement of cost basis for residential condominium units resulting in higher taxable gains upon sale. This is most common within vertical mixed-use developments where residential condos are stacked … Read More

KBKG Tax Insight: Maximizing the Value of the R&D Tax Credit – Pharmaceutical & Life Sciences Industry

KBKG Tax Insight: Maximizing the Value of the R&D Tax Credit – Pharmaceutical & Life Sciences Industry

11/27/2017

It is no secret that many Pharmaceutical and Life Sciences companies (“Companies”) conduct research and development activities that qualify for numerous tax incentives, including the Research and Development (R&D) tax credit. Recent groundbreaking legislation created a level of certainty for tax planning purposes and also includes provisions geared towards providing significant benefits to small businesses … Read More

KBKG Tax Insight: How Tax Reform Bills Impact Real Estate

KBKG Tax Insight: How Tax Reform Bills Impact Real Estate

11/10/2017

The commercial real estate industry can expect significant changes in the event that tax reform is passed. Yesterday, the House Ways and Means Committee finished marking up and approved a tax reform bill introduced last week – the “Tax Cuts and Jobs Act” with the goal of voting on it before Thanksgiving. Simultaneously, the Senate … Read More

KBKG Tax Insight: Effects of Tax Reform on R&D & Orphan Drug Credits

KBKG Tax Insight: Effects of Tax Reform on R&D & Orphan Drug Credits

11/10/2017

Senate Republicans released their own version of a tax plan on Thursday (November 9, 2017), just a week after the House proposal was unveiled. Although both plans keep the research and development tax credit in place, changes in the tax code will require some additional planning for taxpayers currently claiming or those planning on claiming … Read More

KBKG Tax Insight: 5 Tips for Properly Vetting a Specialty Tax Consultant

11/07/2017

CPAs know it is imperative to refer clients to 3rd party consultants for various issues that require deep specialization in an area of tax. In many ways, these specialty tax firms act as an extension of your team and require coordination to deliver results that often have a material impact on a tax return. While … Read More

KBKG Tax Insight: Can You Claim 45L Tax Credits Retroactively?

11/03/2017

Yes, 45L tax credits can be claimed retroactively if they have been missed on prior tax returns. Since 45L tax credits are triggered in the year that a dwelling unit is first leased or sold, some taxpayers incorrectly think that the tax credits need to be claimed timely on current year tax returns. In reality, … Read More

KBKG Tax insight: Tips for Documenting Qualifying R&D Expenses

10/26/2017

Every company seeks effective ways to reduce their overall tax liabilities. Although traditional tax planning can certainly reduce business taxes, there is often a limited impact, leaving owners and managers searching for additional savings opportunities. The good news is that the Research and Development (R&D) Tax Credit is available to qualifying companies that have or … Read More

New Tax Reform Proposal Makes Deductions More Valuable in 2017

10/06/2017

On Thursday, September 27, Republican leaders in Congress and the Trump administration released the Unified Framework for Fixing Our Broken Tax Code. Among the many ideas outlined within the plan is to reduce the corporate tax rate to 20% and provide a maximum tax rate of 25% for business income from flow through entities of … Read More

IRS Issues Guidance Around ASC 730 and the R&D Tax Credit

09/29/2017

According to a new guidance released by the IRS, the Large Business and International Division which serves corporations, subchapter S corporations, and partnerships with assets greater than $10 million are instructed to accept financial statements that comply with the GAAP standards as proof of Qualified Research Expenses (QREs). Ultimately, this new directive could lessen the formally … Read More

New Qualified Improvement Property Category in 2016

09/18/2017

For the most up-to-date information on Qualified Improvement Property, see our latest post. Many tax professionals are still unclear about the newest classification of building improvements eligible for bonus depreciation when placed in service on or after January 1, 2016. That’s understandable considering there has been over a dozen additions or changes to rules relating … Read More

KBKG Tax Insight: IRS Releases Tax Relief Opportunities for those Affected by Hurricane Harvey

08/29/2017

Updated 10/12/17 to include Caldwell, Comal, Guadalupe, Jim Wells, Milam, and San Augustine counties. Updated 9/20/17 to include Burleson, Grimes, Madison and Washington Counties. Updated 9/19/17 to include Bexar, Dallas, Tarrant, and Travis Counties. Updated 9/5/17 to include Austin, Batrop, DeWitt, Gonzales, Karnes, Lavaca, Lee, Polk, Tyler and Walker Counties. Updated 8/30/17 to include Colorado, … Read More

KBKG Insight: Does a Cost Segregation Study Increase the Likelihood of Audit?

08/25/2017

One of the most common concerns that is raised regarding Cost Segregation Studies is whether it increases the likelihood of an IRS audit down the road. While it’s well documented that these studies are accepted by the IRS if performed properly, there isn’t much evidence suggesting the implementation of a cost segregation study on a … Read More

45L: The Energy Efficient Home Credit – Infographic

08/14/2017

Homebuilders and multi-family developers have a unique opportunity to capitalize on an energy efficient home credit that is often overlooked. The 45L Tax Credit offers $2,000 per qualified dwelling unit that can also be claimed retroactively if missed in prior years; however, the clock is ticking. There is a limited timeframe for claiming missed credits, … Read More

KBKG Tax Insight: Maximizing the Value of the Orphan Drug Tax Credit

07/19/2017

  The Pharmaceutical and Life Sciences industry currently faces a range of issues, including the rising costs of discovery and development, major losses of revenue due to patent expirations, and increased complexities due to demanding regulatory requirements. Moreover, developers of orphan drugs must overcome a host of additional challenges that make it difficult to recoup … Read More

KBKG Tax Insight: Illinois Reinstates the R&D Tax Credit

07/07/2017

On Thursday, July 6th, the Illinois state legislature successfully voted to override Republican Governor Bruce Rauner’s veto, giving the state its first operating budget in two years.  Included in the $36 billion spending plan is an extension of the state’s research and development tax credit through December 31, 2021.  The research and development (R&D) credit … Read More

KBKG Tax Insight: Guide to Expensing Roofing Costs

06/21/2017

Each year, tax professionals who deal with real estate must evaluate the most recent building expenditures and determine which items should be written off as a repair expense or capitalized. The most common, and often significant, item that is evaluated is roofing-related work. In many cases, only a portion of the roofing system is replaced, … Read More

KBKG Insight: Tax Court Rejects Taxpayer’s Land vs. Building Allocation

06/13/2017

On May 8, 2017, the U.S. Tax Court released Summary Opinion 2017-31 to conclude that a county assessor’s allocation to land and improvement values were more reliable than the taxpayers proposed values.  The tax court noted they could not find any authority that suggests a taxpayer is qualified to allocate the value of the property … Read More

KBKG Tax Insight: Is a More Valuable R&D Credit Coming Soon?

06/08/2017

The R&D tax credit, which awards companies large and small for their innovative efforts and that was made permanent in 2015, could now be more lucrative with new bi‐partisan support. Senators Chris Coons (D‐DE) and Pat Roberts (R‐KS) have introduced a bill increasing the R&D credit up to 25% for companies that not only conduct … Read More

KBKG Tax Insight: New R&D Payroll Tax Credit Estimator tool

05/02/2017

The R&D tax credit is now permanent and for the first time ever, small businesses and start-ups can take advantage of this lucrative tax credit. Every year, billions of dollars are given to qualified businesses. Estimate your tax savings using our quick, simple R&D Payroll Tax Credit Calculator and save up to $250,000. Author: Kevin … Read More

KBKG Tax Insight: IRS Updates Cost Segregation Audit Techniques Guide

04/18/2017

The Internal Revenue Service (IRS) released a relatively substantial update to their Cost Segregation Audit Techniques Guide (ATG) in order to incorporate various tax and legal developments since it was first released. Originally published in 2004, the Cost Segregation Audit Techniques Guide assists IRS examiners during audits by providing an understanding of technical information, examination … Read More

KBKG Tax Insight: Online Cost Segregation Savings Calculator Provides Instant Estimated Tax Projection for any Building

03/22/2017

KBKG’s complimentary online cost segregation tax savings calculator provides instant, estimated tax projections and is easy to use. Just enter the building details and instantly receive a summary detailing the additional depreciation deductions each year generated by a cost segregation study. “KBKG’s free Cost Segregation Calculator is quick and easy when I need a high-level … Read More

KBKG Tax Insight: Gian Pazzia Discusses Cutting Edge Cost Segregation Software

03/14/2017

Recently, the Tax Resolution Institute invited KBKG subject matter expert, Gian Pazzia, to present a live discussion on KBKG’s new cutting edge software, the Residential Cost Segregator®. Watch the video for an overview on the topic and to learn how tax preparers can use the software to accelerate deductions on smaller residential properties, which was … Read More

KBKG Tax Insight: Monetize R&D Tax Credits: Start-ups and Small Businesses

KBKG Tax Insight: Monetize R&D Tax Credits: Start-ups and Small Businesses

02/11/2017

What start-up or small business wouldn’t want an extra $250,000? Thanks to The Protecting Americans from Tax Hikes (“PATH”) Act of 2015, there is a new opportunity to monetize research and development (“R&D”) tax credits. Start-ups and small businesses who were previously unable to realize a benefit from this lucrative incentive should reassess R&D tax … Read More

Affordable Housing Developers & Investors are Often Missing Out on $2,000 per Unit

01/29/2017

Affordable housing developers benefit from various tax credits from Low-Income Housing Tax Credits to Rehab Credits yet they still fail to claim a tax credit that is often geared towards their developments: the Section 45L Tax Credit. Section 45L is a commonly overlooked section of the tax code that rewards energy efficient dwelling units with … Read More

KBKG Tax Insight: Deductions are More Valuable in 2016. Accelerate Them.

01/24/2017

It may have been one of the most hotly contested, controversial campaigns in living memory, but there can be no denying the outcome of the 2016 US presidential election is generally friendly for business. President Donald Trump and the Republican Party both agree that that tax reform is a top priority to help stimulate the … Read More

KBKG Tax Insight: Using Cost Segregation with Estate Planning

01/13/2017

When a client dies, a critical estate planning area for tax professionals involves managing the step-up in basis on inherited assets for estate and income tax purposes. The general rule for real estate is that when a property is inherited, any gains built up during the decedent’s life are not recognized. The beneficiary also receives … Read More

KBKG Tax Insight: New 2016 Qualified Improvement Property Criteria

11/02/2016

The new Qualified Improvement Property category put into effect in 2016 by the PATH Act will have a broad impact on almost all real estate owners for the near future by increasing the likelihood real property capital expenditures are eligible for bonus depreciation. Qualified Improvement Property (QIP) is defined as any improvement to an interior … Read More

KBKG Tax Insight: IRS Issues Final Regulations Surrounding the Qualification of Internal Use Software towards the R&D Tax Credit

10/04/2016

On October 4, 2016, the Internal Revenue Service issued final regulations which provide guidance on the qualification of internal use software (“IUS”) for purposes of the Section 41 Credit for Increasing Research Activities. The final regulations (TD 9786) address many of the comments received regarding the proposed regulations that were released in January of 2015. … Read More

Estate Planning Strategy Using Cost Segregation

08/19/2016

Real estate owners and investors often use cost segregation studies to accelerate depreciation deductions, generate current income tax benefits, and improve cash flow. But did you know that a cost segregation study can also be used as a powerful estate-planning tool? One of the advantages of transferring property at death (rather than by lifetime gift) … Read More

KBKG Tax Insight: Avoiding Cost Segregation Recapture Tax

08/04/2016

Savvy tax professionals that recommend Cost Segregation studies are well aware of the recapture tax rules that require taxpayers to pay back any accelerated tax deductions when the property is sold. After all, for the right situation, the net present value of those tax savings far exceeds any recapture tax payback. While the effects of … Read More

IRS provides 1 year extension to claim missed repair deductions on 2015 returns

06/03/2016

The recently released Rev. Proc. 2016-29 details new procedures for automatic accounting method changes, as discussed in a previous KBKG Tax Insight, and effectively provides a one year extension for taxpayers to implement many portions of the Tangible Property Regulations (TPR). Taxpayers are generally not permitted to make an automatic method change if they made … Read More

Deduct Your Demolished Building Using a GAA

05/18/2016

When a taxpayer acquires a building that may need to be demolished in the foreseeable future, they are often disappointed to learn from their tax preparer that they will lose all future tax depreciation deductions associated with the building. For many years, the tax code has not been forgiving to property owners who invest in … Read More

Research Tax Credit Opportunities for Architects and Engineers

05/17/2016

Architecture and engineering firms may want to take another look at the often forgotten Research & Development (R&D) Tax Credit. Many may be eligible for federal and state research credits without realizing it. Historically, the R&D Tax Credit was geared to only benefit large companies; mostly in the manufacturing, software, high-tech and pharmaceutical industries. However, … Read More

Rev. Proc. 2016-29: New Procedures for Automatic Accounting Method Changes

05/11/2016

The IRS recently released Rev. Proc. 2016-29, which lists automatic method changes and provides procedures for making them. Form 3115’s filed on or after May 5, 2016 must follow the updated rules. Background. Taxpayers make accounting method changes for numerous reasons, such as claiming missed depreciation from a Cost Segregation study, reclassifying capital expenditures as … Read More

KBKG Video: Using Cost Segregation with Estate Planning

05/05/2016

In an article recently published by the AICPA, Using Cost Segregation in Estate Planning, our subject matter expert, Gian Pazzia, CCSP, details the ability to create permanent tax savings after a death occurs through an often overlooked aspect of the step-up in basis tax law. Our short video explains the mechanics of how this strategy … Read More

Using Cost Segregation with Estate Planning

03/31/2016

When a client dies, a critical estate planning area for tax professionals involves managing the step-up in basis on inherited assets for estate and income tax purposes. The general rule for real estate is that when a property is inherited, any gains built up during the decedent’s life are not recognized. The beneficiary also receives … Read More

PATH Act 2015 Extends and Modifies Important Tax Incentives for Architects & Engineers

02/05/2016

In December, Congress passed and the President signed The Protecting Americans from Tax Hikes (“PATH”) Act of 2015. The bill includes the extension of the 179D Tax Deduction and changes ASHRAE requirements for projects placed in service in 2016. The extender package also included the permanent extension AND expansion of the Research and Development (“R&D”) … Read More

Retail/Restaurant Industry Safe Harbor Under Tangible Property Regulations

01/13/2016

The IRS recently issued Revenue Procedure 2015-56 providing a safe harbor for certain taxpayers operating retail or restaurant establishments for determining whether expenditures incurred to “remodel” or “refresh” their property can be expensed under the Tangible Property Regulations released in 2013. Generally, the safe harbor benefits those enhancing the physical appearance and layout of their … Read More

R&D Tax Credit Expanded for Small & Midsize Businesses

12/18/2015

Congress is spreading some cheer this holiday season in the form of tax breaks for both businesses and individuals. The Protecting Americans from Tax Hikes (“PATH”) Act of 2015 was passed by both the House and the Senate and is a groundbreaking $650 billion tax extender bill aimed at providing taxpayers certainty and opportunity into … Read More

Promising News on Tax Extender Legislation

12/09/2015

On December 7, 2015, House Ways and Means Chairman Kevin Brady (R-TX) unveiled proposed legislation to extend a number of tax provisions that expired at the end of calendar year 2014. The proposed legislation would prevent tax increases on millions of families and businesses as the 2015 tax year filing season begins early next year. … Read More

Late Partial Dispositions – It’s Not Too Late for Fiscal Year-end Taxpayers

11/30/2015

While the opportunity to file a late partial disposition election ended for calendar year taxpayers, fiscal year-end taxpayers still have time to review depreciation schedules for these missed deductions. In the context of a building, a late partial disposition occurs generally when any building component, such as a roof, has been removed in a prior tax … Read More

IRS Releases Retail & Restaurant Safe Harbor Related to Tangible Property Regulations

11/20/2015

On November 20, 2015, the IRS released Revenue Procedure 2015-56, providing certain “qualified taxpayers” engaged in the trade or business of operating a retail establishment or a restaurant a safe harbor accounting method for costs incurred related to remodeling and refreshing of their “qualified buildings.” “Qualified taxpayers” include those conducting activities within NAICS codes 44 … Read More

Tangible Property Regs – Reconsidering Small Taxpayer Relief under RP 2015-20

08/18/2015

Earlier this year, the IRS relieved small business taxpayers from having to file mandatory Form 3115’s to comply with the newly issued Tangible Property Regulations (TPRs). Accepting this relief under Rev. Proc. 2015-20 is done merely by filing of a federal tax return, leaving many CPAs unaware of the negative consequences of doing nothing. More … Read More

Senate Finance Committee approves renewal of expired tax provisions

07/22/2015

Yesterday, on July 21st, the Senate Finance Committee repeated history by overwhelmingly approving a 2-year extension of over 50 expired tax provisions with a strong bipartisan vote, setting the stage for Congress to address later this year. The bill extends many long awaited business tax extenders that originally expired at the end of 2014 and … Read More

IRS Releases New Draft Form 3115

07/20/2015

On July 15th, The IRS posted onto its website an early released draft of Form 3115, Application for Change in Accounting Method. Form 3115 is used for accounting method changes, including complying with the Tangible Property Regulations (“TPRs”) as well as making depreciation adjustments resulting from Cost Segregation studies. The current version of Form 3115 … Read More

R&D Tax Credit for the Food & Beverage Industry

06/08/2015

With the challenge of feeding an ever growing population, food & beverage companies in the United States are forced to increase their research and development efforts to meet demand. In addition to providing more options, food and beverage manufacturers are fighting to keep up with trends in the market place which include the reduction in … Read More

House Passes Permanent Extension of the R&D Tax Credit

05/22/2015

On May 20th, the US House of Representatives passed HR 880, making the Research & Development Tax Credit permanent. The House bill is called the American Research and Competitiveness Bill of 2015. HR 880 provides no revenue offsets which will likely be met with a presidential veto, consistent with what President Obama has promised to … Read More

AICPA Recommends Increasing De Minimis Safe Harbor Limit

04/28/2015

In a recent letter, the American Institute of Certified Public Accountants (AICPA) commended the IRS for requesting input on increasing the De Minimis Safe Harbor limit for taxpayers without applicable financial statements (AFS) and provided a recommendation. The safe harbor generally allows taxpayers with AFS (which usually means audited financial statements) to immediately deduct $5,000 … Read More

Practice Tool – Unit of Property & Major Component Chart for Buildings

03/24/2015

KBKG strives to be a thought leader in the areas we service and we’re proud so many CPAs rely upon the tools we’ve created. For those applying the new Tangible Property Repair Regulations, the first step in a proper Repair vs. Capitalization analysis is to identify and understand the Unit of Property (UOP). For real … Read More

Tangible Property Final Regulations FAQ

03/09/2015

Section 162 of the Internal Revenue Code (IRC) allows you to deduct all the ordinary and necessary expenses you incur during the taxable year in carrying on your trade or business, including the costs of certain materials, supplies, repairs, and maintenance. However, section 263(a) of the IRC requires you to capitalize the costs of acquiring, … Read More

Filing Relief Issued on Tangible Property Regulations under Rev. Proc. 2015-20

02/16/2015

Numerous tax professionals have struggled with the compliance requirements under the final Tangible Property Regulations (TPRs) and when Form 3115, Application for Change in Accounting Method, is required. In response to public concerns, the IRS issued Rev. Proc. 2015-20 providing a simplified method of compliance for small business taxpayers. The new revenue procedure allows small … Read More

Tangible Property Regulations – IRS Considering Filing Relief

02/11/2015

The 2014 tax season is underway and CPAs and tax professionals are knee deep in the implementation of the final Tangible Property Regulations (TPRs). Tax practitioners have expressed frustration regarding the overly burdensome filing requirements of the new TPRs. The number one question KBKG is asked is whether change #184 is really necessary for every … Read More

Treasury Releases Proposed Regulations on R&D Credits for Internal Use Software

01/20/2015

On Friday, January 16, 2015, the Department of Treasury issued proposed regulations regarding the applicability and inclusion of Internal-Use Software as part of the IRC Section 41 ‘Credit for Increasing Research Activities,’ providing increased availability of the research and development tax credit for a greater number of entities, particularly small to mid-sized taxpayers. These proposed … Read More

Senate passes Tax Extenders for 2014; President Expected To Sign Into Law

12/17/2014

On Tuesday December 16th, the Senate passed H.R.5771 to extend several expired tax provisions and President Obama is expected to sign it into law in the coming days. The extension is retroactive from January 1, 2014, through the end of this year with minimal changes to the prior tax provisions. H.R.5771 was originally passed by … Read More

House on the verge of voting on Tax Extenders including the R&D Tax Credit

12/03/2014

Last week, congressional aides to Senate Majority Leader, Harry Reid (D-NV), and House Ways and Means Committee Chairman, Dave Camp (R-MI), were reportedly nearing a deal to address many of the tax provisions that expired at the end of 2013. The reported value of the deal was in excess of $400 billion. Many of these … Read More

How will the 2014 Midterm Elections Impact tax extenders?

11/07/2014

Not since World War II have Republicans had this large of a majority in Congress. The results from the 2014 midterm election are a staggering blow to Democrats. Prior to the 2014 midterm election, the Democrats had control in the Senate (53 out of the 100 seats with 2 Independents that caucus with the Democrats), … Read More

Dispositions of Tangible Property – IRS Restricts use of Discount Value Approach

09/23/2014

In August, the IRS issued final regulations on dispositions of tangible depreciable property under Sec. 168 (T.D. 9689) that are generally effective for taxable years beginning on or after January 1, 2014. Taxpayers can realize significant benefits from these regulations by identifying building components that have been replaced or demolished in current or prior years. … Read More

IRS Releases R.P. 2014-54; Extends Deadline To Claim Retirement Loss Deductions!

09/19/2014

On September 18, the IRS released an advanced copy of Rev. Proc. 2014-54, which provides guidance on certain changes in method of accounting for dispositions of tangible depreciable property. One of the most notable changes in this 93-page document is that the time for making a late partial disposition election has been extended for one … Read More

Research Tax Credit Opportunities for Architects and Engineers

09/11/2014

Although Architecture and Engineering (A&E) firms don’t often claim tax credits, many may be eligible for Federal and state research & development (R&D) tax credits without realizing it. Historically, the R&D tax credit was geared to only benefit large companies; mostly in the manufacturing, software, high-tech and pharmaceutical industries. However, significant changes to the tax regulations … Read More

R&D Tax Credit Now Allows ASC on Amended Returns

06/02/2014

In a surprising, and long overdue modification to the Section 41 Research & Development tax credit, Treasury announced TD 9666 allowing taxpayer’s the opportunity to use the Alternative Simplified Credit (“ASC”) calculation methodology on amended returns in cases where the credit was not previously claimed on a return. Prior to this announcement, the taxpayer’s were … Read More

R&D Tax Credit Update

04/08/2014

The federal tax credit for “increasing research activities” – commonly known as the R&D credit – is one of several “tax extenders” currently being discussed by lawmakers. The credit expired at the end of 2013, but the expectation is that it will be renewed, as it has done consistently since the credit was first enacted … Read More

Expire Act 2014: Tax Extenders for 2014-2015 Passed by Senate Finance Committee

04/03/2014

Yesterday, on April 3, the Senate Finance Committee overwhelmingly approved the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act of 2014 with a strong bipartisan vote, setting the stage for Congress to address. The bill extends many long awaited business tax extenders that originally expired at the end of 2013 and modifies certain tax provisions. … Read More

California Competes Tax Credit Applications Closes April 14

03/20/2014

Businesses may now apply for the first round of awards under the California Competes Tax Credit program. The last date to register for the current application window is April 14, 2014. The California Competes Tax Credit was part of Governor Brown’s three part successor program to the Enterprise Zone tax credit, which is currently being … Read More

Rev. Proc. 2014-16 – IRS releases procedural guidance to implement Final Repair Regulations

01/27/2014

The IRS recently released Revenue Procedure 2014-16, providing the procedural rules taxpayers follow to make “automatic” accounting method changes under the Final Repair Regulations. This revenue procedure modifies Rev. Proc. 2011-14 and supersedes Rev. Proc. 2012-19 regarding certain changes for amounts paid to acquire, produce, or improve tangible property. IRS PROCEDURE 2014-16 The automatic accounting … Read More

Case Study: Retirement of Building Components

01/27/2014

The Final Repair Regulations clarified the rules related to whether a building expenditure is a capital improvement or can be a repair expense. However, one of the most significant rules that has changed under these Regs is in regards to the disposition of structural components of buildings. In the past, when a taxpayer renovated an … Read More

IRS issues Final Revised Tangible Property Repair Regulations

09/16/2013

On Friday (9/13/2013), the IRS issued the final, revised Tangible Property Repair Regulations for Sections 162(a) and 263(a) which modify and supersede the Temporary Regulations that were issued on December 23, 2011. While this is the fourth iteration of the Repair Regulations the IRS has released, it is the first time they have issued them … Read More

New Legislation Replaces California Enterprise Zones

07/11/2013

URGENT ACTION REQUIRED! 2013 will be the last tax year for which businesses may engage in qualified Enterprise Zone hiring or purchasing. Business should document as much Enterprise Zone tax credit as possible now to preserve credits for the eleven year carry forward period. » Contact us and MAXIMIZE your Enterprise Zone credits! Governor Brown … Read More

Texas Governor Signs R&D Credit Legislation

06/17/2013

On June 14, 2013, Texas Governor Rick Perry signed into law HB 800 reinstating the research and development (R&D) tax credit for Texas companies. Although not permanent, both the sales tax exemption and research credit are extended through 2026 and are expected to be a boost to Texas manufacturing and high-technology industries. Details regarding the … Read More

Texas Research and Development Tax Credit Legislation on Governor’s Desk

06/05/2013

On May 25, the Texas state senate approved HB 800 and sent it to Governor Rick Perry for his signature. The bill reinstates franchise tax credits for companies conducting qualified research and development (R&D) activities within the state. The Texas R&D credit was repealed in 2006, but proponents of the bill claim the tax incentives … Read More

Maryland’s Research and Development Tax Credit Extended and Annual Limits Increased

05/01/2013

On April 9, 2013, Maryland’s Governor, Martin O’Malley, approved HB 386 extending and expanding Maryland’s research and development (R&D) tax credit. Maryland’s current R&D tax credit law provides a credit against regular Maryland tax for companies incurring qualified research expenses (QREs) within the state. Maryland currently caps its R&D credits at $6 million per calendar … Read More

Taxpayer Negligence Penalty for Poor Cost Segregation Study

03/12/2013

Summary: In the recently released Chief Counsel Memo #20125201F, the IRS makes it clear that even if you engage a third party to perform a cost segregation analysis, taxpayers cannot avoid penalties for aggressive positions taken in the cost segregation report. The taxpayer attended a presentation that addressed open-air parking structures in which the presentation … Read More

Florida Research & Development Tax Credits are Available for 2012

01/23/2013

For tax years beginning on or after January 1, 2012, the State of Florida allows a qualified “business enterprise” to claim a state R&D credit of 10% for qualified research expenses (“QREs”) incurred in Florida (2012 Florida Statute §220.196). Is there an application process? Yes. An application process must be completed in order to be … Read More

R&D Tax Credit Receives Retroactive Two Year Extension through 2013

01/16/2013

Congress passed a two-year extension for the R&D Tax Credit as part of the Fiscal Cliff Relief bill. The “American Taxpayer Relief Act of 2012” (the Act), which the President signed into law on Jan 2, 2013, extends the credit retroactively and is now set to expire at the end of 2013. This is the … Read More

Fiscal Cliff Bill Extends 45L Tax Credits of $2,000 Per Apartment Unit

01/02/2013

Tax Alert: Energy Efficiency Tax Credits for Multifamily Developers Extended as Part of Fiscal Cliff Agreement In an effort to avert the “Fiscal Cliff”, Congress passed the American Taxpayer Relief Act of 2012 on New Year’s Day, and President Obama has vowed to sign this into law soon. This bill extends many key business tax … Read More

IRS Publishes Formal Amendments to Repair vs. Capitalization Regulations

12/17/2012

On Friday, December 14, the IRS published the amended temporary Repair vs. Capitalization regulations to incorporate the changes announced in the recent Notice 2012-73. The changes include a two year delay of the effective date of the regulations to January 1, 2014. While Notice 2012-73 indicated that taxpayers had the option to apply the temporary … Read More

IRS Changes Rules For A&E Firms: Window Closing To Claim 179D Energy Tax Deduction For Prior Years

09/20/2012

Starting September 4, 2012, designers of government-owned buildings have one less option for retroactively pursuing missed Code Section 179D energy tax deductions. The IRS recently issued Revenue Procedure 2012-39 which prohibits designers from filing a Form 3115 (Application for Change in Accounting Method) to claim missed deductions.  Previous guidance appeared to indicate that architects and … Read More

Tax Alert: Positive Outlook on Extended Tax Credits for Multifamily Developers

08/14/2012

Good news for multifamily developers! On August 2, 2012, the Senate Finance Committee overwhelmingly approved the Family and Business Tax Cut Certainty Act of 2012 with a bipartisan vote of 19-5. The bipartisan bill is a comprehensive $205 billion package that extends numerous tax cuts but reverses the trends of the past by also reducing … Read More

Is the Value of Cost Segregation Depreciating?

08/10/2012

The IRS has challenged the classification components of cost segregation studies done for major corporations such as AmeriSouth XXXII, Ltd. They are calling into question the validity of cost segregation studies and its “savings” to taxpayers. The courts have generally ruled in favor of the IRS, however, even after such rulings, many believe that the … Read More

KBKG Tax Commentary on Regulations for Repairs vs. Capitalization

07/31/2012

It has been several months since the new “Repair Regulations” were issued and many companies are still trying to figure out how this impacts their business. The IRS’s intent was to clarify the existing rules for capitalization but the overwhelming sentiment among CPAs and taxpayers is that they are too cumbersome. The IRS initiated this … Read More

Repair Regulations

05/18/2012

The “Repair Regulations,” are applicable to businesses in all industries that acquire, produce, replace, or improve tangible property. Since these rules mostly affect real property, they can provide significant benefits to your clients even if cost segregation studies have already been performed. Further, the rules allow taxpayers to go back to previous years and take … Read More

Chairman Boustany Suspects GSA of abusing the 179D Tax Deduction

05/10/2012

Facts: On May 3, 2012, Charles Boustany, Jr., Chairman of the House Committee on Ways and Means Subcommittee on Oversight, raised question as to whether the General Services Administration (GSA) is abusing the 179D Tax Deduction. Recent documentation insinuates that the GSA may be improperly requiring contractors to provide kickbacks in order to allocate 179D … Read More

Revenue Procedures 2012-19 and 2012-20

03/30/2012

On March 7, 2012, the Internal Revenue Service (IRS) released two Revenue Procedures 2012-19 and 2012-20 as guidance for taxpayers to make changes to accounting methods in regards to the temporary regulations, “Repair Regulations,” which were released on December 23 of 2011. These two revenue procedures are effective for taxable years beginning on or after … Read More

Tax Alert: IRS takes a stand on Cost Segregation for Apartment Buildings

03/15/2012

Summary: In the recently released AmeriSouth XXXII., Tax Court Memo 2012-67, the IRS makes its first meaningful strike in its attempt to marginalize the benefits of cost segregation studies for residential rental property. For many taxpayers and CPAs, this is a complete surprise. However, KBKG clients have been warned for over a year that this was … Read More

Release of the new Temp Regs. Under 263(a)

01/30/2012

The biggest news that came out over the last month was the long awaited Temporary Regs under 263(a). This clarified the rules related to whether a building expenditure is a capital improvement or can be a repair expense. However, one of the most significant rules that has changed under these Regs is in regards to … Read More

Tax Relief Act (H.R. 4853) Overview

01/10/2011

Summary of H.R. 4853 Benefits 100% Bonus Depreciation & Extension of 50% Bonus– Temporary 100% bonus depreciation deduction for qualifying property placed in service between 9/9/10 and 12/31/11. 50% Bonus Depreciation provisions have also been extended through the end of 2012 (2013 for certain property).   15-Year Life for Qualified Real Property – 2-year extension … Read More

Alternative & Renewable Energy Tax News Alert

12/10/2010

Senate begins consideration of tax “extenders” package including one-year extension of Treasury grant programOn Thursday evening, the Senate began consideration of a bill (H.R. 4853, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010), that includes two-year extensions of Bush-era tax cuts for all taxpayers, changes to the estate tax, and a … Read More

Green Buildings Are Green in More Ways Than One

11/22/2010

The trend toward energy efficient building construction is saving on not only energy costs, but also on taxes for building owners and developers.Gian Pazzia, a shareholder in tax credit specialist KBKG Inc., told an audience at the Accounting Today Growth & Profitability Summit in Orlando last week about the expanding array of tax incentives available … Read More

Tax Incentives Available for Green Building Construction

03/31/2010

Several lucrative federal tax incentives have been extended and enhanced for energy efficient design, construction, and improvement of buildings and homes. Companies that developed properties without necessarily trying to “go green” are often pleasantly surprised to discover that they qualify for these credits and deductions. The types of taxpayers that are likely to benefit from … Read More

KBKG Tax Insight: Affordable Housing Developers & Investors Can Now Reap an Additional $2,000 Tax Credit for Each Unit Leased in 2017

03/08/2008

Affordable housing developers benefit from various tax credits from Low-Income Housing Tax Credits to Rehab Credits, yet they often fail to claim a tax credit that is geared towards their developments: the Section 45L Tax Credit. Section 45L is a commonly overlooked section of the tax code that was recently renewed and rewards energy efficient … Read More