Cost Segregation - Tax Deductions
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by: pradeep
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Collecting more taxes than is absolutely necessary is legalized robbery. - Calvin Coolidge, 13th President of the United States
In addition to the numerous tax deductions the Internal Revenue Service (IRS) allows, research indicates that most U.S. taxpayers do not claim all deductions to which they are entitled.
Some of the tax deductions business owners can claim fall under categories such as charitable contributions/donation deductions, medical and dental deductions, moving expense deductions, deducting job costs, travel and entertainment expense deductions, and casualty and theft losses, depreciation and involuntary conversion deductions.
Even after the fiscal year ends, and business owners of improved commercial real estate are still seeking tax deduction opportunities, one popular option is to order a cost segregation study (CSS). A CSS will identify any item that can be depreciated over a shorter period of time. These studies can result in accelerated depreciation deductions for properties including new buildings, renovations of existing buildings, leasehold improvements, and real estate purchase after 1986. Cost segregation allows business owners to increase depreciation, generate more tax deductions, and reduce their tax rate.
Year 1 federal income tax savings are typically at least two times the cost of a CSS. In many cases they are five to fifty times the cost of the study. The cost segregation study is only required once. Its cost is not recurring, but the benefits are recurring during the term of property ownership. A CSS can also materially reduce local property taxes by separating real and personal property for newly constructed properties.
Tax reduction services include federal income taxes, federal
tax reduction, state income taxes and property taxes. We do not prepare
income tax returns. Instead, our advisors review your circumstances and suggest
cost effective options to lawfully reduce your income tax liability.
About the Author
Patrick C. O'Connor has been president of O'Connor & Associates since 1983 and is a recipient of the prestigious MAI designation from the Appraisal Institute. He is also a registered senior property tax consultant in the state of Texas and has written numerous articles in state and national publications on reducing property taxes. He continues to set the standard in direction and quality of our appraisal products, adding services ranging from business valuations and business appraisals to cost segregation analysis for income tax reduction. Patrick C O'connor http://www.poconnor.com
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