Don’t Just Write Us Off, We Have a Life!Allison Gillette, Tax Manager, CPA, CHAEMiriam Krisher, Senior Audit Manager, CPA

The material appearing in this presentation is for informational purposes only and is not legal or accounting advice. Communication of this information is not intended to create, and receipt does not constitute, a legal relationship, including, but not limited to, an accountant-client relationship. Although these materials may have been prepared by professionals, they should not be used as a substitute for professional services. If legal, accounting, or other professional advice is required, the services of a professional should be sought.

Tug of War

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Capitalization Policies

• GAAP– General Rules

• Tax– New IRS regulations

• Safeharbor: Provisions in a regulation that affords protection from a liability or penalty under specific situations or if certain conditions are met.

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Expense or Capitalization

• extends the life,

• increase the capacity, or

• improve the efficiency or safety of the property.

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What’s in a Building?

• Unit of property– Building structure– Building systems

• HVAC• Plumbing systems• Electric systems• All escalators• All elevators• Fire protection system• Security system• Gas distribution system

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Asset Lives

**Scheduled to expire as of December 31, 2013

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Property Description Book Life Tax Life Eligible for Sec. 179 or Bonus**

Furniture 5-15 years 7 years Yes

Restaurant Furniture N/A 5 years Yes

Fixtures 5-15 years 7 years Yes

Equipment 5-15 years 5 years Yes

Software 36 months 36 months Yes

Building 40 years 39 years No

Improvements 15 years 39 years No

Qualified Improvements** N/A 15 years Yes

Qualified Leasehold Improvements**

N/A 15 years Yes

GAAP vs Tax

• Preopening/Startup costs

• Leasehold improvements

• Goodwill and other intangibles– Impairment: Assets are said to be impaired when their net carrying value,

(acquisition cost - accumulated depreciation), is greater than the future undiscounted cash flow that these assets can provide and be disposed for.

• Loans fees

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Making your Life Easier

• Planning for your audit

• Tax planning

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Questions?Contact Information:

Allison Gillette- agillette@pscpa.com

Miriam Krisher- mkrisher@pscpa.com

Tug of War Capitalization Policies

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