Cost Segregation Working with CPA & Tax Professionals.
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Transcript of Cost Segregation Working with CPA & Tax Professionals.
Business with CPAs
Need a solid understanding of Cost Segregation- If not, could lose their trust quickly
Need to understand personality traits typically associated with CPAs- Enhances communication
CPA
Client says his CPA has already performed Cost Segregation- IRS specifically asks for a third party
engineering firm- Engineered study provides best economic
results- IRS Quote: “Cost segregation is a factually
intensive determination that is based on complex tax law and engineering analysis”
Best Economic Results
3115 Form
Change in Accounting Form- Only needed for properties owned for over
1 year- States that you intend to change from old
method of depreciation to accelerated depreciation using cost segregation
Sample 3115
3115 Form
Catch Up Depreciation- Allows taxpayer to recalculate depreciation
from the first day placed in service and take additional depreciation in the first year of application
- Difference between what was deducted and what could have been deducted is knows as an IRS Section 481(a) adjustment
Net Operating Loss
Allowable tax deductions are greater than taxable income resulting in negative taxable income
Business owner can “carry back” loss 2 years
Passive Loss
IRS states that passive losses can only be offset by passive income
Exception: Rental real estate losses up to $25,000 may be deducted for individuals whose gross income is less than $100,000.
Real Estate Professional
Taxpayer spends the majority of his time in rental real estate- More than ½ personal services related to
real estate business- Taxpayer spends more than 750 hours of
material participation in real estate business
- Losses are no longer passive
Grouping of Activities
If businesses form an economic unit, C and S Corporations and Partnerships/LLCs can group them into a single activity
Ex. – Owner holds building in one LLC and operations of business in a separate LLC
Personality Traits
“C” Personality- Perfectionist – prefer a factual approach
• Respect precise & logical explanations
- Strengths – accuracy through detailed research
- Weakness – fear criticism• Leads to a fear of change
CPA Partnerships
Provide access to multiple commercial property owners
Client trust has already been established
CPA Partnerships
Marketing to CPAs- CPA/Tax Professional Conventions- Visiting Local CPA Firms- Connect with CPA through current clients- Market to your current CPA
CPA Mkt Material
CPA Partnerships
CPA BIQ System- Building Investment Quotient - Allows CPA instant access to analysis- You are sent an e-mail each time an
analysis is created
CPA Partnerships
CPA BIQ System- You can create a user name and password
for CPA or tax professional- CPA or tax professional can log on and
create an analysis for their clients- You will receive an e-mail alerting you an
analysis has been created