Cost segregation is the process of identifying property components that are considered "tangible personal property" or "land improvements" under the federal tax code. The primary goal of a cost segregation study is to identify all construction-related costs that can be depreciated over a shorter tax life (typically 5, 7, and 15 years) than the building (39 years for non-residential real property or 27.5 years for residential rental property).
Two recent court opinions – Moore v. Commissioner and Little Sandy Coal v. Commissioner – reiterate the pitfalls of claiming the Research & Development (R&D) Tax Credit without sufficient documentation. In both cases, the courts completely disallowed the taxpayers’ R&D tax credit despite recognition that the taxpayers undertook R&D activities and had some level of R&D expenses. The issue was that the taxpayers did not meet their burden of proof to show that all of the activities and associated expenses qualified, and the taxpayers did not provide a reasonable basis for estimating what portion could be properly included.
Now more than ever, recent court precedence has created the need to partner with a firm that understands your industry to maximize Research & Development tax credits. This article explains the result of Little Sandy Coal vs. Commissioner and why it’s important to every organization.
The Tax Cuts and Jobs Act (TCJA) creates the need to amortize research and experimental expenditures in tax years after December 31, 2021. This article provides an overview of section 174, then dives into the changes, updates, and questions regarding taxpayers and their involvement with Section 174 of the TCJA as of the 2022 tax year.
It is evident that the COVID-19 Pandemic has changed the way we live and work. It has also created numerous challenges for business owners. From health and safety mandates to logistical problems, the ability to stay profitable has become an issue for many.
Signed into law by President Biden in August of 2022, the Inflation Reduction Act (IRA) is intended to lower inflation by investing in various areas that will facilitate growth, promote jobs, and strengthen the American economy.
It has been a tough few years.
Between an unprecedented and painful economic contraction due to the COVID-19 pandemic and the subsequent supply-side shocks and inflationary pressures, businesses are eager to find ways to save money and improve their bottom line by any means, while also seeking to innovate to better perform in an ever-increasingly competitive environment. For many businesses, this includes renewed exploration of local, state, and federal incentives to help reduce tax liabilities. For a large number of industries, research and development (R&D) tax credits may provide an effective tool in recouping crucially needed cash spent on developing new or improved products or processes. Better still, many companies can take advantage of both federal and state R&D programs concurrently to enjoy even greater benefits.
The Employee Retention Credit (ERC) has been a popular topic of conversation throughout the pandemic, yet many organizations believe they don’t qualify, and even more have yet to claim it. There is a good chance you have been inundated with emails, text messages, and phone calls indicating your business or organization qualifies for cash from the federal government. Whether you’ve been too busy to focus on it or had no idea your business was eligible in the first place, we would like to help you understand what all the fuss is about. In doing so, you may consider taking a closer look at how the ERC may apply to your situation.
Over the past year and a half, the state of Kansas has passed legislation to improve their incentive offerings for new and expanding businesses. The most notable parts of this legislation are the inclusion of remote workforce in incentive program projects, an increase from 6.5% to 10% in the state Research & Development (R&D) credit amount, the removal of training program participation for High Performance Incentive Program (HPIP) participants, and the introduction of a significant benefits package through the Attracting Powerful Economic Expansion (APEX) program.
On August 16th, President Biden signed the Inflation Reduction Act (IRA) into law, and although there were many provisions, there are a few that stand out for business owners. One of which being that there are additional funds for the Internal Revenue Service (IRS). We will explain what this means to taxpayers, specifically ones claiming business tax credits and what they can do to protect themselves from IRS examinations.
