Learn the latest tax strategies as well as happenings at ICS Tax, LLC

In its commitment to matching top talent to its clients, ICS Tax, LLC (ICS) welcomes Lacey Robb as the Pacific Coast Practice Leader. Lacey will operate out of a new ICS office located in Los Angeles, California.

Lacey has over 14 years of tax and legal experience, which includes the Big Four accounting firms KPMG and EY as well as various law firms. Lacey specializes in the R&D credit and numerous other tax planning ideas. Her background in corporate taxation, M&A, SALT and complex tax issues allows her to provide a holistic approach for servicing her clients.

Lacey received her B.A. in Psychology and Juris Doctorate from the University of North Dakota, as well as an LLM in Taxation from the University of Denver. Additionally, she has taken the core accounting classes from North Dakota State University. In her free time, she is an avid scuba diver and participates in annual marathons benefiting cancer research.

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NOTICE 2017-6: GOOD NEWS FOR TAXPAYERS WANTING TO BENEFIT FROM THE TANGIBLE PROPERTY REGULATIONS

BACKGROUND

The IRS released Notice 2017-6, which better allows taxpayers to take advantage of the Tangible Property Regulations (TPRs). Taxpayers generally are not permitted to make an automatic method change if they made or requested a change for the same item during any of the five tax years ending with the year of change. This effectively prevents taxpayers from using the automatic change procedures to change the treatment of the same item more than once within a five-year period.

THE WAIVER

Rev. Proc. 2016‐29 waived the “5-year rule” for implementing TPR changes for any tax year beginning before January 1, 2016. Notice 2017-6 extends this waiver, which now applies to any tax year beginning before Jan. 1, 2017, effectively providing an additional year for taxpayers to comply with the TPRs. The applicable sections and Designated Change Numbers (DCNs) that Notice 2017-6 applies are as follows:

  • Section 6.14, relating to a change from a permissible to another permissible method of accounting for depreciation of MACRS property under § 1.168(i)-1, § 1.168(i)-7, and § 1.168(i)-8 (DCN) 7);
  • Section 6.15, relating to a change in method of accounting for dispositions of a building or structural component under § 1.168(i)-8 (DCN 205);
  • Section 6.16, relating to a change in method of accounting for dispositions of tangible depreciable assets (other than a building or its structural components) under § 1.168(i)-8 (DCN 206);
  • Section 6.17, relating to a change in method of accounting for dispositions of tangible depreciable assets in a general asset account under § 1.168(i)-1 (DCN 207); and
  • Section 11.08, relating to changes in methods of accounting for tangible property under the final tangible property regulations (DCN 184).

Click here to view Notice 2017-6.

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HOW CAN ICS TAX HELP?

ICS Tax has nationally-renowned experts in the Tangible Property Regulations that can assist with compliance-related issues as well as take advantage of several taxpayer-friendly provisions under the TPRs. For a free consultation, please contact an ICS Tax representative.

Author: Alexander Bagne, JD, CPA, MBA, CCSP. Contributing Author: Mike Piper, LEED AP

The First National Bank Building sign is officially lit after being dark for 10 months. ICS Tax is proud to be a part of this exciting project in Downtown St. Paul. See the Star Tribune article here for more information.

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Corporate Tax Planning in a pre-Trump Regime

 

For many businesses and business owners, the outcome of the 2016 election could be quite rewarding. President-elect Donald Trump proposed $6.2 trillion in tax cuts over the next decade. While it remains uncertain as to whether Trump can get such large tax cuts through Congress, even one controlled by the GOP, Republicans remain committed to overhauling the U.S. tax system in a manner that they think will help grow the economy. Overall, some sort of tax reduction seems inevitable.

In years where taxpayers expect tax rates to decrease in future tax years, the standard advice is to accelerate deductions into the current year while defer income until future years. Examples include making major equipment purchases in the current tax years while delaying invoicing of clients until the next tax year. With a tax rate differential, these planning techniques yield permanent tax savings. At ICS Tax, LLC, we are very experienced with tax planning opportunities to accelerate deductions. While the benefits from the time value of money are substantial, permanent tax savings make these planning opportunities even more valuable. Below are some ideas:

  • Cost Segregation/Individual Asset Review – Commercial buildings are depreciated slowly over 39 years. A cost segregation study carves out components from buildings that qualify for more rapid depreciation, such as land improvements and personal property. Likewise, individual assets are often inappropriately depreciated building assets, such as process-related plumbing, electrical, and ventilation systems. This study identifies assets qualifying for more rapid depreciation.
  • §179D Energy Efficient Commercial Building Deduction – Taxpayers who construct new buildings or make improvements to existing ones can take an immediate deduction of up to $1.80/SF for investments in efficient lighting systems, HVAC and hot water systems, and the building envelope.
  • Capital to Expense Studies – The new Tangible Property Regulations allow taxpayers to retroactively review expenditures that were capitalized but qualify as repair and maintenance expenses, such as replacing roof membranes, resealing parking lots, and replacing of HVAC components.
  • Retirement Studies/Partial Dispositions – Taxpayers often have ‘ghost assets’ in their fixed asset systems, such removed roofs and HVAC components. A retirement study identifies these assets, allowing taxpayers immediately deduct the remaining undepreciated basis. Similarly, taxpayers who make improvements to their facilities can immediately deduct the cost of the removed building components and to instantly write-off undepreciated basis amounts.

To learn more about these tax planning ideas and several more, please contact an ICS Tax representative.

Author: Alexander Bagne, JD, CPA, MBA, CCSP. Contributing Author: Mike Piper, LEED AP

Alex Bagne and Mike Piper are heading to Orlando, Florida to attend the annual conference of the American Society of Cost Segregation Professional (ASCSP). Both Alex and Mike are members of ASCSP, which provides education, credentials, technical standards and a Code of Ethics within the cost segregation industry. Alex will be speaking on two panels. For the first panel, he will be discussing Accounting Method Changes and the new Form 3115, the Tangible Property Regulations, and Partial Asset Dispositions. On the second panel, he will be discussing the new depreciation category called Qualified Improvement Property, the PATH Act, and the §179 Expense Election.

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ICS Tax is looking forward to presenting information regarding Federal tax incentives for the Dakota Electric Association’s Commercial & Industrial Fall Meeting on November 3rd. The DEA is a member-owned, electric utility with more than 100,000 members and ranked among the 25 largest electric distribution cooperatives in the nation. Click here for more information on the DEA.

The IRS released final regulations concerning the application of the R&D tax credit to “internal use software” (i.e., software which is developed by or for the benefit of the taxpayer). Examples of internal-use software include software for use in human resources, support services and financial management. Software that is not for internal use needs to meet a lower threshold to qualify for the credit. These final regulations also include examples to illustrate the application of the process of experimentation requirement to software. Click here to view the full regulations.

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Alex Bagne and Mike Piper presented tax planning strategies specifically for the construction industry at the Columbus Contractors Network’s Construction Success workshop. See additional information here: www.columbuscontractorsnetwork.com.

BACKGROUND

The IRS recently released an Audit Techniques Guide titled “Capitalization of Tangible Property”. Audit Techniques Guides (ATGs) help IRS examiners during audits by providing insight into issues unique to specific industries. While designed to provide guidance for IRS employees, these guides are useful to business owners and tax professionals as they are more reader-friendly than the code and regulations, and they often discuss the implications of case law as well as other relevant authorities.

WHAT THIS MEANS TO TAXPAYERS

The Capitalization of Tangible Property ATG deals primarily with issues related to the Tangible Property Regulations (TPRs). In March of 2012, the IRS issued a directive that suspended current field examinations on the repair vs. capitalization issues to permit taxpayers to file accounting method changes under recently issued temporary regulations and revenue procedures. The IRS has since been lenient on examination of TPR issues to allow taxpayers time to adopt the new rules. The new ATG shows that the IRS has renewed interest in auditing TPR issues to ensure proper compliance.

HOW CAN ICS TAX HELP?

ICS Tax has nationally-renowned experts in the Tangible Property Regulations that can assist with compliance-related issues as well as take advantage of several new, taxpayer-friendly provisions. For more information, please contact an ICS Tax representative.

Click below to view the full Audit Techniques Guide

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The ICS Tax, LLC sister company, ICS Consulting, Inc., was just named one of the Minneapolis/St. Paul Business Journal’s Best Places to Work in 2016 for the second year in a row! Click here for more information.

ICS is providing specialty tax and cost segregation related services for Ted Glasrud Associates, a Twin Cities based property management and development firm, for approximately 2 million square feet of commercial and industrial space.

ICS Tax president Alex Bagne co-published an article on Avoiding Recapture Tax in Cost Segregations, featured in the AICPA’s Tax Insider newsletter. The recapture tax rules require taxpayers to pay back any tax deductions for accelerated depreciation when appreciated property is sold. While the effects of a cost-segregation study can magnify recapture issues, tax professionals should consider a number of worthwhile opportunities to reduce or avoid recapture tax that would otherwise be realized upon sale of property. To learn more, please click here.

ICS happy to announce that we are working on behalf of Eide Bailey, LLP to provide specialty tax consulting services for the Scheels All Sports facilities portfolio.

ICS Tax President Alex Bagne coauthored an article on the Tangible Property Regulations in “Disclosures” magazine, a publication by the Virginia Society of CPAs.

Click below to view the article.

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Taxpayers can realize significant benefits under the Tangible Property Regulations by identifying and removing building components that have been replaced or demolished by writing off and taking a loss upon the undepreciated basis. Valuing the cost of the replaced or demolished building component requires a careful understanding of these regulations. Alex Bagne coauthored an article for Bloomberg BNA on Dispositions of Tangible Property-IRS Restricts Use of Discount Value Approach. Click below view the article.

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