Author: Ivan Tax

May 8, 2024 Meyer, Borgman, & Johnson (MBJ) v. Commissioner: A Cautionary Tale on Contract Language and R&D Credits

The recent MBJ v. Commissioner ruling highlights the important role of contract language in determining eligibility for Research and Development (R&D) Credits. MBJ, a structural engineering firm, had $190,000 in credits disallowed due to inadequate contract language. Although MBJ's contracts allowed for phase inspections and termination for substantial failure to perform, they lacked explicit provisions making payments contingent on the success of R&D efforts or refunding payments if the client found the work deficient. ...

May 2, 2024 Tax Court Affirms Crucial Role of Supporting Documentation in R&D Credits

A recent Tax Court ruling in S Moore v. Commissioner serves as a reminder of the important role documentation plays in supporting claims for research credits. In this case, the Tax Court disallowed a tax credit for research expenses claimed by a married couple due to inadequate documentation....

Apr 11, 2024 Build A Real Estate Portfolio While Minimizing Tax: Cost Segregation and the Short-Term Rental Loophole

In an interview by Arda Bircan from STR Tax Loophole, Alex Bagne, President of ICS, explains how savvy investors combine cost segregation with the short-term rental loophole to minimize income taxes, grow a real estate portfolio, and build generational wealth. He discusses a real-life scenario in which a successful C-level executive earning $500K annually from his job buys a $1 million-dollar short-term rental property to produce income, and then has a cost segregation performed to generate huge tax deductions that significantly reduce his tax liabilities....

Mar 26, 2024 Senators Urge Action on R&D Tax Credit to Boost American Innovation

On Thursday, March 21, the Senate Finance Committee held a hearing on the Biden 2025 Budget Proposal, questioning Treasury Secretary Janet Yellen on various aspects of the proposed budget, with many members noting concern about the proposed increase of the corporate tax rate and aspects of the budget that would have a negative impact on various American manufacturing industries. After weeks of silence from the Senate, many members of the committee stated their desire to see the tax bill (H.R. 7024) passed while urging Yellen and the administration for more aggressive incentivization of R&D in the US, which falls short in incentivizing R&D when compared to countries, specifically China....

Feb 15, 2024 Maximum §179D Deduction Increased to $5.65 for 2024

The §179D Energy Efficient Commercial Building Deduction is a federal tax incentive encouraging energy efficient construction by providing building owners and designers with substantial financial benefits. An exciting aspect in 2024 is the inflationary increase of the maximum §179D Deduction to $5.65 per square foot for projects meeting the prevailing wage and apprenticeship requirements and $1.13 per square foot for those that do not. In 2023, the maximum deduction was $5.36 per square foot and $1.07 per square foot, respectively. In 2022 and prior years, the maximum deduction ranged between $1.80 to $1.88 per square foot....

Jan 18, 2024 The R&D Tax Credit Stands to Benefit from the Proposed Tax Act

The proposed Tax Relief for American Families and Workers Act of 2024 changes the period for when companies must start the five-year period for the deduction of research and experimental expenditures from tax years beginning after December 31, 2021, to tax years beginning after December 31, 2025....

Dec 22, 2023 How Cost Segregation Can Widen the Short-Term Rental Loophole

The short-term rental loophole allows investors in vacation homes and similar properties to offset wage income with accelerated tax deductions generated by cost segregation studies. The article titled "Expanding the Short-Term Rental Loophole with Cost Segregation," co-written by Alex Bagne, President of ICS, details the mechanics of this beneficial tax strategy....

Nov 1, 2023 2023 ASCSP Annual Conference

The American Society of Cost Segregation Professionals (ASCSP) just concluded its annual conference in Washington, DC. ICS Tax, LLC sent three of its cost segregation professionals, Alex Bagne, Roel Vicerra and Luis Barreira to stay abreast of developments within this ever changing industry. Alex Bagne, a Certified Cost Segregation Professional (CCSP) and the past ASCSP President, lead several sessions which covered the Alternative Depreciation System, updates to the 179D commercial and 45L residential energy efficiency incentives, and an Anatomy of a Cost Segregation Audit. He also reprised his role of Alex “TreBagne” and hosted Cost Segregation Jeopardy....

Sep 21, 2023 What does Notice 2023-63, Guidance on the New R&D Amortization and Capitalization Requirements, Mean for Taxpayers?

On September 8, 2023, the Internal Revenue Service (“IRS”) and Department of the Treasury (“Treasury”) released an advance version of Notice 2023-63. This Notice provides interim guidance intended to clarify the amortization and capitalization of specified research and experimental (“SRE”) expenditures under Section 174, amended by the Tax Cuts and Jobs Act (TCJA) in 2017. Proposed regulations provide rules consistent with the guidance for tax years ending after September 8, 2023. Until those regulations are provided, tax professionals can rely on interim guidance....

May 22, 2023 Roel Vicerra joined ICS as Cost Segregation Senior Manager

ICS Tax, LLC is pleased to announce that Roel Vicerra has joined our team as a Cost Segregation Senior Manager. Based in Houston, Texas, Roel brings over a decade of experience in the cost segregation industry. He is an associate member of the American Society of Cost Segregation Professionals and is currently pursuing his credential as a Certified Cost Segregation Professional....