Avoid missing tax depreciation benefits or creating costly tax compliance issues by properly addressing the tax challenges of your company’s fixed assets—which often compose a significant portion of the balance sheet.

Tax depreciation has become more complex due to tax-specific framework guidance for expensing and capitalizing costs, ever-changing tax depreciation laws, and the inability of antiquated enterprise resource planning (ERP) systems and software to incorporate current depreciation rules.

Explore solutions for your business with:

• Fixed Asset Tax Analysis
• Fixed Asset Depreciation Compliance and Reporting

Fixed Asset Tax Analysis

Identify opportunities to apply fixed-asset changes that can help provide immediate tax savings through accelerated tax methods for depreciation, repair and maintenance expenses, and other items.

An analysis can also help identify various compliance issues, and tax changes may be applied to assets placed in service in prior periods without amending tax returns.

How the Analysis Process Works

Assessing the specific needs of your business, our professionals will guide you through each step of the process.

Analysis Example

To visualize potential benefits, consider an analysis of assets placed in service during the last five tax years that reveals:

• $5 million of capital project assets that could’ve been expensed. Assuming a 35% tax rate, a taxpayer could benefit from nearly $1.8 million of tax deferral benefit by changing the treatment from 39-year depreciable property to expense treatment.
• $10 million of assets that can be changed from 39-year to five-year property. With 100% bonus depreciation, a taxpayer could benefit from nearly $3.5 million of tax deferral benefit from making the change.

Through this analysis and corresponding accounting method change filing, the company can report an adjustment to catch-up on the missed depreciation and repair expenses on its current tax return, lowering its current tax liability.

Fixed Asset Depreciation Compliance and Reporting

Meet your fixed asset and depreciation reporting compliance needs with crafted solutions to account for fixed assets for federal, state, and other reporting needs throughout the year.

Benefits of Fixed Asset Accounting

Fixed asset accounting can help your company in many areas:

Expedited Processes and Operations

• Free up personnel time allowing them to upskill in the organization
• Save on cost and other resources to acquire and maintain fixed asset and depreciation software
• Process reported additions, disposals, and other fixed asset data each period with automated processes

Strategy

• Take advantage of ever-changing special provisions and rules related to cost recovery of assets for federal and state tax purposes
• Identify disposals and in-service date issues and opportunities related to capital project assets
• Identify opportunities for partial disposition losses and tax-deductible repair expenses capitalized for book purposes
• Assess assets for eligibility of accelerated tax depreciation methods such as bonus depreciation
• Apply accelerated tax depreciation methods and recovery periods based on business use
• Assess construction in process (CIP) accounts for in-service date compliance issues
• Compute state-specific bonus depreciation and other special provisions
• Calculate qualified business asset investment (QBAI) and maintain alternative depreciation system (ADS)-depreciation for the foreign-derived intangible income (FDII) deduction
• Implement retroactive fixed asset changes, whether elective or mandated by legislation

Forecasting and Proactive Solutions

• Project depreciation for future periods using acquisition and disposal assumptions
• Compute depreciation for federal, alternative minimum tax (AMT), state and local, and other tax books on a quarterly or annual basis
• Prepare depreciation, disposal, and other reports as needed
• Track book costs and tax adjustments, with summarized roll-forward schedules

How the Process Works

To address your accounting needs, our professionals will:

• Send a ledger of your fixed asset additions, disposals, and other activity in the current period
• Import reported data into tax depreciation software
• Apply tax recovery periods and methods to additions, with disposals entered for computation of gain or loss
• Calculate depreciation of assets for the period
• Receive tax depreciation reporting for the period

Expansive Industry and Accounting Insight

Industries that can find fixed asset tax analysis and accounting services especially beneficial include:

• Manufacturing and consumer products
• Food and beverage
• Health care
• Hospitality
• Retail
• Aerospace and defense
• Construction
• Professional services
• Real estate

Well-versed in tax law and deeply immersed in 30+ industries, our professionals understand how fixed assets are utilized in daily operations—allowing us to classify costs for recovery and to identify additional opportunities related to your capital expenditures such as cost segregation, fixed asset analyses, energy incentives, and more.

Specializing in various accounting method changes, our professionals understand how to identify the information needed to select an appropriate method for your business—working seamlessly with tax preparers to implement results onto federal and state tax returns.