Top 5 Ways To Find Money Through Fixed Assets

Wow… today the stock market crashed so big it has probably got us all thinking… where do we go from here? Which also gets me thinking — how can businesses find some cash flow so they have some “rainy day funds” (or for operating expenses) in their back pockets?  Then it dawned on me… if they manage their fixed assets properly and received detailed cost segregation studies or had a proper 3115 study done, then shoot, EVERYONE could have extra cash flow.

If you think about it, there really are many ways to capture extra cash flow through fixed assets.  From very small efforts to large.

Top 5 Ways Fixed Assets Can Capture or Re-capture Cash Flow

  1. Cost Segregation Studies – extra Tax Deductions with properly classified fixed assets.  Money is in the DETAILS, not in bulked entries everyone!  Make sure you capture your 100% bonus depreciation for 2011 – it will go away soon.
  2.  Rev Proc 2007-16 Study – 3115 assets; allows taxpayers to change their method of accounting and claim the allowable depreciation (or amortization) amount they never claimed (i.e. bonus depreciation, etc.).
  3. Physical Fixed Asset Inventories – cost savings all across the board with Property Taxes, Insurance Premiums, Financial savings impact and more.  Have you ever done one of these before?
  4. Asset Appraisals – is it really worth TODAY what it once was?  Probably not.
  5. Automated Depreciation System – if you are still stuck in spreadsheet land for calculations, believe me when I say, YES you ARE missing additional expense and bonus that you are entitled to.  I see it every time I open someones spreadsheet!  Doesn’t matter the size of the organization or spreadsheet, there is ALWAYS calculation error, sometimes in the millions.

Which industries would benefit from these services / studies?  Just about all industries, well, maybe government and non-profit wouldn’t benefit from all five, but certainly from a couple.  Industries that would uncover a ton (always in the thousands – sometimes millions) from one or all five: hospitality, data centers, banks, manufacturing, retail, healthcare to name a few.

Now I know why I love waking up every day to go to work for the past 14 years (and growing)… because everything I (and my associates) do each and everyday help people and their businesses grow.  Who doesn’t like that?  Probably the same people who don’t like furry fuzzy kittens.



Sage FAS Asset Accounting: Release of Version 2011.1

The moment has arrived for all you Sage FAS Asset Accounting users out there (over 300,000 active users).  The release of version 2011.1!  Yes, it incorporates tax law changes made during the year including the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 and the Small Business Jobs Act of 2010. 

This release is only available for CURRENT Sage Support members and new licenses.  If you need to renew your support to take advantage of this slick automation and updated depreciation methods and provisions, call me now at (847) 2402981 ext: 164 or shoot me an email with the SUBJECT: RENEW.

The FAS 2011.1 Tax Update contains exciting new features and enhancements to your:

  1. Tax Law Updates: Sage has updated the Sage FAS program to comply with the latest tax law changes:  
  • Updated Tax Forms and Worksheets. The 2011.1 Tax Update includes the updated IRS Form 4562 – Depreciation and Amortization for 2010. 
  • Updated Tax Limits. The 2011.1 Tax Update complies with the scheduled updates to the Section 179 limits and luxury auto limits, including changes to allow up to $250,000 of the Section 179 deduction to be claimed for qualified real property.
  • 168 Allowance of 100% for Certain Property. Assets placed in service after September 8, 2010 and before January 1, 2012 can take a 100% bonus deduction.
  • Extension of Tax Provisions. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 has extended several tax provisions, such as allowing a 15 year estimated life on qualified leasehold improvements, qualified restaurant property, and qualified retail improvement property.

2. Updated Audit Advisor. Sage FAS made the following updates to the Audit Advisor:  

  • Check for the increased Section 179 limits as stated above. 
  • Extend the check for Qualified Restaurant, Leasehold, and Retail Improvement Property. 
  • Added a new check for assets that claimed a 50% 168 Allowance when they are eligible to take the increased 100% depreciation allowance. 
  • Added a new check for real property that may be qualified for the Section 179 expense deduction.

3.  New Sage Timberline Enterprise Link. We have added a new general ledger link that enables you to post depreciation expense and accumulated depreciation from Sage FAS to Sage Timberline Enterprise.

NOTE: Please note that no database conversion is required to upgrade from version 2010.1 of Sage FAS to version 2011.1. However, if you are currently using an older version of Sage FAS, you must first upgrade to version 2010.1 before installing Sage FAS version 2011.1. 

If you DON’T have all the CDs or other material available for versions lower than 2010.1, you need a data schema upgrade.  Contact me today for competitive rates.

Tax Engineered Cost Segregation – Hotel Renovations

There has been a lot of buzz out in the hotel industry lately. Everyone is wanting to renovate in order to capture more occupancy during this economy – but cash flow can, at often times, be unavailable for renovations.  This is where Cost Segregation or Section 179(d) Energy studies come into play. 

More often than not fixed assets are misclassified with a longer depreciation life on a slow depreciation calculation.  About 8 times out of 10 line items are bulked instead of separated out or classified properly —  classified as Real property instead of Personal.  There are many benefits to classifying what goes into your renovations properly: an accelerated depreciation schedule = additional year-end deductions = more money in your piggy bank = additional renovations or keeping staff. 

Should you have questions about Cost Segregation Studies, Tax Engineered Studies or Section 179(d) Energy studies, as always do feel free to reach out to us.  We love hospitality!

P.S.  When you gut rooms, banquet halls, reception areas, restaurants, or other amenities for renovation — remember, they are fixed assets too… run them through disposal!  Otherwise, its money in the trash.

Bonus Depreciation for Hospitality

Restaurant and hotel executives are always looking for ways to be innovative when contributing to their bottom line.  Who wouldn’t?  Both are expensive to build, maintain and run.  Both require an insane amount of fixed assets to operate.

We try and be pro-active with all the hotels and restaurants we encounter and work with them to identify and classify real property and personal property correctly through our engineering based cost segregation studies.  Through this process we are able to determine which personal property items qualify for bonus depreciation and can capture all associated benefits to greatly increase cash flow for other operating costs.

Bonus Depreciation Rates and Dates History

  • September 11, 2001 to May 5, 2003 — 30%
  • May 6, 2003 to December 31, 2004 — 50%
  • January 1, 2005 to December 31, 2007 — None
  • January 1, 2008 to December 31, 2009 — 50%
  • January 1, 2010 to December 31, 2010 — None — Still Pending Legislation

Their may not be a lot of differences in depreciating fixed assets for hospitality versus any other industry, there are however, more accelerated depreciation methods and lives for certain hospitality items — should you catch them on time.

Perhaps YOU should be looking into an engineering based cost segregation study so YOU can figure out which assets could qualify for bonus depreciation for hospitality.

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