In the cartoon show, helpless citizens will always find a saved Super Hero Flying to their rescue at the last moment. Superman, Spiderman, Batman and a bunch of other people well known to make such a task. In the fictional world, these are the guys you want to go in hard times, but what about the real world? Find themselves in life threateni... Read more
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If the current owner paid for the tenant improvements, the remaining cost basis is simple to calculate in an abandonment study. However, if a prior owner paid for the tenant improvements, it is unlikely cost data is available to the current owner. Further, even if cost is available to the current owner, that cost is not necessarily the current owner’s initial or undepreciated cost basis. (For an abandonment study, it is not relevant whether the current owner paid for the tenant improvements. If the prior owner or even the tenant paid for the tenant improvements, and the owner did not expect the tenant to be leaving at the time of acquisition, an abandonment study identifies the tenant improvements as a portion of the assets purchased.) Tax help can originate from unexpected sources. By obtaining an abandonment study, the current owner can determine the undepreciated cost basis for the tenant improvements which are being abandoned. This abandonment study will identify the replacement costs of the assets, extract an appropriate cost basis for the improvements being abandoned from the current owner’s purchase price and calculate a depreciated cost basis which may be deducted from the tenant improvements. Examples of tenant improvements often identified in abandonment studies which are unlikely to benefit a subsequent tenant include: 20,000 square foot bank in an area which has an excessive number of banks with an average of 3,000 square feet; 5000 square feet of space for one physician 50,000 square feet of space mostly apportioned to very small patient rooms for health insurance physicals; another format or layout which is atypical. Let’s consider an example: Stan Smith purchased a 100,000 square-foot office building for $10 million in 2000. In 2004, the XYZ Company which leased 40,000 square feet of space filed for bankruptcy and vacated the space. The prior owner had spent $1 million for tenant improvements. An abandonment study analysis concludes the appropriate cost basis for the new owner is $800,000. The new owner has been depreciating all the improvements over 39 years. An abandonment study identifies the undepreciated cost basis for the teanant improvements for the XYZ Company at $717,949 ($800,000 x 35/39). The owner can deduct this amount when he realizes the improvements have no value or when the improvements are demolished. Depreciation of tenant improvements is a difficult process to execute effectively. Accurately depreciating tenant improvements can substantially reduce income tax liability and increase both cash flow and total investment return. To obtain a quote or further information regarding an abandonment study or a cost segregation report, contact us at 713-686-9955.
Taxes are your enemy, but tax deductions are your friends. Taxes are the great bane of most businesses. Alas, business deductions act as a salve to cool the burning and itching of your bank account.
Business taxes can be summ... Taxes are your enemy, but tax deductions are your friends. Taxes are the great bane of most businesses. Alas, business deductions act as a salve to cool the burning and itching of your bank account.
Business taxes can be summ... An enrolled agent is a federally-authorized tax practitioner who has technical expertise in the field of taxation and who is empowered by the U.S. Department of the Treasury to represent taxpayers before all administrative level... Taxes can be overwhelming which is why there is such a large market for tax preparation services. There are many different types of tax preparers and each title has certain requirements that must be maintained in order to establ... Tax deferral is a key benefit of cost segregation; however, a popular misconception about cost segregation is it is just used for tax deferral, it does not reduce taxes. The tax deferral and tax reduction issue is misunderstood ... Companies and organisations established in the UK are legally responsible for paying corporation tax on all their taxable profits whether these profits are from UK or from other parts of the world. Apart from this, there are num...
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