Fixed Asset Review

What is Fixed Asset Review?

Similar to a cost segregation study, the goal of a fixed asset review is to take fixed assets and reclassify them to a shorter depreciable life. This acceleration of the depreciation expense makes the client eligible for a Section 481(a) or “catch-up” adjustment. However, as a cost segregation study typically focuses on specific real estate investments, a study for fixed assets includes all of the assets a client owns. Fixed asset studies combine a more detailed invoice review of the client’s documentation with the engineering review included in a cost segregation study. A fixed asset study may include multiple cost segregation studies on specific assets placed in services since Jan. 1, 1987.

Benefits of a Fixed Asset Review

The issuance of the Tangible Property Regulations have made fixed asset studies even more beneficial. The regulations allow a portion of a larger capital asset to be written off when it is removed as part of a new capital project. This partial disposition allows the taxpayer to write off the remaining basis in the current tax year instead of deprecating over the remaining useful life. It is important to note that the replacement needs to be a capital replacement and not a repair. If the replacement is done as a repair there is no offsetting capital project and the original depreciable asset will remain on the books.

Much like cost segregation, a fixed asset review can increase cash flow by accelerating deprecation. A fixed asset study may include multiple cost segregation studies in order to maximize depreciation deductions. For companies with significant quantity of assets on the books, a fixed asset study may generate a much higher current year adjustment to taxable income as compared to a cost segregation study.

For more information watch the webinar titled: Scrubbing a Fixed Asset Listing for Repair Regulation Opportunities

Practice Leaders

Interested in a Free Analysis and Proposal?

Click the button below and complete the short RFP form for your Free Analysis.
Free Analysis & Proposal

Additional Fixed Asset Resources

Recent Articles

TJ Sponsel
Are you Integrating the PATH Act Changes this Tax Season?

As tax season gets into full swing, McGuire Sponsel wanted to take a moment to remind our partners and clients that this is the time to take advantage of the opportunities created by the Protecting Americans from Tax Hikes (PATH) […] Read More

David McGuire
Potential Tax Rate Changes and How to Benefit

Over the past few weeks I’ve had many discussions with our CPA clients concerning the changes that may develop from the recent election. While tax policy for 2017 and beyond is still up in the air, most practitioners feel that […] Read More

David McGuire
Depreciation Planning Post Election

The long election cycle is over and we can now start looking at the results and what it might mean for tax planning in the coming years. By now, everyone knows that the Republicans have control in the House, Senate […] Read More

David McGuire
Accounting Today Feature: IRS Previews Audit Techniques for Tangible Property Regulations

Dave McGuire is featured in Accounting Today as he discusses how the IRS’s recent Audit Techniques Guide for the Tangible Property Regulations can help business taxpayers avoid problems with IRS examiners in interpreting the 2014 regulations on how to treat […] Read More

Subscribe To Our
Monthly Newsletter

Join our mailing list to learn about tax and incentive opportunities your firm can realize.

You have Successfully Subscribed!