| > | | | | Cost segregation produces tax deductions and |
| Regarding Tax Deductions for Small Business Owners | | | | reduces federal income taxes across the country and |
| Tax Deductions for Small Business Owners | | | | in every size market. Below are just a few examples |
| Tax tips and tax help to assist taxpayers by | | | | of cities where cost segregation generates |
| describing optionsfor tax reduction and tax cuts | | | | meaningful tax deductions. |
| through lawful tax deductions. | | | | City: |
| Small business owners need all the tax help which is | | | | - Memphis, TN |
| available. Tax deductions allow small business owners | | | | - Baltimore, MD |
| to keep more of what they earn. With a 35% | | | | - Las Vegas, NV |
| marginal tax rate, the government is a silent partner | | | | - Boston, MA |
| who takes no risk and over one-third of the profits. | | | | - Miami, FL |
| Tax deductions are neither simple, straight forward, | | | | - New Orleans, LA |
| or intuitive. However, the effort to increase tax | | | | - Atlanta, GA |
| deductions is well worth the effort. | | | | - Washington, DC |
| Tax Help Tip 1: Tax deductions reduce taxable | | | | - Phoenix, AZ |
| income for small business owners but do not directly | | | | - Houston, TX |
| reduce federal income taxes. (Tax credits, such as | | | | - Albuquerque, NM |
| low income housing investment tax credits, directly | | | | - Sacramento, CA |
| reduce federal income taxes) Both cash and non-cash | | | | - Sarasota, FL |
| tax deductions merit review. | | | | - Salt Lake City, UT |
| Tax Help Tip 2: Cash disbursements can be expensed | | | | - Albany, NY |
| (used as a tax deduction in the current year) or | | | | - Virginia Beach, VA |
| depreciated (capitalized and depreciated or amortized | | | | - Oxnard, CA |
| over a period of years). Due to the judgment | | | | - New Haven, CT |
| required to determine what should be capitalized, | | | | - Chicago, IL |
| there is some discretion. For example, a local gang | | | | - Kansas City, MO |
| paints graffiti on a portion of the side of your building. | | | | - Buffalo, NY |
| You decide to repaint the entire side of the building | | | | - Jackson, MS |
| instead of just the portion with graffiti. Is this a repair | | | | - Tucson, AZ |
| (can be used as a tax deduction) or should it be | | | | - Raleigh, NC |
| capitalized (and depreciated over time)? Some | | | | - Dayton, OH |
| owners would elect to expense repainting the entire | | | | - Pittsburgh, PA |
| building. Business owners should seek counsel from | | | | - Scranton, PA |
| their advisor regarding discretionary tax deductions. | | | | - Jacksonville, TN |
| Tax Help Tip 3: Real estate provides bountiful tax | | | | - Portland, OR |
| deductions for small business owners. Most real | | | | - Birmingham, AL Cost segregation produces tax |
| estate owners inadvertently understate depreciation | | | | deductions for virtually all property types, including |
| and thus forego available tax deductions. The | | | | the following: |
| common practice is to simply separate land and | | | | Property Type: |
| long-life property (depreciated over 39 years for | | | | - Veterinary clinic |
| commercial property and 27.5 years for rental | | | | - Single-tenant retail |
| residential property). Real estate owners can | | | | - Auto dealer |
| typically increase depreciation by 50-100% in the first | | | | - Amusement park |
| 5-7 years of ownership by utilizing cost segregation. | | | | - Community shopping center |
| Cost segregation can separate up to 130 items that | | | | - Convenience store |
| can be depreciated over 5, 7, or 15 years (instead of | | | | - Airplane hangar |
| 27.5-39 years). These short-life items typically | | | | - Research and development |
| comprise about 20-40% of the improvement cost | | | | - Shopping mall |
| basis. The increased depreciation increases tax | | | | - Office warehouse Almost every industry, including |
| deductions. | | | | the following, can generate cost-efficient tax |
| Cost segregation can be utilized for recently | | | | deductions by using cost segregation. |
| purchased or built properties and for properties | | | | Industry: |
| owned for a period of years (1/1/87 or later). | | | | - Arts, Entertainment, and Recreation |
| Long-term real estate owners can claim a one-time | | | | - Frozen food manufacturing |
| tax deduction windfall using catch-up depreciation. | | | | - Real estate lesser |
| Tax Help Tip 4: After a cost segregation study is | | | | - Plastic and rubber products manufacturing |
| prepared, the owner can catch-up previously | | | | - Warehousing and storage |
| under-reported depreciation (without filing any | | | | - Building supply dealers |
| amended tax returns). | | | | - Electronic and appliance stores |
| Tax Help Tip 5: Another source of hidden tax | | | | - Food and beverage stores |
| deductions is a careful review of your fixed asset | | | | - Durable good wholesalers |
| schedule. Many fixed asset schedule include items | | | | - Electrical component manufacturing |
| which should have been expensed or which have | | | | O’Connor & Associates is a national provider |
| been discarded (or should be thrown away). | | | | of commercial real estate consulting services including |
| Misclassified items are another source of additional | | | | cost segregation studies, due diligence, commercial |
| tax deduction. In some cases the depreciation life for | | | | real estate appraisal, Lease Abstraction-,tax |
| an asset has been overstated through clerical error. A | | | | deduction, cost segregation, property tax, market |
| fixed asset audit typically generates meaningful tax | | | | research, estate taxes, Collin central appraisal district, |
| deductions. | | | | Tips and Tricks for Appealing Your Property Taxes in |
| Other Tax Help Articles: Other non-cash sources of | | | | Dento, denton county appraisal and Federal tax |
| tax deductions are amortization, casualty losses, and | | | | reduction. O’Connor appraisers have appraised |
| charitable contributions, which are addressed in | | | | over 100 types of real estate including auto service |
| separate articles. Planning tax deductions requires a | | | | garages, service center warehouses, student housing, |
| modest effort but the rewards are worth the effort. | | | | shopping malls, subsidized housing, commercial |
| You work hard to serve your clients and earn a | | | | buildings, drugstores, office warehouses, racket clubs, |
| profit; don’t give more than is legally required | | | | office buildings, cold storage facilities, shopping |
| to your silent partner. | | | | centers, regional malls, strip shopping centers, used |
| Click here for a FREE preliminary analysis of income | | | | car lots, health spas, auto salvage yards and banks. |
| tax savings for your property. | | | | |