Presentation on theme: "Capitalized Costs and Depreciation. 2 ChapterTitle 1Tax Basis of Property Acquisitions 2Expensing vs. Capitalization 3Amortization, Depreciation, and."— Presentation transcript:
Capitalized Costs and Depreciation
2 ChapterTitle 1Tax Basis of Property Acquisitions 2Expensing vs. Capitalization 3Amortization, Depreciation, and §179
3 Module Overview At the end of this module, you will be able to: Gather the information needed to make the call on the treatment of costs as capital versus expense. Determine the appropriate depreciation schedule based on the nature of the asset and to optimize the tax result.
A Customized Curriculum for Firms 4 Tax Basis of Property Acquisitions Chapter 1
5 Cost Basis Cash payments Fair market value of non-cash property given in exchange Acquisition costs, including Freight Purchase commissions Title fees Transfer taxes and sales taxes
6 Cost Basis Installation and testing costs Real property taxes owed by seller, paid by purchaser
7 Acquisition Financing Initial basis includes: Liabilities incurred to acquire property Seller debt assumed by buyer Debts to which property continues to be subject after acquisition, including nonrecourse debt Amount of purchaser debt included in tax basis determined under OID rules if not adequate stated interest
8 Lump-Sum Purchase of Business Assets Class I: Cash and cash equivalents Class II: Marketable securities, certificates of deposit, and foreign currency Class III: Accounts receivable, mortgage receivables, and credit card receivables Class IV: Inventory and stock in trade
9 Lump-Sum Purchase of Business Assets Class V: All other tangible assets Class VI: Identifiable intangible assets other than goodwill and going concern value Class VII: Goodwill and going concern value
10 Lump-Sum Purchase of Business Assets Form 8594 is required to be filed in duplicate: Buyers to file with their income tax return Sellers to file with their income tax return Form shows the allocation of the asset purchase price among the categories
11 Lump-Sum Purchase of Business Assets Form 8594 is required to be filed in duplicate: The amounts must match between the parties or an IRS notice will likely result The allocation agreement is usually an Appendix to the purchase/sale agreement The FEIN numbers of each party must be made available to each other as it is required to be entered in the form
12 Capitalized Cost of Self-Constructed Assets Direct construction costs Allocable portion of indirect costs that directly benefit or are incurred by reason of production or resale activities
13 Capitalized Indirect Costs of Self-Constructed Assets IRC Section 263A Indirect labor and indirect materials Officers compensation Employee pension and benefits costs Purchasing, handling, and storage costs
14 Capitalized Indirect Costs of Self-Constructed Assets IRC Section 263A Depreciation, rent, insurance, utilities, repairs, and maintenance on production facilities or equipment Non-income taxes attributable to labor, materials, supplies, equipment, land, or facilities used in production or resale Construction-period interest Capitalizable service costs
15 Basis of Property Acquired in Nontaxable Exchange Basis of property surrendered in exchange Plus gain recognized Minus loss recognized Minus value of cash or nonqualifying property received
16 Basis of Property Acquired in Nontaxable Exchange Example 1-16 Flack Inc. transferred land (Property A) FMV of $50,000 Adjusted basis of $28,000 to Jennings Corporation in exchange for Other land (Property B) FMV $50,000.
17 Basis of Property Acquired in Nontaxable Exchange Example 1-16 If the transaction does not qualify for a nontaxable exchange, then Flack recognizes gain of $22,000 disposition Property A.
18 Basis of Property Acquired in Nontaxable Exchange The cost basis of Property B is $50,000. If the transaction qualifies as a nontaxable exchange, Flack will not recognize its $22,000 realized gain. Basis Property B = $28,000 (substituted basis of Property A).
19 Basis of Property Involuntary Conversion Example 1-20 Travel Corporation owned a warehouse: Tax basis of $300,000 that was destroyed in a flood Insurance reimbursement for its loss of $400,000 Realized gain = $100,000 on the involuntary conversion
20 Basis of Property Involuntary Conversion Travel Corporation owned a warehouse: If Travel purchases qualifying replacement property within two years at a cost of $400,000 or more, the gain is not recognized Assume Travel paid $460,000 for qualifying replacement property: -Replacement property = $360,000 -($460,000 cost – $100,000 gain not recognized on the involuntary conversion)
21 Basis of Property Involuntary Conversion Example 1-20 Assume instead Travel paid $380,000 for qualifying replacement property. Because it did not reinvest the entire amount of the insurance reimbursement, it will recognize $20,000 of gain on the involuntary conversion Tax basis in the replacement property = $300,000 ($380,000 cost – $80,000 gain not recognized).
A Customized Curriculum for Firms 22 Expensing vs. Capitalization Chapter 2
23 Capitalized Intangibles 15-yr. safe harbor amortization 25-yr. amortization Improvements to realty owned by another
24 Facilitative Costs for Business Acquisitions Acquisition of assets that constitutes a business Acquisitions of ownership interest – related party Acquisition of ownership interest Restructuring, recapitalization or reorganization Transfer to a corporation or partnership
25 Facilitative Costs for Business Acquisitions Formation of a disregarded entity Acquisition of capital Stock issuance Issuance of debt Writing an option
26 Facilitative Costs for Business Acquisitions Exceptions: De minimis amounts investigating < $5,000 Employee compensation and overhead Amount paid to integrate business operations
27 Facilitative Costs for Business Acquisitions Exceptions: Bright line date-up to letter of intent or material terms -Unless inherently facilitative: -appraisal, structuring, -preparing and reviewing documents, -obtaining regulatory and shareholder approvals, -conveying property
28 Prepaid Expense 12-Month Deduction Rule Prepayment for goods & services = economic performance and therefor deduction if benefits do not extend beyond earlier of: 12 mos. after receive first benefit End of tax year, following year of payment
29 Prepaid Expense 12-Month Deduction Rule Example 2-10 On December 1, 2012, N Corporation pays a $10,000 insurance premium - property insurance policy
30 Prepaid Expense 12-Month Deduction Rule One-year term beginning on February 1, 2013 The right attributable to the $10,000 payment extends beyond the end of the taxable year following the taxable year in which the payment is made The 12-month rule does not apply and N is required to capitalize the $10,000 payment
31 Prepaid Expense 12-Month Deduction Rule Example 2-10 Assume the same facts, except: One-year term beginning on December 15, 2012
32 Prepaid Expense 12-Month Deduction Rule 12-month rule now applies because the right attributable to the payment does not extend more the 12 months beyond December 15, 2012 (the first date the benefit is realized by the taxpayer) Nor beyond the taxable year following the year in which the payment is made Accordingly, N is not required to capitalize the $10,000 payment
33 12-Month Rule: Accrual Method Economic performance Receive goods/services - 3½ mos after Y/E Payment = economic performance for insurance, taxes, licenses Payment is not economic performance for prepaid rent
34 Accounting Method Changes Automatic consent for tax years ending after December 31, 2005 Form 3115 with tax return No user fee Rev. Proc Applies to 12-mo. prepaid expense rule
35 Other Deduction Issues Expensing environmental clean-ups: Capitalize to inventory (Rev. Ruls & ) Qualified contaminated sites OK per §198 Currently §198 expensing extended through 2009 only Asbestos removal deduction (Cinergy Corp.) Removal of depreciable assets (Rev. Rul )
36 Expenditures Related to Tangible Assets New Temporary Regulations effective 2014 (now effective) Replaced proposed regulations issued in 2008 which were not effective
37 Materials and Supplies Tangible property used or consumed in operations that is not inventory and that: Is a component acquired to maintain, repair, or improve a unit of tangible property owned, leased, or serviced by and not part of any single unit of tangible property; Consists of fuel, lubricants, water, and similar items, reasonably expected consumed in 12 months or less, beginning when used in taxpayer's operations;
38 Materials and Supplies Unit of property economic useful life of 12 months or less, beginning when used or consumed Is a unit of property acquisition cost or production cost of $100 or less; or Federal Register or Internal Revenue Bulletin -(see § (d)(2)(ii)(b)) as materials and supplies
39 Economic Useful Life Economic life matches that of Applicable Financial Statement (AFS), if taxpayer has one Otherwise uses period expected to be used Applicable Financial Statement Priority: SEC Filing Certified financial statement Other filed (with a govt. or agency) financial statement other than return
40 Capitalization Required New buildings or permanent improvements or betterments that increase the value Restoring property or in making good the exhaustion thereof for which an allowance is or has been made. §263A still applies for direct and indirect costs
41 Other Rules Elect to capitalize unless a prohibited item Optional method for spare parts
42 Seven Items Requiring Capitalization 1.An amount paid to acquire or produce real or personal tangible property. 2.An amount paid to improve real or personal tangible property. 3. An amount paid to acquire or create intangibles. 4.An amount paid or incurred to facilitate an acquisition of a trade or business, a change in capital structure of a business entity, and certain other transactions.
43 Seven Items Requiring Capitalization 5.Acquisition costs-land, easements, life estates, mineral interests, timber rights, zoning variances, or other interests in land. 6.Agreement between bondholders or shareholders in reorganization. 7.Guaranty of dividends in securing new capital for the subsidiary and increasing the value of its stockholdings in the subsidiary.
44 Facilitative Costs General rule is to capitalize Includes investigative costs with some exceptions Allocate among separate and distinct properties that are part of the transaction
45 11 Examples of Facilitative Costs 1.Transporting the property; 2.Securing an appraisal or determining the value or price of property; 3.Negotiating terms/structure of acquisition and tax advice on the acquisition; 4.Application fees, bidding costs, or similar expenses; 5.Preparing and reviewing the documents (bid, offer, sales contract, or purchase agreement);
46 11 Examples of Facilitative Costs 6.Examining and evaluating the title of property; 7.Obtaining regulatory approval, securing permits 8.Conveying property (sales and transfer taxes, and title registration costs; 9.Finders' fees or brokers' commissions 10.Architectural, geological, engineering, environmental or inspection services 11.Services qualified intermediary or other facilitator of an exchange under §1031.
47 De Minimis Rule for Acquisition or Production of Property Does not apply to inventory or land A qualifying taxpayer for this purpose must: Have an AFS, Have written accounting procedures for the expensing of de minimis items, Recognize de minimis costs as expenses on its AFS, and
48 De Minimis The total aggregate of amounts paid and not capitalized under this rule and the material and supplies rule for the tax year are less than or equal to the greater of: 0.1 percent of the taxpayer's gross receipts 2 percent of the taxpayer's total depreciation and amortization expense
49 Improvements Capitalization required amounts paid that: Result in a betterment to a unit of property, Restore a unit of property, or Adapt a unit of property to a new or different use.
50 Unit of Property Concept very important to understanding the new rules Functional interdependence Special rules for certain types of property
51 Buildings Each building and its components are a single Unit of Property Improvements to building include: Building structure
52 Buildings Improvements to building include: Building system HVACFire protection Plumbing systemFire alarms Electrical systemSecurity system Escalators and elevators Gas distribution system
53 Routine Maintenance Safe Harbor (for Property other than Buildings) Relevant considerations include: The recurring nature of the activity- expected to occur more than once during units class life Industry practice, Manufacturer recommendations, Taxpayer experience, and The treatment of the activity on the taxpayer's AFS.
54 Safe Harbor Exceptions Items that ARE NOT included in definition of routine maintenance: Replacement of a component of a unit of property deducted as a loss (other than a casualty loss under Regulation § ) Replacement of a component of a unit of property wherein realized gain or loss has resulted from the sale or exchange of the component.
55 Safe Harbor Exceptions Items that ARE NOT included in definition of routine maintenance: Repair of damage and a basis adjustment has been taken from casualty loss under §165, or relating to a casualty event described in §165.
56 Safe Harbor Exceptions The safe harbor does not apply to the cost of replacement components to: Return a unit of property to its ordinarily efficient operating condition, if it has deteriorated to a state of disrepair and is no longer functional for its intended use. Repairs, maintenance, or improvement costs under the Optional method of accounting for rotable and temporary spare parts per Temporary Regulation § T(e).
57 Betterments Correction of pre-acquisition or pre-production material condition or defect Material addition to the unit of property, i.e; physical enlargement, expansion, or extension Material increase in the capacity, productivity, efficiency, strength, or quality of the unit of property or its output.
58 Restorations Replacement of a component of a unit of property deducted as a loss (other than a casualty loss under Regulation § ) Replacement of a component of a unit of property wherein realized gain or loss has resulted from the sale or exchange of the component. Repair of damage and a basis adjustment has been taken from casualty loss under §165, or relating to a casualty event described in §165.
59 Restorations Return unit of property to ordinarily efficient operating condition if deteriorated to a state of disrepair and no longer functional for its intended use; Rebuilding to like-new condition after end of class life Replacement parts of major component or a substantial structural part of a unit of property.
60 Updated Automatic Consent Procedures Revenue Procedure Updates prior guidance for automatic changes Automatic consent to utilize new Temporary Regulations affecting the capitalization of tangible assets
61 Updated Automatic Consent Procedures Revenue Procedure New automatic consent procedures Change to the methods of accounting for depreciation of grouped assets (discussed in chapter 3)
A Customized Curriculum for Firms 62 Amortization, Depreciation, and §179 Chapter 3
63 Corporate Organizational Costs Current rule (post 10/23/2004): In the taxable year in which a corporation begins business Deduct the lesser of $5,000 (reduced by the amount of the costs > $50,000) in that year and Corporation may elect to capitalize excess and amortize over 180 months Deemed election made by capitalizing on timely filed return All organizational costs of the corporation are considered in determining if the total is > $50,000
64 Start-up Costs Current rule (post 10/23/2004): In the taxable year in which a taxpayer begins an active trade or business Deduct the lesser of $5,000 (reduced by the amount of the costs > $50,000) in that year and Taxpayer may elect to capitalize excess and amortize over 180 months beginning with the month active business begins Deemed election made by capitalizing on timely filed return All start-up costs of the taxpayer are considered in determining if the total is > $50,000
66 §197 Intangible in a Stock Redemption Example Corp. $3.5 M for stock $1.3 M Noncompete (5 yrs.) Corp. $3.5 M for stock $1.3 M Noncompete (5 yrs.) S/H
67 Cost Recovery/Depreciation Leasehold improvements Capitalize and depreciate SL - 39 yrs. Deduct at abandonment SL-15-year amortization for qualified restaurant and retail property acquired prior to 2014
68 Cost Recovery/Depreciation Demolition Capitalize to land De Cou case: -Not incurred on account of demolition -Loss must be taken in year prior to demolition
69 MACRS Depreciation Class life system No estimated useful life criteria Asset subject to wear, tear Asset used in business/investment Residential rental: 27.5 yrs. Commercial real estate: 39 yrs. Retail motor fuel bldgs. (C-stores): 15 yrs. Restaurant bldg. improvements: 15 yrs (through 2013)
70 MACRS Depreciation Half Year Convention Acme Corp. buys an asset (7-year class) on February 15, 2013, for $10,000 (assume expensing is not elected and a non-bonus depreciation year). The declining balance rate: Divide 1 by 7 to get the basic rate of 1/7 or percent. Since this is 7-year property and the 200 percent declining balance applies, Acme multiplies percent by two or percent. A half-year convention must be used.
71 MACRS Depreciation Half Year Convention 2013: $10,000 x 28.58% = $2,858 x ½ = $1, % 2014 : $10,000 - $1,429 = $8,571 x 28.58% = $2, % 2015: $8,571 - $2,450 = $6,121 x 28.58% = $1, % 2016: $6,121 - $1,749 = $4,372 x 28.58% = $1, % 2017: $4,372 - $1,250 = $3,122 x 28.58% = $ %
72 MACRS Depreciation Half Year Convention 2018 Remaining basis: $2,230 ($3,133 - $892) Declining balance deduction: $637 ($2,230 × 28.58%) & 2020 Switch to straight-line: $892 deduction ($2,230 / 2.5 remaining years in recovery period). 2020* $446 deduction (half-year of write-off). $10,000 Total write-off claimed for the property the assets cost. * Final year
73 MACRS Depreciation Half Year Computation Half-Year Depreciation Computation On August 15, 2013, Ames Corp. places in service a piece of equipment used in its business that cost $1000, Having a 5-year class (assume no bonus depreciation). The declining balance method is used.
75 MACRS Depreciation Mid quarter convention applies if: 40 percent or more of the total cost basis of property additions are placed in service during the last three months of the tax year. Does not apply to nonresidential real property/residential rental Does not include cost of properly elects to expense under §179 (only aggregate depreciable basis is considered for the 40 percent test); and (2) property not depreciated under §168.
76 MACRS Depreciation The mid-quarter convention may apply whether the taxpayers year is a full 12 months or a short tax year. If the year consists of three months or less, the mid- quarter convention applies automatically [Reg. §1.168(d)-1(a)]. All group members included on a consolidated return are treated as one taxpayer for purposes of the 40 percent test
77 MACRS Depreciation Determine the depreciation for the full tax year and multiply by the following percentages for the quarter of the tax year the property is placed in service. Quarter of tax yearPercentage First87.5% = (10.5/12) Second62.5% = (7.5/12) Third37.5% = (4.5/12) Fourth12.5% = (1.5/12)
78 MACRS Depreciation Nonresidential real property includes most real property (§1250 property) that is not residential rental property and real property with a class life of 27.5 years or more. Depreciated over 39 years (31.5 years if placed in service before May 13, 1993) using the straight-line method and a mid-month convention.
79 MACRS Depreciation Residential rental property is a rental building or structure for which 80 percent or more of the gross rental income for the tax year is rental income from dwelling units. Depreciated over 27.5 years using the straight-line method and a mid-month convention.
80 MACRS Depreciation MACRS Depreciation - Mid-month Convention Delta Corp buys a building for $1,000,000 plus land for $200,000 on January 5,2013.
81 MACRS Depreciation Depreciation is calculated as follows: $1,000,000/ 39 years = full year of $25,641 $25,641/12 = monthly depreciation = $2,137 Mid-month convention - assume building acquired in the middle of January months depreciation, assuming the property was held for the remainder of the year of 2013 $24,576 ($2,137 × 11.5 months).
82 Trades of MACRS Property For assets acquired in a nontaxable exchange: Continue same method and life over remaining recovery period (if same recovery period) Excess (Boot): treat as a new asset
83 Trades of MACRS Property Taxpayer an elect out of exchange treatment on an individual case basis If made, the election applies to both the relinquished MACRS property and the replacement MACRS property For depreciation purposes, the sum of the exchanged basis and excess basis, if any, in the replacement property is treated as placed in service at the time of the replacement. The adjusted depreciable basis of the relinquished MACRS property is treated as being disposed at the time of disposition. This does not affect the non recognition of gain on the exchange.
84 Cost Segregation Hospital Corporation of America Landmark case Assets that are not structural components can be depreciated as tangible personal property and accelerated depreciation over 5- 7 years is achieved versus straight line depreciation over 39 or 27.5 years. IRS Legal Memo Dictates a logical and objective measure in determining what is and is not a structural component Correction of depreciable life Regs. require accounting method change Waiver of 2-yr. rule in this case a taxpayer can amend a prior return or file a change in accounting method
85 Correcting Depreciation in Year of Disposition Rev. Proc Can file Form 3115 in year of disposition If the error is caught after only one year, can correct with amended return as long as subsequent years return not filed
86 Correcting Depreciation in Year of Disposition H Corp acquired and placed in service $100,000 of tangible personal property in 2012, categorizing the equipment as 7-year property. In 2013, H Corp discovers assets should be classified as 5-year property under the MACRS recovery periods.
87 Correcting Depreciation in Year of Disposition H Corp has the option: of either filing an amended 2012 return or filing a Form 3115 with its 2013 return, and claiming the omitted depreciation as a §481(a) negative (additional expense) amount in 2013.
88 Bonus Depreciation §168(k) Additional first-year depreciation (bonus depreciation) is allowed for qualified property. The bonus depreciation is allowed at a rate, generally, of 50 percent but 100 percent for property acquired and placed in service, generally, after Sept. 8, 2010 and before 2012).
89 Bonus Depreciation §168(k) Qualified property: NEW MACRS property < or = 20 year recovery Depreciable computer software – not§197 Water utility property Qualified leasehold improvement property
90 Bonus Depreciation §168(k) The original use of the property must begin with the taxpayer after Dec. 31, 2007, the property must be acquired by the taxpayer either after Dec. 31, 2007 and before Jan. 1, 2014, and no written binding contract for the acquisition can be in effect before Jan. 1, 2008, or under a written binding contract entered into after Dec. 31, 2007, and before Jan. 1, 2014.
91 Bonus Depreciation §168(k) The property must be placed in service by the taxpayer before Jan. 1, 2014, except certain property with a long production period or certain aircraft is qualified property if it is placed in service before Jan. 1, 2015.
92 Bonus Depreciation §168(k) Meeting the Original Use Test Late in 2013, Sharpware, Inc., a tool and dye maker, acquires Machine A for $30,000. Machine A was acquired from another tool and dye maker that had previously used this asset in its business.
93 Bonus Depreciation §168(k) Before placing Machine A in service, Sharpware spends $12,000 to recondition this asset. No part of the $30,000 purchase price of used Machine A qualifies for the 50 percent depreciation allowance, $12,000 reconditioning expenditure satisfies the original use test and Sharpware may claim a $6,000 bonus depreciation deduction.
94 Bonus Depreciation §168(k) 50 percent Bonus Depreciation on Leasehold Improvements Bellco, Inc. leases space in a shopping mall beginning in November of Under the terms of the lease, Bellco must incur the cost of any improvements to reposition the interior walls within its lease space, as well as to add ceilings, lighting, and related interior improvements.
95 Bonus Depreciation §168(k) Assuming that this shopping mall is more than three years old at the time of the improvements by Bellco, these leasehold improvements to the building will qualify for the 50 percent bonus depreciation. After claiming the 50 percent deduction, Bellco depreciates the remaining basis of these improvements over a 15-year recovery period.
96 Bonus Depreciation §168(k) Furniture, fixtures, and other tangible personalty purchases made by Bellco during 2013, assuming meeting the original use test, would also qualify for the 50 percent bonus, with the remaining depreciation claimed over a five-year recovery period.
97 Bonus Depreciation §168(k) Taxpayers can elect to forgo bonus and accelerated depreciation in exchange for the present allowance of certain otherwise-deferred credits. The election had to be made beginning with the first tax year ending after Mar. 31, 2008 (the post-Mar election).
98 Bonus Depreciation §168(k) Taxpayers that didn't make the post-Mar election can make the election only for tax years ending after Dec. 31, 2008 (the post-Dec election). Taxpayers that made neither the post-Mar election nor the post-Dec election can make the election only for tax years ending after Dec 31, 2010.
99 Bonus Depreciation §179 and § 168(k) The reduction in§179 expensing impacts, generally, only smaller businesses, and The elimination of bonus depreciation (§ 168(k) is, generally, but not exclusively, of interest to larger businesses.
100 Luxury Vehicle Limits $3,060 ($11,060 if 100% eligible for bonus depreciation) $4,900 2nd yr. 2,950 3rd yr. 1,775* $3,160 ($11,160 if 100% eligible for bonus depreciation) $5,100 2nd yr. 3,050 3rd yr. 1,875* * For each succeeding tax year in its recovery period
101 §179 Deduction Annual dollar limit 2013$500, $25,000 Asset addition limit (before phase-out) 2013$2,000, $200,000 For 2014 and later, depreciable computer software will no longer qualify as §179 property.
102 §179 Deduction Revocation via amended tax return Late election via amended tax return [Reg. § (c)] Effective tax years beginning in 2003 Currently allowed through 2013 Recapture of §179 Expensed Amounts
103 §179 Deduction If a taxpayer claims expensing deduction and subsequently the property is not used predominately for business, part of the deduction may be subject to recapture.
104 §179 Deduction Example: Browne, a calendar-year taxpayer, bought and placed in service in his business - February 15, 2011, five-year property costing $5,000. Expensing deduction of $5,000 for the property. The property was used entirely for business for all of 2011 and In 2013, he used the property for personal purposes. The expensing benefit claimed in 2011 is recaptured (added to taxable income).
105 §179 Deduction Expensing deduction claimed in 2011$5,000 Allowable depreciation deduction -in lieu of expensing: 2011: $5,000 x 20% = $1, : $5,000 x 32% = $1,600 2, : Recapture amount2,400
106 $25,000 Vehicle §179 Limit >Applicable to highway vehicles with a 6,000 lb gross vehicle weight but not > 14,000 lb. except: Vehicles seating over 9 Vehicles with cargo area > 6 ft. box for use as an open area Vans with driver-only seating For the vehicles excepted, there is no limit on the §179 Limit
107 Tax Deduction for Energy Improvements to Buildings For property place in service after 1/31/2005 and 1/1/2014 Taxpayers who own or lease commercial buildings and install property as part of buildings' interior Before claiming Taxpayer must attain a certification that these items are being installed as part of a plan designed to reduce the total annual energy and power costs for interior lighting, heating, cooling, ventilation and hot water systems of the building by 50% compared to a reference building
108 Energy Improvements to Buildings Partially qualifying commercial building property is that which fails to achieve the 50% reduction in energy and power costs required Deduction is allowed for energy efficient commercial building property installed as part of that system and as part of a plan to meet those targets, However, alternative energy savings percentages permitted are 20% for the interior lighting system and the heating, cooling, ventilation, and hot water systems, and 10% for the building envelope
Questions, Wrap-Up, and Key Points/Lesson Review
Capitalized Costs and Depreciation Thank you for attending!