2Capitalized Costs and Depreciation ChapterTitle1Tax Basis of Property Acquisitions2Expensing vs. Capitalization3Amortization, Depreciation, and §179
3Module 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.
4Tax Basis of Property Acquisitions Chapter 1Tax Basis of Property Acquisitions
5Cost Basis Cash payments Fair market value of non-cash property given in exchangeAcquisition costs, includingFreightPurchase commissionsTitle feesTransfer taxes and sales taxes
6Cost Basis Installation and testing costs Real property taxes owed by seller, paid by purchaser
7Acquisition Financing Initial basis includes:Liabilities incurred to acquire propertySeller debt assumed by buyerDebts to which property continues to be subject after acquisition, including nonrecourse debtAmount of purchaser debt included in tax basis determined under OID rules if not adequate stated interest
8Lump-Sum Purchase of Business Assets Class I: Cash and cash equivalentsClass II: Marketable securities, certificates of deposit, and foreign currencyClass III: Accounts receivable, mortgage receivables, and credit card receivablesClass IV: Inventory and stock in trade
9Lump-Sum Purchase of Business Assets Class V: All other tangible assetsClass VI: Identifiable intangible assets other than goodwill and going concern valueClass VII: Goodwill and going concern value
10Lump-Sum Purchase of Business Assets Form 8594 is required to be filed in duplicate:Buyers to file with their income tax returnSellers to file with their income tax returnForm shows the allocation of the asset purchase price among the categories
11Lump-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 resultThe allocation agreement is usually an Appendix to the purchase/sale agreementThe FEIN numbers of each party must be made available to each other as it is required to be entered in the form
12Capitalized Cost of Self-Constructed Assets Direct construction costsAllocable portion of indirect costs that directly benefit or are incurred by reason of production or resale activities
13Capitalized Indirect Costs of Self-Constructed Assets IRC Section 263A Indirect labor and indirect materialsOfficer’s compensationEmployee pension and benefits costsPurchasing, handling, and storage costs
14Capitalized Indirect Costs of Self-Constructed Assets IRC Section 263A Depreciation, rent, insurance, utilities, repairs, and maintenance on production facilities or equipmentNon-income taxes attributable to labor, materials, supplies, equipment, land, or facilities used in production or resaleConstruction-period interestCapitalizable service costs
15Basis of Property Acquired in Nontaxable Exchange Basis of property surrendered in exchangePlus gain recognizedMinus loss recognizedMinus value of cash or nonqualifying property received
16Basis of Property Acquired in Nontaxable Exchange Example 1-16Flack Inc. transferred land (Property A)FMV of $50,000Adjusted basis of $28,000to Jennings Corporation in exchange for Other land (Property B)FMV $50,000.
17Basis of Property Acquired in Nontaxable Exchange Example 1-16If the transaction does not qualify for a nontaxable exchange, thenFlack recognizes gain of $22,000 disposition Property A.
18Basis 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).
19Basis of Property Involuntary Conversion Example 1-20Travel Corporation owned a warehouse:Tax basis of $300,000 that was destroyed in a floodInsurance reimbursement for its loss of $400,000Realized gain = $100,000 on the involuntary conversion
20Basis 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 recognizedAssume Travel paid $460,000 for qualifying replacement property:Replacement property = $360,000($460,000 cost – $100,000 gain not recognized on the involuntary conversion)
21Basis of Property Involuntary Conversion Example 1-20Assume 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 conversionTax basis in the replacement property = $300,000($380,000 cost – $80,000 gain not recognized).
22Expensing vs. Capitalization Chapter 2Expensing vs. Capitalization
23Capitalized Intangibles 15-yr. safe harbor amortization25-yr. amortizationImprovements to realty owned by another
24Facilitative Costs for Business Acquisitions Acquisition of assets that constitutes a businessAcquisitions of ownership interest – related partyAcquisition of ownership interestRestructuring, recapitalization or reorganizationTransfer to a corporation or partnership
25Facilitative Costs for Business Acquisitions Formation of a disregarded entityAcquisition of capitalStock issuanceIssuance of debtWriting an option
26Facilitative Costs for Business Acquisitions Exceptions:De minimis amounts investigating < $5,000Employee compensation and overheadAmount paid to integrate business operations
27Facilitative Costs for Business Acquisitions Exceptions:Bright line date-up to letter of intent or material termsUnless inherently facilitative:appraisal, structuring,preparing and reviewing documents,obtaining regulatory and shareholder approvals,conveying property
28Prepaid 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 benefitEnd of tax year, following year of payment
29Prepaid Expense 12-Month Deduction Rule Example 2-10On December 1, 2012, N Corporationpays a $10,000 insurance premium - property insurance policy
30Prepaid Expense 12-Month Deduction Rule One-year term beginning on February 1, 2013The right attributable to the $10,000 payment extends beyond the end of the taxable year following the taxable year in which the payment is madeThe 12-month rule does not apply and N is required to capitalize the $10,000 payment
31Prepaid Expense 12-Month Deduction Rule Example 2-10Assume the same facts, except:One-year term beginning on December 15, 2012
32Prepaid 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 madeAccordingly, N is not required to capitalize the $10,000 payment
3312-Month Rule: Accrual Method Economic performanceReceive goods/services - 3½ mos after Y/EPayment = economic performancefor insurance, taxes, licensesPayment is not economic performance for prepaid rent
34Accounting Method Changes Automatic consent for tax years ending after December 31, 2005Form 3115 with tax returnNo user feeRev. ProcApplies to 12-mo. prepaid expense rule
35Other Deduction Issues Expensing environmental clean-ups:Capitalize to inventory (Rev. Ruls & )Qualified contaminated sites OK per §198Currently §198 expensing extended through 2009 onlyAsbestos removal deduction (Cinergy Corp.)Removal of depreciable assets (Rev. Rul )
36Expenditures Related to Tangible Assets New Temporary Regulations effective 2014 (now effective)Replaced proposed regulations issued in which were not effective
37Materials 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;
38Materials and Supplies Unit of property economic useful life of 12 months or less, beginning when used or consumedIs a unit of property acquisition cost or production cost of $100 or less; orFederal Register or Internal Revenue Bulletin(see § (d)(2)(ii)(b)) as materials and supplies
39Economic Useful LifeEconomic life matches that of Applicable Financial Statement (AFS), if taxpayer has oneOtherwise uses period expected to be usedApplicable Financial Statement Priority:SEC FilingCertified financial statementOther filed (with a govt. or agency) financial statement other than return
40Capitalization Required New buildings or permanent improvements or betterments that increase the valueRestoring 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
41Other Rules Elect to capitalize unless a prohibited item Optional method for spare parts
42Seven Items Requiring Capitalization An amount paid to acquire or produce real or personal tangible property.An amount paid to improve real or personal tangible property.An amount paid to acquire or create intangibles.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.
43Seven Items Requiring Capitalization Acquisition costs-land, easements, life estates, mineral interests, timber rights, zoning variances, or other interests in land.Agreement between bondholders or shareholders in reorganization.Guaranty of dividends in securing new capital for the subsidiary and increasing the value of its stockholdings in the subsidiary.
44Facilitative Costs General rule is to capitalize Includes investigative costs with some exceptionsAllocate among separate and distinct properties that are part of the transaction
4511 Examples of Facilitative Costs Transporting the property;Securing an appraisal or determining the value or price of property;Negotiating terms/structure of acquisition and tax advice on the acquisition;Application fees, bidding costs, or similar expenses;Preparing and reviewing the documents (bid, offer, sales contract, or purchase agreement);
4611 Examples of Facilitative Costs Examining and evaluating the title of property;Obtaining regulatory approval, securing permitsConveying property (sales and transfer taxes, and title registration costs;Finders' fees or brokers' commissionsArchitectural, geological, engineering, environmental or inspection servicesServices qualified intermediary or other facilitator of an exchange under §1031.
47De Minimis Rule for Acquisition or Production of Property Does not apply to inventory or landA 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
48De MinimisThe 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 receipts2 percent of the taxpayer's total depreciation and amortization expense
49Improvements Result in a betterment to a unit of property, Capitalization required amounts paid that:Result in a betterment to a unit of property,Restore a unit of property, orAdapt a unit of property to a new or different use.
50Unit of Property Concept very important to understanding the new rules Functional interdependenceSpecial rules for certain types of property
51BuildingsEach building and it’s components are a single Unit of PropertyImprovements to building include:Building structure
52Buildings Improvements to building include: Building system HVAC Fire protectionPlumbing systemFire alarmsElectrical systemSecurity systemEscalators and elevatorsGas distribution system
53Routine Maintenance Safe Harbor (for Property other than Buildings) Relevant considerations include:The recurring nature of the activity-expected to occur more than once during unit’s class lifeIndustry practice,Manufacturer recommendations,Taxpayer experience, andThe treatment of the activity on the taxpayer's AFS.
54Safe 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.
55Safe 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.
56Safe 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).
57BettermentsCorrection of pre-acquisition or pre-production material condition or defectMaterial addition to the unit of property, i.e; physical enlargement, expansion, or extensionMaterial increase in the capacity, productivity, efficiency, strength, or quality of the unit of property or its output.
58RestorationsReplacement 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.
59RestorationsReturn 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 lifeReplacement parts of major component or a substantial structural part of a unit of property.
60Updated Automatic Consent Procedures Revenue ProcedureUpdates prior guidance for automatic changesAutomatic consent to utilize new Temporary Regulations affecting the capitalization of tangible assets
61Updated Automatic Consent Procedures Revenue ProcedureNew automatic consent proceduresChange to the methods of accounting for depreciation of grouped assets (discussed in chapter 3)
62Amortization, Depreciation, and §179 Chapter 3Amortization, Depreciation, and §179
63Corporate Organizational Costs Current rule (post 10/23/2004):In the taxable year in which a corporation begins businessDeduct the lesser of $5,000 (reduced by the amount of the costs > $50,000) in that year andCorporation may elect to capitalize excess and amortize over 180 monthsDeemed election made by capitalizing on timely filed returnAll organizational costs of the corporation are considered in determining if the total is > $50,000
64Start-up Costs Current rule (post 10/23/2004): In the taxable year in which a taxpayer begins an active trade or businessDeduct the lesser of $5,000 (reduced by the amount of the costs > $50,000) in that year andTaxpayer may elect to capitalize excess and amortize over 180 months beginning with the month active business beginsDeemed election made by capitalizing on timely filed returnAll 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 Mfor stock$1.3 MNoncompete(5 yrs.)S/H
67Cost Recovery/Depreciation Leasehold improvementsCapitalize and depreciate SL - 39 yrs.Deduct at abandonmentSL-15-year amortization for qualified restaurant and retail property acquired prior to 2014
68Cost Recovery/Depreciation DemolitionCapitalize to landDe Cou case:Not incurred “on account of” demolitionLoss must be taken in year prior to demolition
69MACRS Depreciation Class life system No “estimated useful life” criteriaAsset subject to wear, tearAsset used in business/investmentResidential rental: 27.5 yrs.Commercial real estate: 39 yrs.Retail motor fuel bldgs. (C-stores): 15 yrs.Restaurant bldg. improvements: 15 yrs (through )
70MACRS 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.
71MACRS Depreciation Half Year Convention 2013: $10,000 x 28.58% = $2,858 x ½ = $1,42914.29%2014: $10,000 - $1,429 = $8,571 x 28.58% = $2,45024.50%2015: $8,571 - $2, = $6,121 x 28.58% = $1,74917.49%2016: $6,121 - $1, = $4,372 x 28.58% = $1,25012.50%2017: $4,372 - $1, = $3,122 x 28.58% = $8928.92%
72MACRS Depreciation Half Year Convention 2018Remaining basis: $2,230 ($3,133 - $892) Declining balance deduction: $637 ($2,230 × 28.58%).2019 &2020Switch to straight-line: $892 deduction ($2,230 / 2.5 remaining years in recovery period).2020*$446 deduction (half-year of write-off).$10,000Total write-off claimed for the property the asset’s cost.* Final year
73MACRS Depreciation Half Year Computation Half-Year Depreciation ComputationOn 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.
74MACRS Depreciation Half Year Computation 2013: $200 [$400 (40% × 1000) × ½*2014: $320 [$ $200 = $800 × 40%]2015: $192 [$ $522 = $478 × 40%]2016: $115 [$ $712 = $288 × 40%]2017: $1152018: $58*Half year applied Year One
75MACRS 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 rentalDoes 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.
76MACRS DepreciationThe mid-quarter convention may apply whether the taxpayer’s 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
77MACRS Depreciation Quarter of tax year Percentage First 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 yearPercentageFirst87.5% = (10.5/12)Second62.5% = (7.5/12)Third37.5% = (4.5/12)Fourth12.5% = (1.5/12)
78MACRS DepreciationNonresidential real property includes most real property (§1250 property) that is not residential rental property and real property with a class life of 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.
79MACRS DepreciationResidential 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.
80MACRS Depreciation MACRS Depreciation - Mid-month Convention Delta Corp buys a building for $1,000,000 plus land for $200,000 on January 5,2013.
81MACRS Depreciation Depreciation is calculated as follows: $1,000,000/ 39 years = full year of $25,641$25,641/12 = monthly depreciation = $2,137Mid-month convention - assume building acquired in the middle of January.11.5 months depreciation, assuming the property was held for the remainder of the year of 2013$24,576 ($2,137 × 11.5 months).
82Trades 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
83Trades of MACRS Property Taxpayer an elect out of exchange treatment on an individual case basisIf made, the election applies to both the relinquished MACRS property and the replacement MACRS propertyFor 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.
84Cost Segregation Hospital Corporation of America Landmark caseAssets 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 MemoDictates a “logical and objective measure” in determining what is and is not a structural componentCorrection of depreciable lifeRegs. require accounting method changeWaiver of 2-yr. rule in this case a taxpayer can amend a prior return or file a change in accounting method
85Correcting Depreciation in Year of Disposition Rev. ProcCan file Form 3115 in year of dispositionIf the error is caught after only one year, can correct with amended return as long as subsequent year’s return not filed
86Correcting 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.
87Correcting Depreciation in Year of Disposition H Corp has the option:”of either filing an amended 2012 return orfiling a Form 3115 with its 2013 return, and claiming the omitted depreciation as a §481(a) negative (additional expense) amount in 2013.
88Bonus 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 percentbut 100 percent for property acquired and placed in service, generally, after Sept. 8, 2010 and before ).
90Bonus 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, andno written binding contract for the acquisition can be in effect before Jan. 1, 2008, orunder a written binding contract entered into after Dec. 31, 2007, and before Jan. 1, 2014.
91Bonus Depreciation §168(k) The property must be placed in service by the taxpayer before Jan. 1, 2014, exceptcertain property with a long production period or certain aircraft is “qualified property” if it is placed in service before Jan. 1, 2015.
92Bonus Depreciation §168(k) Meeting the Original Use TestLate 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.
93Bonus 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.
94Bonus Depreciation §168(k) 50 percent Bonus Depreciation on Leasehold ImprovementsBellco, Inc. leases space in a shopping mall beginning in November of 2013.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.
95Bonus 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.
96Bonus 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.
97Bonus 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).
98Bonus 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.
99Bonus Depreciation §179 and § 168(k) The reduction in§179 expensing impacts, generally, only smaller businesses, andThe elimination of bonus depreciation (§ 168(k) is, generally, but not exclusively, of interest to larger businesses.
100Luxury Vehicle Limits 2010-2011 $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 $500,000 2014 $25,000 Asset addition limit (before phase-out)$2,000,000$200,000For 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 2003Currently allowed through 2013Recapture of §179 Expensed Amounts
103§179 DeductionIf 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 DeductionExample: Browne, a calendar-year taxpayer, bought and placed in service in his business - February 15, , 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 2012.In 2013, he used the property for personal purposes.The expensing benefit claimed in 2011 is recaptured (added to taxable income).
105§179 Deduction 2011: $5,000 x 20% = $1,000 2012: $5,000 x 32% = $1,600 Expensing deduction claimed in $5,000Allowable depreciation deductionin lieu of expensing:2011: $5,000 x 20% = $1,0002012: $5,000 x 32% = $1,6002,6002013: 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 9Vehicles with cargo area > 6 ft. box for use as an open areaVans with driver-only seatingFor the vehicles excepted, there is no limit on the §179 Limit
107Tax Deduction for Energy Improvements to Buildings For property place in service after 1/31/2005 and 1/1/2014Taxpayers who own or lease commercial buildings and install property as part of buildings' interiorBefore 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 by50% compared to a “reference building”
108Energy Improvements to Buildings Partially qualifying commercial building property is that which fails to achieve the 50% reduction in energy and power costs requiredDeduction 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
109Questions, Wrap-Up, and Key Points/Lesson Review
110Capitalized Costs and Depreciation Thank you for attending!