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Value Added Services Our Team Is Your Resource Our Team is Your Resource Established in 1999 with offices across the US, KBKG provides turn-key tax solutions to CPAs and businesses. By focusing exclusively on value-added tax services that complement your traditional tax and accounting team, we always deliver quantifiable benefits to clients. Our firm provides access to our knowledge base and experienced industry leaders. We help determine which tax programs benefit clients and stay committed to handling each relationship with care and diligence. Our ability to work seamlessly with your team is the reason so many tax professionals and businesses across the nation trust KBKG. Value Added Services Research & Development Tax Credits Fixed Asset Review Federal credit worth approximately 10% of While a cost segregation study focuses on buildings, every qualified dollar spent on developing a comprehensive Fixed Asset Tax Review encompasses brand new or improving existing products, all fixed assets a company owns including real property, processes, software, and formulae. machinery, furniture, fixtures, and equipment. Cost Segregation for Buildings and 45L Credits for Energy Improvements Efficient Residential Developments Any building improvement over $750,000 Newly constructed or renovated apartments, condos, should be reviewed for proper classification and tract home developments that meet certain of the individual components for tax criteria are eligible for a $2,000 credit per unit. depreciation, and retirement purposes. 179D Incentive for Energy Repair vs. Capitalization Review §263(a) Efficient Commercial Buildings Taxpayers often capitalize major building Federal deduction worth $1.80 per square foot of expenditures that should be expensed as energy-efficient buildings. Available to architects, repairs and maintenance such as HVAC units, engineers, design/build contractors and building roofs, plumbing, lighting and more. Retirement owners. loss deductions for demolished building structural components are also identified. IC-DISC The Interest Charge Domestic International Sales Corporation (IC-DISC) offers significant Federal income tax savings for making or distributing US products for export. NATIONWIDE SERVICE | 877.525.4462 | KBKG.COM COPYRIGHT © 2018 KBKG ALL RIGHTS RESERVED. ALLSRV 8/20/2018 INDUSTRY MATRIX FOR TAX SAVING OPPORTUNITIES (updated 01-23-18) R&D Tax Repair/Asset 45L Tax 179D Tax Cost 199 DPAD Industry Segregation IC-DISC Credits Retirement Credits Deductions /Fixed Asset Deduction Affordable Housing X X X X Agriculture, Forestry & Fishing X X X Architecture & Engineering X X X X X Auto Dealerships X X X Communications & Utilities X X X X Construction X X X Film & Music X X X X X X Financial Services X X X Government Contractors X X X X X Healthcare X X X X Hotels X X X X Logistics & Distribution X X X X X X Manufacturing X X X X X X Mining X X X Multifamily Developers X X X X Oil & Gas X X X Pharmaceutical X X X X X X Professional Services X X X Real Estate X X Restaurants X X Retail X X X X Technology/Software X X X X X X Transportation X X Wholesale Trade X X X X X Call us today at 877-525-4462 to see how we can help you and your clients better understand these opportunities and secure these specialty tax incentives. NATIONWIDE SERVICE | 877.525.4462 | KBKG.COM COPYRIGHT © 2018 KBKG ALL RIGHTS RESERVED. ALLSRV. 8/20/2018 IDENTIFYING VALUE-ADDED TAX OPPORTUNITIES updated 01-23-18 KBKG Service Description & Highlights Applicable Clients & Industries How Much is it Worth? Tax Considerations Research & Development Federal and State tax credit – designed to • Manufacturing • Food & Beverage Federal Benefit - Roughly 10% of their General Business Tax Credit Tax Credits promote innovation. Expenses incurred • Software • Equipment or tools total Qualified R&D Expenses in the United States and that meet the • Dollar-for-dollar reduction in income tax (Federal & State) Development • Life Sciences qualification criteria can result in a credit. • Architects • Agriculture Ex. Client has $1M/year of wages related liabilities. • High Tech to R&D. Benefit = $100k in gross credits • 1-year Carryback / 20-year carryforward Qualifying expenses can include wages per year. of unused credits. paid to employees, supplies used in the • Clients developing brand new products, • Qualified small businesses can reduce research process, and payments made processes, software, or formula. Many states also allow an R&D credit. alternative minimum tax liabilities. to contractors for performing qualified • Clients materially improving existing For example, CA R&D Credit is worth an • Qualified start-up companies can offset research. products, processes, software or additional 7.5% of Qualified R&D expenses. up to $250,000 in payroll taxes. formula. • Clients that employ those with technical backgrounds (software development, engineering, etc..) Cost Segregation Allows taxpayers who have constructed, Any building with over $750k of Net Present Value is roughly 5% of the • Reduces AMT (Federal & State) purchased, expanded, or remodeled depreciable tax basis (excluding land). total building cost. • Starting in 2018, unused deductions any kind of real estate to accelerate carryforward. depreciation deductions by reclassifying Any leasehold improvement with over Ex. $2M office can yield an after-tax NPV of • Must recapture personal property and building components into shorter tax lives. $500k of depreciable tax basis (excluding $100k. bonus eligible assets upon the sale of a land). building. Any smaller residential rental property with over $150k of depreciable tax basis (excluding land) can utilize KBKG’s online software to generate a cost segregation report. Repair v. Capitalization New rules allow you to assign value to Any building renovation costs > $400k Additional Year 1 deductions of 15%-40% Depending on project specifics, may Review “Asset Retirement “structural” components removed from a of renovation costs (on top of benefits require a separate 3115 if doing building and write off the remaining basis! Retirement Study -Building is renovated from 1245 reclassification) concurrently with a depreciation change. Study” Regs also clarify repair expense treatment AFTER owning it at least 1 year. Building (Federal) of many types of building costs such as should have >$500K of remaining Ex. Client spends $3M on structural HVAC or roof replacements. depreciable basis left. renovations. Additional Year 1 deductions of KBKG also provides compliance consulting Repair Study - renovations that include $450K-$1.2M. for repair and disposition regulations. roof, HVAC, windows, lighting, plumbing, ceilings, drywall, flooring, etc. Call us today at 877-525-4462 to see how we can help you and your clients better understand these opportunities and secure these specialty tax incentives. NATIONWIDE SERVICE | 877.525.4462 | KBKG.COM COPYRIGHT © 2018 KBKG ALL RIGHTS RESERVED. ALLSRV. 8/20/2018 IDENTIFYING VALUE-ADDED TAX OPPORTUNITIES (CONT.) updated 01-23-18 KBKG Service Description & Highlights Applicable Clients & Industries How Much is it Worth? Tax Considerations Fixed Asset Tax Review Comprehensive review of company’s entire Operations with > $40M in real property or Net Present Value of 5-8% of total building- • Reduces AMT (Federal) Fixed Asset listing & supporting documents > 500 lines of fixed assets. related costs. • Starting in 2018, unused deductions to assign appropriate tax lives, identify carryforward. retirements, and correct items that should • Retail, Restaurant, Bank and Hotel Ex. Manufacturing client has $60M of 39- • Must recapture personal property and be expensed. Chains of 10 or more year fixed assets. NPV Cash value = $3M - bonus eligible assets upon the sale of a • Manufacturing $4.8M building. Includes Cost Segregation & Repair • Utility Companies analysis. Residential Energy Credits Federal credit for developers of Anyone that has built Apartments, Condos, Federal Credit = $2,000 per apartment/ General Business Tax Credit / Section 45L Apartments, Condos, or Spec Homes that or Production Home Developments in the home unit. • Credit is realized when unit is first leased meet certain energy efficiency standards. last 4 years. or sold, not placed in service. (Federal / States can have Generally, more than 20 units. Many states have similar credits. • 1-year Carryback similar programs) Units must be certified by a qualified • 20-year carryforward. professional to be eligible. Ex. 100-unit apartment/condo can get • Does not reduce AMT. $200,000 of Federal Tax Credits. • Subject to passive activity loss rules • Credit reduces basis. Commercial Energy Federal deduction for Architects, • 179D for Designers: $.30 up to $1.80 per square foot in Federal • Reduces AMT Deductions / Section 179D Engineers, and Design/Build Contractors Architects, General Contractors, Tax Deductions. • Deduction reduces basis in real property. that work on Public or Government Engineers, Electrical & HVAC (Federal/ States can have Buildings such as Schools, Libraries, Subcontractors. Ex. 100,000SF building is eligible for Designers must amend open tax years to similar programs) Courthouses, Military Housing etc. $180,000 in deductions. claim • Any Building Owner or Lessee: Also available to any commercial building That has constructed a commercial Owners: Can go back to 2006 with Form owner. improvement greater than 40,000 SF 3115 to claim missed deductions. since 1/1/2006. CA Competes Credit California income tax credits designed to CA Competes Credit: Growing business Must apply for credits. Up to
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