Remodel and Refresh Regulations for Restaurant and Retail Accounting

Q and AWe recently received a question from one of our clients:

“There are some new remodel and refresh regulations (Rev. Proc. 2015-56). Do you have any suggestions on how Bassets could handle the depreciation. Remodels and refreshes would be allowed to expense 75% of the Lease Hold Improvement in the first period and the remaining 25% would be allowed bonus depreciation. “

Here is our reply:

Yes, we added a new ITC code “C” for Capitalization Rules. Here is a sample LHI (Lease Hold Improvement) calculation example with the new code:  

  • Cost $1,000.00
  • 75% of $1,000.00 asset cost can be expensed at $750.00
  • 25% of $1,000.00 asset cost can be depreciated @ $250.00
    • Qualified LHI w/ 50% bonus depreciation @ $125.00
    • Qualified LHI w/ Straight Line, Full Month 1st Year Convention over 15 years

T1 Tax Report Columns:

  • Purchase Price = $1,000.00
  • Section 179 = $0.00
  • ITC Amount = $750.00
  • Bonus Depreciation = $125.00
  • Depreciable Basis = $125.00
  • Prior, Current Period, Total Accum and Net Book Value reflect current period depreciation during the life of the asset

The start or effective date for this new feature applies to assets acquired after 01/01/2015. For more information, see this post “Majority of Costs to Remodel or Refresh Retail Stores Are Deductible Under New Safe Harbor” from TheTaxAdvisor.com.

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.


Protecting Americans From Tax Hikes of 2015 – Update

Tax Breaks Extended - UpdateOn Monday we reported that Congress had passed the “Tax Extenders” bill and had sent it along to President Obama for his signature. Well, the Protecting Americans from Tax Hikes (PATH) Act of 2015 has been signed into law by Obama and is now a reality. As we also stated on Monday, this not your typical year-end slap another year onto the extenders and hope for the best situation. Over 20 key tax provisions have been made permanent. The good folks from CCHGroup.com have provided us with an overview and a detailed 7 page summary that is designed to bring you up to speed on all tax provisions within this new law. 

20 key tax provisions have been made permanent, including the research tax credit, enhancedCode Sec. 179 expensing and the American Opportunity Tax Credit. It also extends other provisions, including bonus depreciation, for five years; and revives many others for two years. In addition, many extenders have been enhanced; and numerous other provisions that impact tax administration, “family tax relief,” real estate investment trusts and more were made part of the final bill. Further, the Act imposes a two-year moratorium on the PPACA medical device excise tax. 

Read The Full Story Here:

Read “Tax Briefing: Protecting Americans From Tax Hikes Act off 2015″ here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

Bonus Depreciation and Section 179 Tax Breaks Extended

Bonus Depre and Sect 179 wThe “Tax Extenders” bill was, as expected, approved by Congress and has been sent to President Obama for his signature. Yes we have run, or perhaps rerun, this story for the past few years. However this year is different, specifically as it applies to both Bonus Depreciation and Section 179. If fully passed Bonus Depreciation will be extended for 5 years and the Section 179 cap will be permanent. That means we will have to find other things to report about next year. Yay!! In an article posted to Equipment World, we get the recap from 

Under current legislation, the bonus depreciation is extended through 2019. This allows contractors to apply a 50 percent bonus depreciation to any equipment bought during a fiscal year. The current bill allows the full 50 percent for property placed in service during 2015, 2016 and 2017, then phases down to 40 percent in 2018 and 30 percent in 2019.

There’s better news on the Section 179 front. The Section 179 cap, which was reduced to $25,000 for fiscal 2015, not only went back up to the $500,000 cap in effect from 2010 to 2014, it was permanently extended. This section of the tax code, according to the section179.org website, allows businesses to deduct from its gross income the full purchase price of qualifying equipment bought during a tax year, instead of depreciating it over time. If you exceed a total of $2 million in annual qualifying equipment purchases, there’s a dollar-for-dollar phase out of the depreciation until it’s completely eliminated above the $2.5 million level. The Section 179 will be indexed to inflation in $10,000 increments in coming years.

Read The Full Story Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

The Argument Against Making Bonus Depreciation Permanent

Anyone familiar with this blog knows that we have been covering the “Tax Extenders”, particularly Bonus Depreciation, for quite some time now. During that time we have been hard pressed to find anyone in business or politics that isn’t in favor of the permanent enactment of these provisions. When it comes to Bonus Depreciation the Committee For A Responsible Federal Budget is arguing against it’s permanent enactment. Why? It has to do with something that neither side of the aisle has been able to effectively wrangle. Simply put, cost. It will cost the US citizens more, over time, to make Bonus Depreciation permanent than to eliminate it. 

Because bonus depreciation is largely a timing shift, a one-year extension would have substantial immediate costs that would be largely recovered over time, but a permanent extension would cost $245 billion over ten years (the W&M version costs $280 billion).

From 2008 through 2015, bonus depreciation has cost $200 billion (including interest). If bonus depreciation remains expired, that cost would be partially recovered over time as businesses would not be able to take the deductions they have already accelerated, leading the total cost to fall to $135 billion by 2025. However, if it is extended permanently, bonus depreciation would cost nearly $450 billion through 2025.

Aside from budgetary concerns, there are a few reasons why bonus depreciation shouldn’t simply be extended permanently. The Congressional Research Service and others do not view the provision as effective stimulus.

There is an argument that bonus depreciation should be made permanent as a way to encourage investment and thus longer-term economic growth. However, doing this in isolation could lead to hugely negative tax rates on investments funded by borrowed money due to the ability to deduct interest costs.

(Bonus Depreciation) is the single most costly extender and is a temporary provision because it was intended to be economic stimulus in a weak economy. Making it permanent would undermine that purpose and could increase the incentive to borrow if not done in the context of tax reform. Most of all, policymakers should not think that they can extend bonus depreciation for free; it should be paid for.

Read The Full Story Here:

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.

2016 U.S. Master Depreciation Guide Now Available

U.S. Master Depreciation GuideThe new phonebook’s here, the new phonebook’s here!!

If if you don’t get this reference to the 1979 Steve Martin movie, “The Jerk”, you should still appreciate the fact that the 2016 US Master Depreciation Guide, now available from Wolters Kluwer, at over 1000 pages of depreciation goodness, is much the size of an old-time phonebook. While both are handy, and large, the difference is that phonebooks are free and this new guide will set you back $119.00, even for the e-book version. Here’s a brief description:

U.S. Master Depreciation Guide (2016) offers tax and accounting professionals who work with businesses a one-stop resource for guidance in understanding and applying the complex depreciation rules to their fixed assets. This area is especially challenging, because bits and pieces of applicable information must be gathered from a maze of Revenue Procedures, IRS Tables and IRS Regulations. These sources are frequently old and include some materials which may be non-applicable. CCH’s U.S. Master Depreciation Guide pulls the pieces together, so practitioners can make sense of all the corresponding information and put the information into practice.

Of course, after buying it you still have to read…and learn it. Or, you can let our desktop software solution, eDepreciaton, and our cloud-based software solution, Depre123, do the work for you. 

The decision is yours….

Questions? Comments? Let us know in the comments section below.

More information about Bassets eDepreciation software can be found at Bassets.net or depre123.com. At Bassets register for our live webinar, download a free evaluation copy and get a personalized pricing estimate. At depre123 try out our Free Depreciation Calculator and check out our cloud based fixed assets application.