Real Estate Strategies

Life Cycle of a Cost Segregation Study

The concept of cost segregation began in the 1960s, when taxpayers argued specific components of real estate had a shorter life than the depreciation tables allowed (39 years for commercial property and 27.5 years for residential real estate). After decades of legal cases, the IRS provided rules and safe harbors in 1996 and 2002. Taxpayers now can use cost segregation and remain compliant with IRS regulations. The real question now is: Does a cost segregation study really reduce a taxpayer’s liability? And if so, by how much?

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Think Outside the Tax Box provides tax reduction strategies along with practical implementation advice in order to reduce your clients’ federal tax bill with ease.

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CURRENT EDITION

Popular Tax Shelter for the Ultra-Wealthy Comes onto the Radar

Dominique Molina, CPA MST CTS

In a recent turn of events that has caught the attention of financial experts and policymakers alike, Senate Finance Committee Chairman Ron Wyden, D-Ore., has unveiled the results of an 18-month investigation into the use of Private Placement Life Insurance (PPLI) by the ultra-wealthy. The investigation, the first of its kind focusing on PPLI, highlights the use of these policies as a significant tax shelter mechanism, revealing the ways in which a small number of wealthy individuals are leveraging them to avoid substantial tax liabilities.

Don’t Let the IRS Put Your Client in The Penalty Box

Timalyn Bowens, EA

There’s only one thing worse than your client overpaying their taxes when you could have helped them – them not paying enough in taxes and having to deal with penalties as well. It’s like adding insult to injury. There is only so much that we can do to help our clients avoid penalties. Educating ourselves, so we can educate our clients, is a big part of that. Penalties are inevitable, but that doesn’t mean that the client must max out their penalties. But it also doesn’t mean that we should not do our due diligence to avoid penalties where possible.

Remind Your Clients About Higher-Education Tax Credits

Jeff Stimpson

A new school year is here and, for many families, so are the worries over the cost of tuition and other college expenses. The cost keeps skyrocketing every academic year, and these days that diploma comes with an average of almost $29,000 in debt for most graduates. Many of them also carry that debt well into middle age. Families paying for these educations need every break they can get. The federal government offers education tax credits (and other tax breaks on college costs), but don’t assume your client has the brain space at this stage of life to learn about them. Even your clients who can afford college would appreciate learning about ways to save on higher education. Here’s what to tell them.