2A — August 26 - September 15, 2016 — M id A tlantic
Real Estate Journal
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AG&A.........................................................................6A American Architectural Window & Door.................1B Arcara Realty Advisors...........................................19A AW Meyer. ...............................................................19A Azarian Realty Co.. .............................................IBC-C Barley Snyder............................................................7A Behr Building Services............................................20B Bennett Williams Retail....................................... BC-C BL Companies............................................................6C Bohler Engineering. ................................................12C Capitol Aerials...........................................................2B CAPSTAN..................................................................2A Caryl Communications............................................19A Cooch and Taylor.....................................................10A Crystal Window & Door..........................................14B Cushman & Wakefield, Inc................................... IC-A E.B. Cohen.................................................................4B Earth Engineering Inc.. ..........................................15C Ehrlich, Petriello, Gudin & Plaza...........................10B Electronic Access Foundation...................................2B Elliott-Lewis. .............................................................5B Environmental Systems..........................................19A Fowler Companies...................................................18B Hillcrest Paving & Excavating...............................19A Integrated Business Systems. ..................................6B Investors Real Estate Agency.................................19A IREM.................................................................. 24-25B Jewel Electric...........................................................13B Kaplin|Stewart.........................................................8A Kay Commercial Realty. .........................................19A Levin Management................................................ 8-9C LEW Corporation. .....................................................8B Lewis-Chester Associates........................................11B Lightbridge Academy..............................................11C M. Miller & Son.......................................................19B Marcus & Millichap........................................ 19, BC-A Meridian Capital. ....................................................10A NAI Summit....................................................... 19A,2C NAI Mertz..................................................................4A National Realty & Development........................... IC-C NJ’s Clean Energy Program. ..................................15B NJAA........................................................................18B NorthMarq Capital....................................................3A P.Cooper Roofing. ................................................. BC-B Poskanzer Skott Architects.......................................3B Premier Compaction Systems.................................22B RD Management.................................................... 4-5C Rittenhouse Capital Advisors.................................13C Silbert Realty & Management Co.............................3C Specialty Building Systems. ................................. IC-B Stark & Stark............................................................7C Stout & Caldwell. ......................................................9B Subway.....................................................................14C SVN Motleys..............................................................3A Target Building Construction.................................10C Total Cleaning Associates.........................................2B USGBC.....................................................................23B Weichert Commercial Brokerage............................19A MAREJ A dvertisers D irectory
M id A tlantic Real Estate Journal
M id A tlantic R eal E state J ournal Publisher .................................................................Linda Christman Publisher ....................................................................Joe Christman Senior Editor/Graphic Artist ..................................... Karen Vachon Production Assistant/Graphic Artist ............................... Julie King Associate Publisher ....................................................... Kim Brunet Associate Publisher ................................................. Alissa Aronson Associate Publisher .............................................. Barbara Holyoke Associate Publisher .....................................................Steve Kelley Office Manager .........................................................Joanne Gavaza Contributing Columnists . .........................Andrew Cohen, JD, LLM ..................................................... Michael Greenwald, MPPM, CPA Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly Periodicals postage paid at Rockland, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal, 312 Market St. Rockand, MA 02370 USPS #22-358 | Vol. 28 Issue 16 Subscription rates: $99 - one year, $198 - two years, $4 - single copy REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Toll-Free: (800) 584-1062 | MA: (781) 871-5298 | Fax: (781) 871-5299 www.marejournal.com The views expressed by contributing columnists are not necessarily representative of the Mid Atlantic Real Estate Journal
Andrew Cohen Michael Greenwald
Late Adoption of the Tangible Property Regulations
O
h, no. We’re more than halfway through 2016, I haven’t filed my 2015
tax returns (fortunately they are on extension) and I never did anything about the Tan- gible Property Regulations (“TPR”) that became effective in 2014. Is there anything I can do? As a matter of fact, there are a number of things you can still do. There is no prohibition against adopting the TPR in 2015. You can still file for an automatic change of account- ing method with your 2015 tax return. What you don’t get is the audit protection that was available to taxpayers who adopted the TPR in 2014. Most accounting method changes are granted with audit protec- tion, which means that the Service will not require the taxpayer to change its method of accounting for the same item for a taxable year prior to the year of change. If your 2015 return is examined by the IRS, adjustments resulting from the method changes as well as the tax treatment of the same or similar items in prior years are subject to challenge. You also don’t get to take full advantage of the new partial asset disposition (“PAD”) rules which allow taxpayers to claim a loss on a retired structural component of a unit of property when the asset is permanently withdrawn from use in the taxpayer’s trade or business or when ownership is transferred.
A PAD is required when there is a casualty loss, tax-free ex- change or a transfer of the prop- erty. One of the advantages of adopting the TPR in 2014 was the opportunity to take a de- duction for PAD that occurred in prior years. Now taxpayers may take such a deduction only for current year PAD. The TPR provide guidance on whether certain expendi- tures are currently deductible or require capitalization and apply to anyone who pays or incurs expenditures to ac- quire, produce or improve tan- gible real or personal property. In general, when adopting the TPR, a taxpayer is adopt- ing the following changes: • Utilizing the Safe Harbor for Routine Maintenance; • Defining the Unit of Prop- erty (“UoP”) for building(s), cer- tain specified building systems and land improvements; and • Determining the amount to be capitalized as an improve- ment to tangible property The Routine Maintenance safe harbor allows for the
deduction of certain costs incurred on a unit of tangible property. Repair or mainte- nance activities are consid- ered routine if the taxpayer reasonably expects to perform the activities more than once over a ten-year period. The taxpayer can qualify for the safe harbor deduction even if the activity does not occur more than one time over that ten-year period if it can be established that, at the time the property was placed in service, it was reasonable for the taxpayer to expect that the repair or maintenance would be required more than once. The UoP definition is impor- tant when determining wheth- er expenditures incurred to improve upon tangible per- sonal property must be capi- talized or could be deducted as a repair. The larger the UoP, the more likely the expendi- ture will be deducted. The UoP is a group of func- tionally interdependent compo- nents – when one component’s continued on page 12A
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