Madison's Loebenberg Addresses Gnyada's 2010 Annual Tax Forum
Madison SPECS' CEO Outlines the Tax Benefits of Cost Segregation Resulting in Faster Depreciation for Metropolitan Area Auto Dealers
QUEENS, N.Y., Dec. 3, 2010 â€“ The venue was the 2010 Annual Tax Forum of the Greater New York Automobile Dealers Association (GNYADA), and the topic was Cost Segregation: Lower Tax Payments by Learning which Assets Can be Classified for Faster Depreciation. "The importance of cost segregation's role in reducing tax liability cannot be understated," presenter Eli Loebenberg told attendees.
"Improved cash flow is the ultimate benefit," said Loebenberg, CPA, CEO of Madison SPECS, the cost segregation division of Madison Commercial Real Estate Services (MCRES), Lakewood, N.J. "Given the ongoing state of the economy, this subject has taken on a new sense of urgency."
GNYADA's Annual Tax Forum, attended by dealer principals, controllers, general and sales managers, covered a wide range of topics, from cost segregation to the tax implications of health care reform, energy tax credits and other issues affecting dealers. The program also updateReleased new federal, state and local tax proposals, proper record-keeping for sales taxes, and the taxability of certain lease transaction fees.
On the subject of cost segregation, Loebenberg explained that, according to the Internal Revenue Code, certain fixed assets can be depreciated more quickly, over five-, seven-, or 15-year periods. "A cost segregation study is a tax and engineering analysis that identifies eligible assets, assesses their value and determines the resulting asset classes and corresponding accelerated depreciation."
For auto dealers and other property owners, assets eligible for consideration are systems and fixtures that do not directly impact the operation of their facilities, or are temporary structures. This classification can include everything from floor and wall coverings, to decorative lighting, to back-up HVAC equipment.
"Utilizing IRC guidelines, tax and engineering experts segregate these elements, a process that can maximize the tax benefits for property owners of facilities that have either been constructed or purchased in the last seven years, or have significant construction in progress," Loebenberg explained.
"After the seminar, it was interesting to interact with the dealer/owners and CPAs in attendance, many of whom were not aware of cost segregation, and all indicated to me that they would benefit from this knowledge," Loebenberg said. "And the fact that cost segregation was mentioned in other presentations focusing on tax and UNICAP/LIFO rules is a clear indication of the growing importance of this issue."
During his presentation, Loebenberg noted, as well, that cost segregation benefits have been augmented by the Small Business Jobs Act of 2010, recently signed into law by President Obama, which reinstated the 50% bonus depreciation tax deduction for capital expenditures through year-end.
"This additional first-year depreciation deduction allows businesses to write off more than a standard depreciation schedule would allow," Loebenberg explained. "This tax strategy can increase a company's cash flow, freeing up capital for necessary improvements and new business opportunities as the economy begins to improve."
MCRES is well-known for its ongoing educational outreach, facilitated by the firm's Madison Learning Center (MLC). Through it, MCRES' highly trained professionals offer basic and advanced presentations and courses designed for CPAs, tax and real estate attorneys, real estate brokers, realtors, mortgage brokers and property owners. MLC conducts a systematic program of seminars, newsletters and informational materials offered nationwide. Madison also publishes “The Trusted Advisor,” a Blog providing advice and noteworthy information on topics related to commercial real estate.
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