Case Studies:

Our Process

Scarpello Consulting offers a turnkey solution to implementing this significant tax benefit.

Our specialized team will conduct an in-depth analysis of your company’s fixed assets, requiring minimal support from client personnel.

The following process is provided in implementing our depreciation study:

Review tax depreciation schedules to identify areas of potential reclassification with emphasis on assets placed in service after 1987 with a tax life of 27.5 to 39 years.
Review invoices, construction costs detail, blueprints and tour facilities in order to determine proper tax classifi classification.
Make a determination regarding proper tax life and recalculate depreciation and the applicable 481 (a) adjustment.
Prepare and draft Form 3115.
Deliver documentation and calculations.
Provide road map for future purchases.

Rev. Proc. 2002-9 along with recent tax court changes, provide taxpayers an opportunity to obtain large tax deductions over the next few years.

Tax Court Decision and IRS Procedures

U.S. tax court decision and recent IRS procedures permit large cash tax savings opportunities.

Tremendous tax savings opportunities are often trapped inside the cost of a company’s building purchase price or construction costs. Recent changes in case law and rulings provide large opportunities to optimize depreciation for federal tax purposes.

Rev. Proc. 2002-9 allows a taxpayer to file for an AUTOMATIC change of accounting method (Form 3115) to correct under-depreciated assets and catch-up the amount of missed depreciation from when the asset was placed in service [section 481(a) adjustment]. This adjustment can be deducted in the current year.

Further benefits expand as a result of a recent US Tax Court decision in Hospital Corporation of America (HCA). In a pro-taxpayer decision, the tax court narrowed their definition of real property for federal tax purposes. Many building improvements that were once considered real property and depreciated over a 39 year life can be classified as personal property and depreciated over a 5 or 7 year life.

Property Reclassification

Business enterprises both invest and borrow large sums of money. The common factor in these two types of transactions is the time value of money.

Rev. Proc. 2002-9 along with the 2002 and 2003 tax acts, provide taxpayers an opportunity to obtain large tax deductions in the current tax year.