Scarpello Consulting
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.
The charts to the right illustrate a $2,000,000 property reclassification under revenue procedure 2002-9
New Purchase
The following graph illustrates the future tax benefits of assets placed into service in the current year. $2,000,000 reclassed to a 7- year life.
*ATNPV $374,956.47
1st Year Tax Savings $103,192.00
2nd Year Tax Savings $175,408.00
3rd Year Tax Savings $119,408.00
4th Year Tax Savings $79,408.00
5th Year Tax Savings $50,928.00
*After Tax Net Present Value 6% Discount Factor Assuming a 40% Effective Tax Rate
Purchased in Prior Years
The following graph illustrates assets placed into service 7 years ago. $2,000,000 reclassed from 39-year life to a 7-year life.
*ATNPV $358,115.51
1st Year Tax Savings $645,288.00
*After Tax Net Present Value 6% Discount Factor Assuming a 40% Effective Tax Rate
