Specialty Tax Services: Going Beyond the Numbers

From mitigating tax compliance risk and optimizing tax credits to identifying overlooked deductions, Magone & Company's specialty tax services help your business uncover hidden opportunities to save.

Cost Segregation Analysis

A cost segregation engagement will methodically review property, plant and equipment and properly reclassify real property (e.g., property that is generally depreciated for tax return purposes over a period of either 27.5 in the case of a commercial residential apartment building or 39 years in the case of a commercial office building; movie theater; hotel; casino; shopping mall; amongst other structures) into personal property (e.g., property that is generally depreciated for tax return purposes over a period of either 3, 5, or 7 years) and land improvements (e.g., property that is generally depreciated for tax return purposes over a period of 15 years) by reviewing all of the structural components within the building structure (e.g., exterior walls, roof, windows, doors, etc.) and the building systems (e.g., lighting, HVAC, plumbing, electrical, escalators, elevators, fire-protection and alarm systems, security systems, gas distribution systems, etc.). In general, floor plans and blueprints are meticulously reviewed and site inspections are conducted to review the building envelope as part of an engineering based Cost Segregation engagement to ensure sustainable tax return filing positions per Circular 230. The result? Immediate tax savings!

A cost segregation study can be completed any time after the purchase of a building, a remodeling project or the construction of a new property. Although, the optimum time for a study for new owners is during the year a building is constructed, purchased or remodeled. For investors who are in the planning phases of construction or remodeling, the best time to consider a cost segregation study is before the infrastructure of the building is set.

TPR Compliance Services

The Department of Treasury's much-awaited final treasury regulations governing the proper tax treatment for repair and maintenance expenditures (a.k.a, Tangible Property Regulations or “TPR Compliance Services”) replace the temporary regulations issued in December 2011. These updated regulations are meant to provide further clarity and reduce controversy over the determination of whether an expenditure may be currently deducted as a repair under I.R.C. § 162(a) or must be capitalized under I.R.C. § 263(a).

TPR Compliance is applicable to businesses in all industries that acquire, produce, replace or improve tangible property. Application of the new Repair Regulations requires an in-depth understanding of various tax cases and circumstances that must be met.

Research & Development Tax Credits

Research & Development Tax Credits can apply to virtually any industry that conducts qualified research and development including:

  • Life Sciences (Pharmaceuticals, Bio-Technology & Medical Devices)
  • Food Science & Bio-Flavoring
  • Green Energy, Fuel Cells & Solar Technology
  • Chemicals
  • Architectural; Engineering & Design Build Contractors
  • Aerospace & Defense (Commercial and Military)
  • Software & Electronics
  • Semiconductors
  • Financial Services Software Development
  • Transportation (Airlines, Automotive, Rail, etc.)
  • Utilities

The New & Improved R&D Tax Credit Program The Protecting Americans from Tax Hikes Act of 2015 (“PATH Act”) significantly enhanced the R&D Tax Credit Program by making it a permanent tax incentive and considerably updated the program to:

  • Permit eligible “Small Businesses” ($50 million or less in gross receipts) to claim the RTC against the Alternative Minimum Tax for tax years beginning on or after January 1, 2016; and
  • Permit eligible “Start-Up Companies” (less than $5 million in gross receipts and earning revenue for less than five years) to claim up to $250,000 of the RTC against the company’s Federal Payroll Tax for tax years beginning on or after January 1, 2016.

Take 3 Simple Steps to Offset Payroll Tax with the RTC

  1. File Form 6765 entitled “Credit for Increasing Research Activities” so companies can make an annual election to specify the amount of RTCs that will be applied to the employer-portion of Social Security tax;
  2. File Form 8974 entitled “Qualified Small Business Payroll Tax Credit for Increasing Research Activities” to report the amount of RTCs elected on Form 6765 to offset Social Security tax and the form will be filed with Form 941 each quarter that the credit is applied to the Social Security tax liability; and
  3. File Form 941 entitled “Employers Federal Quarterly Tax Return” to be able to include the amount reported on Form 8974 each quarter.