Abandonment Tax Benefit
Abandonment allows for the write-off of discarded assets when it is not identified as a separate asset on the books of the property.
Abandonment Write-Off of Disposed Assets
Typically, lighting and HVAC is included in the total value of a property and is not individually segregated on the books. When old lighting fixtures, or HVAC are removed, that asset is ‘abandoned’ and its undepreciated value can be segregated and written-off. Abandonment involves calculating the book value of the discarded asset, so that it may be written off as a tax deduction.
Abandonment Studies Determine the Write-Off.
Abandonment studies serve as a method to capture the significant Abandonment ‘write-off’ deductions that otherwise may have been overlooked. Abandonment allows for dismantled, removed or demolished assets to be retired and expensed in the taxation year of their Abandonment.
Why Can We Do This?
Recent changes to regulations allow disposal of individual building components where previously the IRS viewed a building as a single ‘Unit of Property’ (UOP). The new regulations allow disposal of a smaller UOP provided a detailed Cost Segregation has properly broken down individualized UOP within the larger unit.
Deadline is December 31, 2016.
On December 18, 2015, the President signed the Tax Extender Bill, extending EPAct 179D for two years. One year retroactive (2015) and one year forward (2016). The energy saving system must be placed in service before December 31, 2016, which is when 179D expires.
Awaken Prepares the Entire File.
Awaken’s professional partner’s engineers and CPAs will provide an independent, third-party certification as required by the IRS, to take advantage of these significant tax benefits. They will perform an on-site visit, determine the tax deduction and prepare all the required IRS forms. PDF drawings of the affected area are typically required.
Protected by Lloyds.
Awaken, through its professional partner, has a Lloyds insurance policy that guarantees to fund any and all engineering, accounting and legal professional fees required to vigorously defend against any denial by the IRS of the 179D tax deduction.
