Archive for the ‘179D Energy Tax Credits’ Category

CPA Prospect acquired $6,400,000 Office building.

The owner did $800,000 in renovations, some which were energy efficient.

The tax benefit in additional one-year tax deductions for CPA’s newest client were:

Cost Segregation: $1,435,000
179D/Energy: $68,000
162 Retirement: $87,555
263a Repair & Maintenance: $288,127

For a total of benefit of: $1,878,682.00

The power of combining all the favorable tax incentives is powerful for property owners

December 10, 2012 By: Heidi Henderson

Over the past few weeks there has been some confusion on the status of the 179D extension.  A blog post written by Danielle Stewart on November 28 titled US Senators Pass ‘More Efficient’ Energy Act has gone “viral” in our industry!

We would like to set the record straight and provide some information on the current status of the bill, and what the proposed extension entails.  The extension titled S. 3591: Commercial Building Modernization Act was introduced to the Committee on September 20, 2012 and is awaiting congressional approval and final Presidential sign-off. At this point, the bill has not been passed.

Based on our current legislative connections, we believe that the bill will be passed prior to the end of the year and will diligently work to keep our clients posted of these and other changes as they occur.

In the meantime, the extension has proposed these changes:

• Deduction increased from $1.80 to a range of $1.00 – $4.00 per sq.ft.
• Allocation from Non-Profits to a Third-Party
• Allows REIT’s to allocate benefit to other holding companies, contractors, engineers or designers.
• Extended for properties placed in service (PIS) through the end of 2016
• Will focus on efficiencies for existing buildings
• Updated Efficiency Standards –
  • ASHRAE 90.1-2004 for PIS dates between 2012-2014
  • ASHRAE 90.1-2007 for PIS dates between 2015-2016
  • Scales the Tax Deduction by Reduction % (see chart below)

Although the monetary benefit may be increased, the qualification standards will be more stringent. Therefore, we recommend that property owners or designers completing projects with energy efficient upgrades or components pursue the 179D deduction before the onset of these new regulations.

For more information, please contact Engineered Tax Services.

The Independent Electrical Contractors, the National Electrical Contractors Association (NECA), and dozens of other construction and real estate groups have signed a letter in support of Senate Bill 3591, the Commercial Building Modernization Act (CBMA), which extends and enhances the tax deduction at Section 179D of the Internal Revenue Code for energy efficient commercial and multifamily buildings. Buildings use more energy than any other sector of the U.S. economy and consume more than 70 percent of electricity in the country.

179D was one of several key tax incentives enacted over the last several years focused on encouraging businesses to incorporate energy efficiency into their operational plans. 179D in particular relates to the design and construction of energy-efficient commercial building property. Intended to offset some of the costs of qualifying energy-efficient improvements to commercial buildings, the deduction allows building owners to take an immediate expense for the cost of property that would normally be recovered through depreciation. To qualify, energy-efficient improvements must reduce total annual energy and power costs with respect to the interior lighting, heating, cooling, ventilation, and hot water systems by 50 percent. Partial deductions are allowed.

179D expires at the end of 2013, but work on extending and improving this important deduction has already begun. Specifically, the CBMA improves Section 179D’s effectiveness by making the tax incentive useable for a broader range of building owners, such as those owned by real estate investment trusts and certain LLPs. It also makes the incentive “performance based” and “technology neutral” mean that the greater the energy savings, the greater the deduction, and the incentive applies to projects not products, so owners and their contractors can decide among the best suite of efficiency measures that will achieve optimal energy performance in their assets rather than specifying particular equipment or products.

Published October 22, 2012 at: http://njecpac.blogspot.com/2012/10/iec-supports-extension-of-179d-tax.html

For more information please contact ETS at (561) 253-6640 or email: info@engineeredtaxservices.com

Cindy Lucas of Engineered Tax Services will be presenting the Energy Policy Act of 2005 (179D) seminar at the South Florida Building & Facility Maintenance Show in Ft. Lauderdale, Florida on November 7-8, 2012.

She will be presenting at 9:00am on Thursday the 8th. For more information click the image above or:

Contact Cindy Lucas at (954) 439-1671 or via email at clucas@engineeredtaxservcies.com

10/16/2012| 06:42pm US/Eastern

Overview

The Energy 179D policy came effective 1/1/2006. This allowed property owners who designed energy efficient buildings that year to claim up to $1.80 tax deduction. The policy also extended these tax benefits to architects, engineers and contractors  who were the primary designers of governmental buildings. The policy has since been extended twice and now is set to expire at the end of 2013.

First Option

From 2006 through 2011, the policy only allowed the property owner or designer two methods to take tax benefit. They could file the tax benefit with their current tax return if the building generating the tax benefit was placed into service that same year. If either the property owner or designer missed the tax benefit from previous years, they also had the opportunity to amend tax returns.

2011 Revision

The IRS made available a third option in 2011 under procedures of Rev. Proc. 2011-14 whereby the tax benefit could also be filed with a 3115 form to catch up the missed benefits in previous years in the current year’s tax return. This made the whole process much easier for the taxpayer. The notice did not state whether this beneficial method was available to the designers, however, and the IRS promised more clarity in late 2011. Since that time, many CPA firms used the filing position for their design clients to avoid the complications that can sometimes come with amending tax returns.

2012 Clarification

The attached notice from the IRS now clarifies that Designers will no longer be permitted to file a 3115 as of September of 2012. To claim previous tax benefits in previous years, they must now file amended tax returns. Rev. Proc. 2012-39, which modifies the automatic change procedures of Rev. Proc. 2011-14 and specifically states that designers of Energy Efficient Commercial Property that have been allocated tax deductions under the EPAct’s Section 179D, will not be eligible to apply for a change in accounting method. The IRS further stated that a designer claiming a 179D deduction is making a permanent change in its taxable income, unlike a property owner who is making a temporary change and thus going forward the designer is not entitled to deduct the amount of the 179D deduction by another method such as depreciation.

Engineered Tax Services has consistently held the stance that designers of government buildings should amend previous years taxes rather than file a Form 3115 in the case of look-back studies.

Julio P. Gonzalez, CEO

Engineered Tax Services

New York City has publicly posted 2011 energy benchmarking results for 2,065 large commercial properties representing more than 530 million square feet, marking the first time any US city, state or county has disclosed private-sector building energy data from a mandatory policy.

The database includes site energy use intensity (EUI), a measure of the energy used at the site on a per square foot basis; the weather-normalized source EUI, which takes into account generation and distribution losses; greenhouse gas emissions; water per square foot, and the Energy Star scores for buildings, where such a rating is applicable.

This article is available to be read in full through the following link. Click Here As Provided by the Environmental Leader

Leading up to the election, the promises discussed by President Obama and Presidential candidate Mr Romney include several specialty tax statements.  Specifically;

The R&D Tax Credit

Mr Romney has proposed to make permanent the research tax credit

Mr Obama has proposed to make permanent the research tax credit and to increase the alternative simplified credit from 14 percent to 17 percent.

The DPAD – S. 199

The Code Sec. 199 domestic production activities deduction allows qualified taxpayers to deduct an amount equal to the lesser of a phased-in percentage of taxable income (adjusted gross income for individuals) or qualified production activities income.

Mr Romney has not addressed the Code Sec. 199 deduction.

Mr Obama has proposed to disallow the Code Sec. 199 deduction for oil and gas producers and coal and other hard mineral fossil fuels.

Energy

The 2009 Recovery Act extended the placed in service date for wind energy facilities for the energy production tax credit to December 31, 2012.

Mr Romney has indicated his opposition to extending the energy production tax credit for wind energy facilities.

Mr Obama has proposed to extend the energy production tax credit for wind energy facilities

This brief is provided by CCH – a copy of the brief is available through the following link. 2012 Tax Policies of the Major Presidential Candidates_September 11 2012

Join Rick McElvain and Michael D’Onofrio at this years National Auto Dealership Conference.

Learn how ETS can assist the auto industry increase their cashflow through specialty tax.

October 25-26, 2012

Venetian/Palazzo Conference Center

Venetian Las Vegas

For details

http://www.aicpa.org/cpeandconferences/conferences/pages/autodealershipconference.aspx

Thursday, November 8, 2012

Ft. Lauderdale/Broward County Convention Center

Join Cindy Lucas, Director, Energy Policy Act 179D, Room A, Gain an understanding of the Energy Policy Act of 2005 and recently extended 179D Federal Tax benefits available for the design of energy-efficient buildings:

* Recognize the benefits for Property Owners, Investors, CPA’s, Real Estate Attorneys, Architects, Engineers, Corporations, Energy Consultants and Lighting, HVAC, Roof & Insulation Contractors.

* Learn how the “Designer” (Architect, Engineer, and Specialty Contractor) qualifies to claim substantial tax benefits under 179D for any public or government-owned buildings.

* Learn how to take advantage of new energy tax incentives, niche strategies like cost segregation studies and insurance replacement appraisals for valuable tax savings and increased cash flow

* Understand how these new tax strategies offered by the government, can become an additional value-added service to your clients.

For details http://www.sf-fm.info/