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Top 5 Ways To Find Money Through Fixed Assets

Wow… today the stock market crashed so big it has probably got us all thinking… where do we go from here? Which also gets me thinking — how can businesses find some cash flow so they have some “rainy day funds” (or for operating expenses) in their back pockets?  Then it dawned on me… if they manage their fixed assets properly and received detailed cost segregation studies or had a proper 3115 study done, then shoot, EVERYONE could have extra cash flow.

If you think about it, there really are many ways to capture extra cash flow through fixed assets.  From very small efforts to large.

Top 5 Ways Fixed Assets Can Capture or Re-capture Cash Flow

  1. Cost Segregation Studies – extra Tax Deductions with properly classified fixed assets.  Money is in the DETAILS, not in bulked entries everyone!  Make sure you capture your 100% bonus depreciation for 2011 – it will go away soon.
  2.  Rev Proc 2007-16 Study – 3115 assets; allows taxpayers to change their method of accounting and claim the allowable depreciation (or amortization) amount they never claimed (i.e. bonus depreciation, etc.).
  3. Physical Fixed Asset Inventories – cost savings all across the board with Property Taxes, Insurance Premiums, Financial savings impact and more.  Have you ever done one of these before?
  4. Asset Appraisals – is it really worth TODAY what it once was?  Probably not.
  5. Automated Depreciation System – if you are still stuck in spreadsheet land for calculations, believe me when I say, YES you ARE missing additional expense and bonus that you are entitled to.  I see it every time I open someones spreadsheet!  Doesn’t matter the size of the organization or spreadsheet, there is ALWAYS calculation error, sometimes in the millions.

Which industries would benefit from these services / studies?  Just about all industries, well, maybe government and non-profit wouldn’t benefit from all five, but certainly from a couple.  Industries that would uncover a ton (always in the thousands – sometimes millions) from one or all five: hospitality, data centers, banks, manufacturing, retail, healthcare to name a few.

Now I know why I love waking up every day to go to work for the past 14 years (and growing)… because everything I (and my associates) do each and everyday help people and their businesses grow.  Who doesn’t like that?  Probably the same people who don’t like furry fuzzy kittens.



Tax Engineered Cost Segregation – Hotel Renovations

There has been a lot of buzz out in the hotel industry lately. Everyone is wanting to renovate in order to capture more occupancy during this economy – but cash flow can, at often times, be unavailable for renovations.  This is where Cost Segregation or Section 179(d) Energy studies come into play. 

More often than not fixed assets are misclassified with a longer depreciation life on a slow depreciation calculation.  About 8 times out of 10 line items are bulked instead of separated out or classified properly —  classified as Real property instead of Personal.  There are many benefits to classifying what goes into your renovations properly: an accelerated depreciation schedule = additional year-end deductions = more money in your piggy bank = additional renovations or keeping staff. 

Should you have questions about Cost Segregation Studies, Tax Engineered Studies or Section 179(d) Energy studies, as always do feel free to reach out to us.  We love hospitality!

P.S.  When you gut rooms, banquet halls, reception areas, restaurants, or other amenities for renovation — remember, they are fixed assets too… run them through disposal!  Otherwise, its money in the trash.

Bank Acquisitions: Allocation of Purchase Price and Valuation

There have been over 140 banks that have fallen through the FDIC in 2009 and another 86 to date already in (since June 28th) 2010.

When other operating banks purchase a fallen bank through the FDIC and assume all of their deposits through a Loss Share Agreement, banks have the option of getting a second opinion of how the slashed purchase price was allocated (intangible versus tangible assets).  While the purchase price for fixed assets is established by the FDIC’s appraisers, the buyer should have an independent valuation performed by experts that do not work for the FDIC to maximize future cash flows.

Compliance with stringent financial reporting requirements, coupled with more demanding regulations resulting from record-setting bank failures, presents valuation challenges at a completely different level!  Below are some objectives to consider PRIOR to or AFTER purchasing a fallen bank.

Objectives for Valuation and Allocation of Purchase Price Services

  • Third Party Independent Experts are required to determine the Fair Value of all acquired assets for compliance with provisions of the Purchase and Assumption Agreement between the FDIC and the acquiring bank, SFAS Statements No. 141 & 141R, 157, and AICPA Statement of Position (SOP)03-3, Accounting for Certain Loans or Debt Securities acquired in a transfer.
  • Optimize future tax benefits for buyers by providing the basis for maximizing future cash flow resulting from income tax depreciation of Section 1245 (personal) and Section 1250 (real) property based upon proper classification and allocation of value.
  • Determine Fair Value of the Loan Portfolio to establish the proper payment by the FDIC for projected settlement losses, outside associated consulting, and audit fees, and internal administrative costs under the Loss Share Agreement.
  • Establish a supportable cost basis for future Mark-to-Market valuations required by audit standards.

If you need additional information about this subject or who to contact for an expert opinion or independent study, call us (877) 824-6834 or shoot me an email.

For the complete list of failed banks, log onto: http://www.fdic.gov/bank/individual/failed/banklist.html