Can someone please provide an overview of the scope of a Construction Tax Planning engagement?
Tax Professional Answers
Construction Tax Planning enables accelerated depreciation deductions through the recommendation of select materials and supplies to be utilized in the "Construction Phase" to ensure that the structural components will be classified as personal property as opposed to real property (e.g., use of a modular wall as opposed to permanently affixing a wall to bifurcate office and / or conference room space within the floor configuration layout will enable the said structural components to be classified as personal property with a 5 year class life as opposed to real property with a 39 year class life).
In addition, Form 3115 is never filed as Construction Tax Planning is proactive and not reactive. Noting, there is no need to reclassify asset classifications as all of the structural components of the building envelope are properly classified when they are initially placed into service on a timely filed tax return. This mitigates IRS audit risk as an accounting method change never occurred and therefore Form 3115 is not filed. It should be duly recalled that Accounting Method changes only occur when a transaction is treated a certain way on a tax return (i.e., regardless of correctly or incorrectly) for a period of two years or more.
Please consult my published article entitled “Construction Tax Planning: A Proactive Approach To Accelerated Component Depreciation” utilizing the subsequent link: http://taxconnections.com/taxblog/construction-tax-planning-a-proactive-approach-to-accelerated-component-depreciation/#.VFVQrJ3D-Uk
For complete legislative updates and coverage of the latest statutory, administrative, and judicial interpretations please follow Peter J. Scalise at:
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