Accruit Blog

Economic stimulus implications: Bonus Depreciation recapture is coming

Recently, I came across an article written by Hal Vandiver for the Material Handling Industry of America regarding the current Economic Stimulus Package and its impact on asset-owning businesses. Mr. Vandiver described the initial benefit of this measure very well, including some mathematical analysis of asset purchases that occur in 2008 or 2009. Put simply, the continuation of Bonus Depreciation and increased Section 179 deductions as economic stimulation have a significant impact for companies able to take advantage of these measures. That said, there is a hangover looming in the distance of which these companies should be aware. That hangover is " depreciation recapture" caused by an artificially lower basis than would normally apply to these assets. Clearly, these stimulation measures are a double-edged sword, in the form of immediate increased depreciation expense, yet an artificially lower basis (therefore higher taxes) if these assets are sold before the end of their MACRS recovery lives.

Accruit and commercial real estate 1031 exchanges

We've historically been known as the leader in personal property 1031 like-kind exchanges, but we want to make sure that everybody realizes Accruit's value for real estate 1031 exchanges, as well. The bottom line is this: the things that make us ideal for personal property exchanges - our patented 1031 exchange process (the only one of its kind in America), our outstanding one-to-one customer service, our uncompromising commitment to financial and data security - also apply to commercial real estate.

Reverse 1031 exchanges aren't as complicated as you think

1031 exchanges are typically of the "forward" variety - they start when you sell an asset and then buy a replacement asset of like-kind. But more and more our clients are finding themselves in the position of needing to purchase a new asset before they sell their old one.

Good news for leasing industry: IRS rules that cars are like-kind with light-duty trucks

The IRS has recently confirmed in a private letter ruling ( PLR 200912004, released on March 20, 2009) that cars and light general purpose trucks ("light-duty trucks") are of like-kind for purposes of Section 1031. Specifically, the IRS ruled that cars, light general purpose trucks (for use over the road having actual unloaded weight of less than 13,000 pounds) and vehicles that share characteristics of both cars and light general purpose trucks (e.g. crossovers, sport utility vehicles, minivans, cargo vans, and similar vehicles) are of like-kind for purposes of section 1031.

Colorado & Washington enact Qualified Intermediary model law; Is your state next? Has anyone heard of reciprocity?

As we told you last week, the FEA was successful once again in pushing regulations through the Colorado House and Senate to provide consumer protection for those conducting 1031 like-kind exchanges in the state. The Governor signed HB09-1254 into law on 4/16/09. Washington's Governor signed a similar law on Monday, April 13. Who next? Texas? Maine? Arizona? Oklahoma? The ideal goal is to maintain reciprocity between these states so that QIs can deliver consistent guidance and maintain reasonable standards for customers across the country.

Unleashing a Green stampede within America's energy industries

While on the campaign trail, Barack Obama made greening America's infrastructure a huge priority for his administration. As noted in the Los Angeles Times, Obama planned

to spend $150 billion over the next decade to promote energy from the sun, wind and other renewable sources as well as energy conservation. Plans include raising vehicle fuel-economy standards and subsidizing consumer purchases of plug-in hybrids. Obama wants to weatherize 1 million homes annually and upgrade the nation's creaky electrical grid. His team has talked of providing tax credits and loan guarantees to clean-energy companies.

His goals: create 5 million new jobs repowering America over 10 years; assert U.S. leadership on global climate change; and wean the U.S. from its dependence on imported petroleum.

1031 Exchanges help California construction companies go “Green” and save a little green in the process.

Accruit is seeing more and more California construction companies utilizing 1031 exchanges to sell off old equipment. These outdated assets don't meet California's strict new emissions laws so companies are buying new, greener replacement equipment.

Everyone agrees that going green is good for the environment, but the cost of doing so can take a bite out of a company's bottom line. For example, if a demolition company sells just one fully depreciated loader for $60,000, they're going to owe the IRS approximately $21,000 in taxes.

Technology & 1031 Like-Kind Exchanges, part 1

If you read enough of the Accruit Web site, you'll notice that we talk a good bit about how technology plays an important role in the processing of successful 1031 Like-Kind Exchanges (LKEs). We obviously think this is an important reason to do business with us, but it's possible that some readers may want to know more about why a technology-driven process is so beneficial to them.

There are a number of ways in which a software-based process helps you, and addressing them all at once might be too much for one sitting. So let's call this part one of a series.

California, Idaho, Nevada and Washington QI bills now available

Multiple states have recently passed laws regulating Qualified Intermediaries, and we've now made the text of these bills available for download.

How do I know if my personal property exchange is like-kind?

If you've done a 1031 real estate like-kind exchange you know that the "like-kind" definition simply means investment real estate for investment real estate. For example, you can exchange a condo for a duplex, or a duplex for an apartment building, or a single family residence for bare land - you get the picture. But when it comes to "personal property" (the IRC term for tangible, non-real estate assets) the restrictions on what determines like-kind property narrow and can sometimes be a pain in the neck. For example, if you sell a light duty truck you can't replace it with a car, or can you?

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