I really appreciate all of the visitors I have had since I started this blog. While I have enjoyed putting the information out and I hope you found it useful, I have started a new blog that is less "technical" from a legal perspective. Please check it out if you get a chance:
buildingpurpose.com
Thanks again.
Tuesday, June 11, 2013
Wednesday, February 13, 2013
Mississippi: Refund of Ad Valorem Taxes
The Mississippi Attorney General has issued an opinion that
a county board of supervisors may issue a refund of erroneously paid ad valorem
taxes that were paid in protest by an exempt entity. The exempt entity made payments
for the 2007, 2008, and 2009 tax year in February of 2010 and requested a
refund of the taxes paid in protest on October 17, 2012. A county board of
supervisors has the authority to issue a refund of excess or erroneously
collected taxes paid within three years of the date the petition for such
refund is filed with the tax collector. Miss. Code Ann.§ 27-73-7 authorizes a
tax collector, upon request by a taxpayer, and upon order of the board of
supervisors, to refund erroneously paid taxes. The statute of limitations for
such a refund of ad valorem taxes is controlled by Miss. Code Ann.§ 15-1-49,
which requires that a refund of ad valorem taxes may only be issued for payments
that were made within three years of the date the petition for a refund was
filed.
Tax Credits Available for Clean Energy Manufacturers
The U.S. Departments of Energy and the Treasury on February
7 announced the availability of $150 million in Advanced Energy Manufacturing
tax credits for clean energy and energy efficiency manufacturing projects
across the United States. The program supports manufacturing of a range of
clean energy products, from renewable energy equipment to energy efficiency
products. Established by the American Recovery and Reinvestment Act, the
initial round provided $2.3 billion in credits to 183 projects across the country.
The $150 million in tax credits are being made available because they were not
used by the previous awardees.
The tax credits will be allocated on a competitive basis. Projects will be assessed by the Energy Department based on the following criteria: commercial viability, domestic job creation, technological innovation, speed to project completion, and potential for reducing air pollution and greenhouse gas emissions. The Department will also consider additional factors, including diversity of geographical locations, technology, project size, and regional economic development.
The tax credits will be allocated on a competitive basis. Projects will be assessed by the Energy Department based on the following criteria: commercial viability, domestic job creation, technological innovation, speed to project completion, and potential for reducing air pollution and greenhouse gas emissions. The Department will also consider additional factors, including diversity of geographical locations, technology, project size, and regional economic development.
Wednesday, February 6, 2013
DOE Announces New Funding to Develop Biomass Supply Chain Technologies
The Energy Department on January 28 announced about $6
million for projects that will develop and demonstrate supply-chain
technologies to affordably deliver commercial-scale lignocellulosic biomass
feedstocks such as woody plant tissue to biorefineries across the country. This
funding will help accelerate the development of integrated, cost-effective
supply-chain systems that reduce time and costs to produce biofuels for cars,
trucks, and airplanes.
The Department will make available about $6 million this year for one to two multi-year projects. All selected projects will require a cost share contribution by the grant recipient, including 20% for research and development activities and 50% for demonstration activities.
The Department will make available about $6 million this year for one to two multi-year projects. All selected projects will require a cost share contribution by the grant recipient, including 20% for research and development activities and 50% for demonstration activities.
DOE Expands Technical Assistance for Tribal Energy Projects
The Energy Department on January 30 announced the second
round of the Strategic Technical Assistance Response Team (START) Program,
which provides federally recognized Tribal governments with technical
assistance to accelerate clean energy project deployment. Additionally, the
Energy Department plans to seek information from tribes interested in launching
or expanding utility services in their own communities, which will help
establish a new START Utility Program (START-UP). Additional details on this
effort will be available on the Office of Indian Energy website in the coming
weeks.
Over the past year, the START program has helped nine Tribal communities advance their clean energy technology and infrastructure projects, from solar and wind to biofuels and energy efficiency. The second round of technical assistance awards will build upon the initial successes of the START program and further help Native American and Alaska Native communities increase local generation capacity, enhance energy-efficiency measures, and create local entrepreneurial and job opportunities. In the contiguous United States, Energy Department and national laboratory experts will provide technical assistance on tribes' clean energy project development. In Alaska, the Energy Department and the Denali Commission will help rural Alaska Native communities conduct energy awareness and training programs and pursue new renewable energy and energy efficiency opportunities. Applications are due by March 15, 2013.
Over the past year, the START program has helped nine Tribal communities advance their clean energy technology and infrastructure projects, from solar and wind to biofuels and energy efficiency. The second round of technical assistance awards will build upon the initial successes of the START program and further help Native American and Alaska Native communities increase local generation capacity, enhance energy-efficiency measures, and create local entrepreneurial and job opportunities. In the contiguous United States, Energy Department and national laboratory experts will provide technical assistance on tribes' clean energy project development. In Alaska, the Energy Department and the Denali Commission will help rural Alaska Native communities conduct energy awareness and training programs and pursue new renewable energy and energy efficiency opportunities. Applications are due by March 15, 2013.
Wednesday, January 30, 2013
Some Pending Mississippi Economic Development Bills
The Mississippi Legislature is considering a whole host of bills that could impact Mississippi businesses. Here are a few worth noting:
Strengthening Mississippi Academic Research Through Business Act (“SMART Business Act”) - Encourages private businesses to invest their research dollars in Mississippi universities. The proposal offers a rebate equal to 25% of the research costs to companies who enter into a written agreement with a university for research and development.
Employee Pass-Through Jobs Tax Credit - In lieu of a business utilizing the jobs tax credit, the business may pass all or a portion of the tax credit to one or more employees of the company.
Headquarters Relocation Tax Credit - Provides a tax credit in the amount of actual relocation costs incurred by a business in relocating its corporate headquarters to Mississippi.
Expansion Relocation Tax Credit – Provides a tax credit in the amount of actual relocation costs to existing businesses expanding their workforce in the State of Mississippi. The businesses must qualify for the jobs tax credit provided in the Economic Development Reform Act and must relocate employees to Mississippi from outside the State.
Strengthening Mississippi Academic Research Through Business Act (“SMART Business Act”) - Encourages private businesses to invest their research dollars in Mississippi universities. The proposal offers a rebate equal to 25% of the research costs to companies who enter into a written agreement with a university for research and development.
Employee Pass-Through Jobs Tax Credit - In lieu of a business utilizing the jobs tax credit, the business may pass all or a portion of the tax credit to one or more employees of the company.
Headquarters Relocation Tax Credit - Provides a tax credit in the amount of actual relocation costs incurred by a business in relocating its corporate headquarters to Mississippi.
Expansion Relocation Tax Credit – Provides a tax credit in the amount of actual relocation costs to existing businesses expanding their workforce in the State of Mississippi. The businesses must qualify for the jobs tax credit provided in the Economic Development Reform Act and must relocate employees to Mississippi from outside the State.
Monday, January 28, 2013
Maximizing Depreciation Deductions for Business Real Estate
When buying business real estate, for your own occupancy or
for rental to others, you should take steps that maximize the income tax
depreciation deductions that you can claim for the property. Here are a few
suggestions.
Separating improvements from land. Not all of the cost of acquiring real estate is depreciable. Specifically, the cost of improvements to land is depreciable, but the cost of the land itself is not. Clearly, then, it is desirable to identify and document, at the time that you acquire real estate, the part of your overall acquisition cost allocable to improvements. Thus, when you buy a property, you should either retain a qualified real estate appraiser to make an allocation between land and improvements based on a detailed written analysis, or, if you have enough valuation expertise and knowledge of the locality, write your own detailed analysis and allocation. Also, regarding the allocation, you should be aware that the cost of improvements includes not only the cost of buildings, but also the cost of items such as landscaping and roads, and even some costs of grading and clearing.
Turning land into a deductible asset. Even though land isn't depreciable, there are ways to obtain deductions, for your land cost, that provide a similar tax benefit. One technique is to enter into a long-term lease of the land rather than buy it. If you lease the land, the rents you pay under that “ground lease” are deductible. A different technique, but one which also can turn land into a deductible asset, is the acquisition of an interest in land known as an “estate-for-years.” Under an estate-for-years, you would own the land, but not forever, while an individual or entity “unrelated” to you would own the interest in land that begins when your estate-for-years ends. As the owner of the estate-for-years, you would be allowed to “amortize” (deduct ratably) the cost of the estate-for-years over its duration. Thus, for example, if your estate-for-years is for 50 years, you would be allowed to deduct each year 1/50th of the cost of the estate-for-years.
Separating personal property from buildings. Most business buildings must be depreciated over a period of 39 years, with somewhat more favorable treatment for residential rental real estate (27.5 years) and for certain other types of buildings or building improvements. On the other hand, most personal property (furniture, equipment, etc.) is depreciable over considerably shorter periods. Furthermore, most new personal property is eligible for additional first-year depreciation (bonus depreciation) equal to 50% or 100% of its cost (depending on when the property was acquired and placed in service). In contrast, among buildings or building improvements, only certain leasehold improvements qualify for bonus depreciation. As you can see, if a specific item is classified as personal property rather than as a part of a building, the depreciation deductions for that item will be available sooner and, in economic terms, have a greater “present value” to the property owner. Thus, in the same way that it is desirable to properly allocate between improvements and land, it is important to take steps to identify and document, at the time that you acquire real estate, the items that are personal property and the items that are building parts. For some items, the distinction follows “common sense”, an ordinary chair is personal property, a weight-bearing brick wall is part of a building. However, for many items, for example, lighting fixtures, signs, floor coverings, wall coverings, plumbing, electrical systems and heating and cooling systems, the distinctions are governed by tax rules that can be complex, can involve projections as to the future use of the items, and may even necessitate consultation with engineers or other construction experts. Also, after the personal property and building items are separately identified, they must be separately valued, either by an appraisal, a breakdown of construction costs or both.
Separating improvements from land. Not all of the cost of acquiring real estate is depreciable. Specifically, the cost of improvements to land is depreciable, but the cost of the land itself is not. Clearly, then, it is desirable to identify and document, at the time that you acquire real estate, the part of your overall acquisition cost allocable to improvements. Thus, when you buy a property, you should either retain a qualified real estate appraiser to make an allocation between land and improvements based on a detailed written analysis, or, if you have enough valuation expertise and knowledge of the locality, write your own detailed analysis and allocation. Also, regarding the allocation, you should be aware that the cost of improvements includes not only the cost of buildings, but also the cost of items such as landscaping and roads, and even some costs of grading and clearing.
Turning land into a deductible asset. Even though land isn't depreciable, there are ways to obtain deductions, for your land cost, that provide a similar tax benefit. One technique is to enter into a long-term lease of the land rather than buy it. If you lease the land, the rents you pay under that “ground lease” are deductible. A different technique, but one which also can turn land into a deductible asset, is the acquisition of an interest in land known as an “estate-for-years.” Under an estate-for-years, you would own the land, but not forever, while an individual or entity “unrelated” to you would own the interest in land that begins when your estate-for-years ends. As the owner of the estate-for-years, you would be allowed to “amortize” (deduct ratably) the cost of the estate-for-years over its duration. Thus, for example, if your estate-for-years is for 50 years, you would be allowed to deduct each year 1/50th of the cost of the estate-for-years.
Separating personal property from buildings. Most business buildings must be depreciated over a period of 39 years, with somewhat more favorable treatment for residential rental real estate (27.5 years) and for certain other types of buildings or building improvements. On the other hand, most personal property (furniture, equipment, etc.) is depreciable over considerably shorter periods. Furthermore, most new personal property is eligible for additional first-year depreciation (bonus depreciation) equal to 50% or 100% of its cost (depending on when the property was acquired and placed in service). In contrast, among buildings or building improvements, only certain leasehold improvements qualify for bonus depreciation. As you can see, if a specific item is classified as personal property rather than as a part of a building, the depreciation deductions for that item will be available sooner and, in economic terms, have a greater “present value” to the property owner. Thus, in the same way that it is desirable to properly allocate between improvements and land, it is important to take steps to identify and document, at the time that you acquire real estate, the items that are personal property and the items that are building parts. For some items, the distinction follows “common sense”, an ordinary chair is personal property, a weight-bearing brick wall is part of a building. However, for many items, for example, lighting fixtures, signs, floor coverings, wall coverings, plumbing, electrical systems and heating and cooling systems, the distinctions are governed by tax rules that can be complex, can involve projections as to the future use of the items, and may even necessitate consultation with engineers or other construction experts. Also, after the personal property and building items are separately identified, they must be separately valued, either by an appraisal, a breakdown of construction costs or both.
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