What you won’t find at the NADA site...but desperately need to know

We went to the NADA site and looked around for information on Tangible Asset Regulations. There is lots of information….but all the Tax Professionals and CPAs missed one of the most important aspects of the temporary Tangible Asset Regulations as it pertains to dealerships.

Auto dealers that have completed major renovations in past years can now write down all the building components that were removed from the building.  The problem is that the tax professionals have no data on what was removed and what it was worth. 

A plain English explanation 

For most Auto Dealership remodel projects in the past, there was no tax mechanism to write down all the parts and pieces of your building that were removed.  The tax law usually required your CPA to keep the value of those parts and pieces on the books.  No write off and no tax deduction for the owner.

Tax professionals never inventoried what was being removed because there was no mechanism to write it off.  It had no tax value because there was no deductions to be taken.  So those parts are long gone, but their value is still buried in the books slowly depreciating over 39 years.
You may have had to replace a roof. The original roof was never written off.  That original roof is still on your depreciation schedule, buried in one big number labeled  “Building- 39 year property”. 

The new roof probably has its own line item on the schedule as “New Roof-39 year property.”  You still have 2 roofs on the book and slowly depreciating them both....Until Now.

“Who moved my Cheese?”

The rules of the game have changed in your favor.  The new Tangible Asset Regulations affect virtually every building owner...and especially Auto Dealerships.  With all the Manufacturer mandated show room renovations and new branding wall exteriors, Auto Dealership owners have substantial write offs from the past 15 years that can be taken in 2012 due to Tangible Regs write downs and Cost Segregation Deductions..

Showroom renovations, roof replacement, HVAC replacements, bathroom and office remodels all qualify.  That's the good news.

 "The IRS got your cheese."

The unintended challenge the IRS created is that they didn’t give the tax community a nice neat formula to figure out what a showroom renovation or a roof is worth because every showroom and roof is different.  The only advice that they gave Tax Professionals is that Cost Segregation is an acceptable method to value the removed parts and pieces.

“So what’s the solution?”

For over 10 years, and 7,000 studies, CSSI has perfected the art, science and engineering process of valuing parts and pieces of buildings in the tax application of Cost Segregation.

Show us a picture, gives us the old plans, tell us all about it and we can determine what and how much of the building was removed and thrown away and what was it was worth. 

CSSI specializes in doing the hard work that produces the numbers and documents that give your Tax Professional exactly what they need to scrub the depreciation schedules and write off those nonexistent parts.  On average, we return between $30,000 - $80,000 to the dealership.

“What’s in your dumpster?”

CSSI can turn those past dumpsters of debris into mounds of cash. 

Contact your local CSSI associate to discuss your past remodel projects to determine how much of your cash was hauled away with the trash and how CSSI will work with your tax professional to get it back.  It's your money.  Don't you want it back?

Engineer Finds $53,300 in Demolition Debris at Dealership

Temporary Tangible Property Regs are turning dumpsters of demolition debris into mounds of Tax Deductions.

What's in your dumpster?

CSSI is leading the nation in educating and strategizing with Tax Professionals to do the hard work of calculating and valuing the depreciation deductions of building components that were removed and thrown in the dumpster in past years.

The IRS has given little direction on how to get this done other than stating that cost segregation is an acceptable method.

This has caused a big problem for Tax Professionals that service the Auto Dealers.  Most Tax Professionals have not called their dealers to discuss this savings opportunity yet because they are looking for help to value the removed assets.

At CSSI, we already have an Asset Valuation Strategy in place to work with your CPA to meet the Tangible Asset Regs Disposition.

CSSI actually performed numerous Asset Valuation Studies on Auto Dealerships to help the owner and their CPA take advantage of the new Tangible Property Regs.

Here is an example of how CSSI assisted and Auto Dealer to reduce his taxes and maximize his cash flow. The auto dealer hired CSSI to conduct a Cost Segregation Study on a $1.56 million auto dealership.  The owners removed the whole front of the facility, showroom, bathrooms, kitchen and replaced it with a up to date Branding Wall and showroom to meet the manufacturer's branding specs. 

CSSI was able to get the client over $53K in cash by writing off the building components that were removed and an additional $216K in cash flow from accelerated depreciation thur the application of Cost Segregation to the remaining building and new additions.  Total additional cash flow to the dealer in the first 5 years was over $314K.

Here are a few more examples of past projects where the Tangible Asset Regs worked in a client's favor.


Dealer              Demolished Property Cost              Tax Benefit from Disposal
GMC                               $93K                                              $34K             
Toyota                             $173K                                            $62K
Chevrolet                         $232K                                            $81K

“What did it cost?” 

After taxes, the client typically receives a 10:1 to 20:1 return on his investment in the Cost Segregation and additional Asset Valuation Study. 

CSSI provides the "know how" and the "know what" to meet the Tangible Asset Regs for Disposition.

“Going over the fiscal cliff is not so bad when you are wearing a parachute.” 

Let CSSI determine "What's in your Dumpster" and help reduce your tax liabilities in 2012.

Contact your local CSSI rep for a free consultation or to receive a no-cost preliminary analysis illustrating the estimated tax savings and increased cash flow from an Asset Valuation Study or a full building Cost Segregation Study.

We found the best Book on Tangible Asset Regulation.

We’ve spent a lot of time looking thru all the Tangible Asset Regulations info on the Web so you don’t have to.  We think this EBook is the “best of the best” overview of the regs. 

CCH has released a special Tax Briefing: Comprehensive Repair/Capitalization Regulation to help professionals interpret and apply these often complex regulations that affect all businesses in one way or another.
If you have had a renovation in your past, skip to page 17 and read Disposition of MACRS Property.  Turn your renovation debris into dollar for the 2012 tax year. 

After you've read the regs, give your local CSSI rep a call to obtain a no obligation evaluation of your renovation project and what deductions are available to you thru the Tangible Asset Regulations.

Click here to get your free copy of Comprehensive Repair/Capitalization Regulation.

CCH is a leading global provider of tax, accounting and audit information, software and services (CCHGroup.com)

What Is Cost Segregation?

Cost segregation is the IRS approved method of re-classifying components and improvements of your commercial building from real property to personal property. This process allows the assets to be depreciated on a 5, 7, or 15-year schedule instead of the traditional 27.5 or 39-year depreciation schedule of real property. Thus your current taxable income will be greatly reduced and your cash flow will increase.

Request your complimentary CSSI Property Analysis

When Should A Study Be Done?

It is best to have a study completed for the year the building or improvements are placed in service. 

However, IRS Revenue Procedures allow taxpayers to "catch up" on the depreciation that was not claimed from the first day the property was placed in service without amending prior years' tax returns. Furthermore, the IRS recently allowed for the "catch up" period all in the first year rather than over four years, when the Revenue Procedure 99-49 was first introduced. 

A cost segregation study can be performed on any property constructed, acquired or remodeled since Jan. 1, 1986.

Check Out More Frequently Asked Questions

3 Simple Steps To Reduce Taxes & Increase Cash Flow

Step 1: Analyze
Request your complimentary CSSI Property Analysis.

Step: 2: Review
Based on CSSI's Property Analysis, CSSI will consult with you and your advisors regarding your effective tax savings.

Step 3: Complete
Your CSSI Study is performed and completed within 4-6 weeks.