RS Investments launches three fixed-income funds
RS Investments launches three fixed-income funds By Hilary Johnson December 31, 2009, 6:01 AM EST Post a Comment RS Investments, a San Francisco-based investment management firm, launched three new fixed-income funds today to offer retail ...


years of ownership by allocating a portion of the cost basis to 5, 7 and 15 year property. Short-life property includes items such as carpet, vinyl tile, some signs, sidewalks, landscaping and paving. In addition, real estate owners can "catch-up" depreciation under reported in prior years without filing amended tax returns.

Fixed asset audits can be a cost effective means to increase operating expenses by removing phantom assets, removing operating expenses mistakenly coded as capital expenditures and correcting the depreciable life for incorrectly coded items. In most cases, the tax savings from a fixed asset audit will be much higher than the fees for the audit. Phantom assets can include assets which have been lost, stolen or disposed of without removing them from the accounting records. The undepreciated basis of these assets can be converted to an operating expense after the error is discovered. In some cases, substantial operating expenses are incorrectly added to the fixed asset listing as capital expenditures. This could include items such as substantial roof repair or parking lot repair. Another example is extensive repairs to a massive chilled water cooling system; are these repairs or a capital improvement? Accounting professionals could vehemently argue both points of view. The undepreciated basis of these items can be converted to an operating expense and written off when the error is discovered. The fixed asset listing is massive for many companies, sometimes exceeding 1,000 pages. With so many assets, it is difficult to ensure all are accurate. After an acquisition, aggregating the faxed assets schedules often results in assets receiving minimal review due to time pressures to complete the project. For items added with an incorrect and excessive depreciable life, it is possible to revise the asset life and "catch-up" depreciation under reported in prior years without filing an amended tax return. Instead, a form 3115 is filed with the tax return.

The difference between capital expenditures and operating expenses is often subjective. Are substantial roof repairs a capital expense or an operating expense? Reviewing disbursements which were listed as capital expenditures in 2006 may uncover items which can be converted to operating expenses.

Federal income taxes are a substantial expense for successful businesses. However, since it is difficult to profitably operate a business, it is worth reviewing legitimate options to keep more of what you have earned. Tax planning is less glamorous than purchasing a new company or developing a new division. However, a modest effort focused on reducing federal income taxes can sharply increase net income.

Patrick O’Connor, MAI is president of O’Connor & Associates, a 180-person real estate services firm in business since 1974. Further information on reducing income taxes is available at: http://www.poconnor.com/federal_tax_reduction_overview.asp.
O’Connor can be reached at 713 686 9955 or poconnor@poconnor.com.

Article Source: http://activeauthors.com

Patrick O’Connor, MAI is president of O’Connor & Associates, a 180-person real estate services firm in business since 1974. He can be reached at 713 686 9955 or poconnor@poconnor.com.


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