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03/23/2018

New Member - Tax Question

Hayes Water Storage - Darren Stillwell

I am new to NCSSA and I am sure I will have many questions for you in the future. I purchased on existing storage facility of 87 units in July of 2017 and had the staff stay on. My question today is in regards to taxes for 2017. I am torn around where the metal buildings can be depreciated over 20 years. On top of that, I want to do the 179 bonus depreciation which would allow me to depreciate half now. The only thing is that my tax preparer advising me not to do this due to audit concerns (even though I keep all my paperwork). She is worried that above and beyond the audit concern, I will have to depreciate over 39.5 years...which is typical for commercial business, Has anyone else did bonus depreciation and did you have any issues such as an audit.

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3 Comments

Kevin Leebrick on Friday 03/23/2018 at 01:42PM wrote:

Darren,

It's a great question. I hope that someone else has an answer here.

Thanks for posting.

Barbara Hancock on Thursday 03/29/2018 at 01:11PM wrote:

Commercial rental property buildings are to be depreciated over 39.5 years. Be aware that the bonus depreciation is an add back for North Carolina state tax return, meaning NC doesn't allow the bonus depreciation to be taken all in one year but spread out over several years.

Wes Evans on Wednesday 04/11/2018 at 12:18PM wrote:

Hi Darren – Fixed structure metal buildings are treated the same as any other fixed structure building. The existing building you purchased in July 2017 will have to be depreciated over 39.5 years unless you use the cost segregation method of depreciation. If you use the cost segregation method, you can take advantage of 50% bonus depreciation in the first year on the 5,7,& 15 year property that is segmented out of your building. Properties acquired or built after 9/27/17 can take advantage of 100% bonus depreciation. Section 179 is not applicable to the initial building purchase. It would only apply to up to $500K of new or used equipment purchased or leased after the building was purchased and placed in service in 2017. There is no audit concern with using the cost segregation depreciation as it is an approved methodology in the Audit Technique Guidelines issued in the Federal Tax Code. You can still take advantage of the tax savings associated with cost segregation bonus depreciation in 2017 if you file for an extension. I’ll be happy to run a free complementary analysis for you. - Wes Evans, Cost segregation Services, Inc. 919-630-8229.

Disclaimer: The opinions expressed in the comments shown above are those of the individual comment authors and do not reflect the opinions of this organization.