410-466-3779

QuickBooks Accounting

Why Hire a QuickBooks Certified ProAdvisor

QuickBooks Certified ProAdvisors are accountants that have gone through a rigorous training process developed by Intuit, the company that developed QuickBooks.  And at the end of this training, a series of tests must be passed in order to become certified.

QB Pros

Why Hire a Certified ProAdvisor? 

A Certified ProAdvisor can provide accounting and tax assistance well beyond a technical staff person at Intuit.  Often, they have extensive experience that can save you precious time and money rather than trying to figure out something yourself.

Graber QBSecond, a Certified ProAdvisor often knows what is currently available on the market today to solve your day-to-day challenges either with a QuickBooks product or another vendor that integrates with QuickBooks software.  Surprisingly, there are many apps and software vendors that make QuickBooks operate more effectively and save you time.

And third, a Certified ProAdvisor will attend conferences to learn what changes are around the corner.  For example, the cloud accounting changes to QuickBooks are rapidly changing so staying abreast of these changes will be key to better serving your business needs.

At Graber & Associates, we are QuickBooks Certified ProAdvisors and a Baltimore CPA Firm.  We have been serving the Baltimore market since 1993.  Our overall goal is to minimize your tax obligations legally and QuickBooks is a tool to help us minimize your taxes.  To learn more, call 410-466-3779 and ask for Steven Graber, CPA.

To better service you, we have two convenient offices, International Drive in the Inner Harbor and in Baltimore near Pikesville.

Depreciating Property for Tax Purposes

Depreciation2Depreciation deductions can be extremely valuable for a business. For example, in a recent court case, a federal judge ruled a company could begin taking its depreciation deductions for two buildings housing retail stores at a point prior to when they were “open for business.” The ruling allowed the company to show a loss for that tax year, which the company then used to offset income in earlier years and ultimately claim a total tax refund of over $2 million.*

Although this case involved a special 50% depreciation allowance made available by the Gulf Opportunity Zone Act of 2005, the fact remains that even regular depreciation deductions can significantly reduce a company’s tax bill.

General Rules

If business property has a useful life greater than one year, the owner generally is prohibited from deducting the full cost of the property in the year it is placed in service. Instead, a portion of the cost may be deducted each year as depreciation. The depreciation rules apply to most types of tangible property, with notable exceptions being inventory and unimproved land.

Different schedules specify the proper depreciation calculations for different types of property. The most widely used schedules are set forth under the Modified Accelerated Cost Recovery System (MACRS). MACRS assigns property to a recovery class based on the property’s “class life.”

For example, office equipment is assigned to the seven-year MACRS class. Assume a business purchased a piece of equipment for $20,000 and placed it in service in 2012. The property would be in its fourth year of service in 2015. Applicable IRS tables indicate that the appropriate deduction percentage is 12.49% of the cost, so the business could deduct $2,498 for that equipment in 2015.**

Placed in Service

As the above-mentioned court decision suggests, the date property is placed in service can be an important consideration. Though the IRS has specific definitions for different types of assets, generally, property is first placed in service on the date the taxpayer first places it “in a condition or state of readiness and availability for a specifically defined function.”

Because the definition is broad, taxpayers sometimes litigate how it should be applied to specific situations. In the decision mentioned above, the key issue was the “placed-in-service” date of two buildings that would eventually be used as building supply stores. The IRS had argued that the “placed-in-service” requirement meant that the buildings had to be open for business for retail customers. The court disagreed, however, holding that the buildings were placed in service when they were substantially complete and limited certificates of occupancy had been issued so that workers could enter the buildings to install necessary racks and shelving.

Related Provisions

Businesses may be able to benefit from the tax law’s Section 179 provisions to garner faster write-offs for some of their asset purchases. Currently, businesses will be allowed to expense up to $25,000 of qualifying property placed in service during the 2015 tax year, with that limit subject to further reduction once the amount placed in service exceeds $200,000.*** In addition, a current deduction may be available for certain limited amounts paid for property that the business expenses for financial accounting purposes. We can tell you more about these “de minimis safe harbor” regulations.

If you are tired of overpaying taxes, then call 410-466-3779 and ask for Steve Graber.  Lower your overall tax liability using depreciation is right up our alley.

 

Graber and Associates is a Baltimore CPA Accounting Firm with two convenient office locations, Downtown Baltimore and Pikesville.  To better service our small business clients who use QuickBooks, we are Certified QuickBooks ProAdvisors.

 

 

 

* Stine, LLC v. USA (DC LA, 1/27/2015)

** Calculation assumes the half-year depreciation convention.

*** Congress kept the Section 179 limit at $500,000 for 2014 in late-year extender legislation.