Issue link: http://read.dmtmag.com/i/267019
w w w. v w m m e d i a . c o m M a r - A p r 2 014 | V I N E YA R D & W I N E RY M A N A G E M E N T 9 7 tion is an improved approach to the rules originally outlined in the temporary regulations. This will be important to companies that are or have made improve- ments to existing buildings. + Yo u m a y e l e c t t o e x p e n s e items in accordance with your financial statement capitaliza- tion policy for purchases up to a specified amount per item if you've expensed the items in a c c o r d a n c e w i t h y o u r p o l i c y for your financial statements. For certain taxpayers, the com- pany's capitalization policy must be in writing as of the begin- ning of the year. As a result, those taxpayers that plan to use this provision beginning in 2014 must have had their policy documents as of Jan. 1, 2014. This is an annual election that requires taxpayers to attach an election statement to the tax return. + You may elect to apply any or all of the provisions on your 2012 or 2013 tax return, even if you've already filed your 2012 return. The window to amend your 2012 return is 180 days after its extended due date. + The annual election require- ment for several provisions will require taxpayers and their advi- sors to discuss these issues each tax year. Once an election is made (or not made), there is limit. This provision is not avail- able in 2014. These rules are complex and should be carefully reviewed with your tax advisor. BONUS DEPRECIATION FOR QUALIFYING PURCHASES + For qualified assets acquired a n d p l a c e d i n s e r v i c e d u r- ing 2013, 50% of the cost can b e d e d u c t e d i n t h e c u r r e n t year using accelerated bonus depreciation. + This bonus depreciation provi- sion expired at the end of 2013. + Be sure to check your state's rules regarding bonus depre- ciation and Section 179 depre- ciation deductions, since not all states conform to federal depre- ciation laws. A l l i n d i c a t i o n s a r e t h a t a n y changes to extend bonus depre- ciation, or to increase Section 179, won't occur until at least the sec- ond quarter of 2014. This is fluid, however, given the situation in Washington, D.C. We encourage you to take the time – sooner rather than later – to evaluate your options and talk with your tax advisor about your specif- ic tax and financial situation before implementing any of the above strategies. Jeffrey L. Shilling, director of tax for Moss Adams, has more than 20 years of experience, which includes hundreds of cost seg- regation, allocation of purchase price, and deprecation studies across a wide variety of industries (wineries are just his favorite). Michael Ricioli, tax partner for Moss Adams, has been in public accounting since 2000. He leads the firm's wine tax practice and special- izes in serving clients in the wine, agribusiness and food processing industries. Comments? Please e-mail us at feedback@vwmmedia.com. generally no way to change it after the return is filed. The mandatory effective date of Jan. 1, 2014, has already passed, making it essential that business owners understand the impact the regulations will have on the com- pany and to create an implemen- tation plan – as soon as possible – to minimize surprises later. We strongly recommend you review your asset capitalization policies to see that they're in compliance with the new regulations and consult with your tax advisor to help you implement necessary changes. DEPRECIABLE REAL ESTATE AND BUSINESS EQUIPMENT + The Section 179 depreciation deduction for qualifying assets acquired in 2013 was $500,000. This deduction begins to phase o u t o n c e t o t a l d e p r e c i a b l e assets purchased during the year exceeded $2 million, and it decreases dollar-for-dollar above that threshold. The deduction is $25,000 for 2014 and there- after, and the in-service limita- tion is scheduled to decrease to $200,000. + In 2013 certain real property (defined as certain leasehold improvements, restaurant prop- erty and retail improvement property) qualified for the Sec- tion 179 expense deduction of up to $250,000 of the $500,000 + New final tangible property regulations are set to take effect for tax years beginning on or after Jan. 1, 2014. + The new regulations apply to all taxpayers that acquire, produce or improve tangible property. + A unit of property has been improved when activities are performed after the property has been placed in service, which result in betterment, resto- ration or adaptation of the property to a new or different use. + The Section 179 depreciation deduction for qualifying assets acquired in 2013 was $500,000; the deduction is $25,000 for 2014 and thereafter. AT A GLANCE