November 3, 2017
FINDING TAX SAVINGS WITH AN ASSET INVENTORY
An often-overlooked avenue for property tax savings is an asset inventory. While the main function of an inventory is to reconcile the fixed asset listing (FAL) to the the equipment located in-house, it can also be a tax savings tool.
When identifying assets through the course of the inventory, there are invariably assets on the FAL that have been disposed of in one manner or another. Removing these “ghost assets” can result in significant tax savings.
Additionally, the asset’s current productive use can be confirmed. Most states allow for personal property to be filed as “idle” if the assets are no longer being used, such as an old press from a retired process. Idle equipment is taxed at a much lower rate than equipment being used in production.
Finally, simply reviewing the assets listed on the FAL can reveal misclassifications that affect your tax basis. If an item of real property was incorrectly included on the FAL, or if an asset was misclassified (such as computer equipment entered into the furniture/fixtures account), those errors may be identified while conducting an inventory.
Asset inventories can generally be conducted in-house over the course of a few weeks or months – but the longer the project takes, the more inaccurate the data can be. However, asset inventories can be completed in just a matter of days by contracting with an outside firm like Valu Tec, who will focus on the project specifically.
More information can be found on our website (https://valutec.com/fixed-asset-inventory/), or by calling us directly.