The effective management of fixed assets is an increasing challenge. The complexity of calculating depreciation, coupled with tax law changes, merger and acquisition activity, and ERP system and cloud migrations has increased the need for companies to have a clear strategy around the management of fixed asset tax reporting.
Federal tax credits and incentives
The Inflation Reduction Act of 2022 created or expanded many tax credits to promote clean energy, not only for energy producers but for any business that produces carbon emissions, uses alternative energy sources for its own electricity consumption or for heating or cooling, owns commercial real estate, or uses vehicles in its trade or business.
What is new: Round 2 announced for Section 48C credit allocations
The application window opens on May 22 for $6 billion of additional Section 48C tax credit allocations. Clients with projects that expand clean energy manufacturing, reduce greenhouse gas emissions, or re-equip, expand, or establish a facility for the processing critical materials could qualify for an investment tax credit of up to 30%.
Maintaining compliance and managing cash flow
PwC can help to analyze the timing of income and deductions, cost capitalization issues, and depreciation calculations - including bonus, leasing, and other accounting method issues, so that companies can evaluate their ability to utilize, change, or adopt advantageous accounting methods and achieve their overall tax objectives.
We can help:
- Review your entire fixed asset register to assess whether any fixed assets may be reclassified through a method change to a shorter, or more appropriate, tax recovery period, resulting in a ‘catch-up’ adjustment.
- Consider the year of change and determine the procedural requirements and other considerations for filing the method change, usually requiring filing Form 3115, Application for Change in Accounting Method.
- Determine appropriate fixed asset basis for GILTI inclusion and FDII calculations.
- Consider the interaction with other tax provisions (e.g., interest expense deduction limitation).
Our Prevailing Wage and Apprenticeship (PWA) Compliance Services
Complying with PWA requirements drives the difference between a 30% and 6% credit - is your company capitalizing on the increased credit opportunity? Our specialists can provide in-depth education on the rules, establish highly effective compliance programs, and leverage cutting-edge technology to streamline the entire process.
Direct pay regs provide clarity, but more guidance needed
Randa Barsoum discusses recently-issued regulations on direct payment of certain clean energy tax credits and the CHIPS Act advanced manufacturing investment credit and additional guidance on key issues needed by companies.
Certainty, relief in new energy credit rules
While the outlook for tax legislation remains uncertain with the return of Congress, new Treasury guidance informs companies what they need to know to monetize unused clean energy tax credits by transferring them to third parties - tax free - according to a final rule issued recently.
Learn more about STS Fixed asset services
- Tax Fixed Asset Methods and Election Studies
- Fixed Asset Tax Basis Balance Sheet Process and Remediation
- Tax Depreciation Services (TDS)
- Geospatial Solutions
- Renewable Energy
- Like-Kind Exchange Services
Tax Fixed Asset Methods and Election Studies
Current and Historical Fixed Asset Methods and Election Studies
PwC works with companies to initially classify new fixed assets and update historical fixed asset classifications as well as remediate the effects of under- or over-depreciated assets. Specifically PwC works with companies to properly allocate and classify fixed assets placed in service during the current year as Section 1245 or Section 1250 property (often buildings that have been recently constructed or acquired) as well as deductible Section 162 expenditures, including helping with Section 1060 purchase price allocations. PwC also can help companies with fixed asset planning related to certain international-focused tax provisions.
Fixed Asset Tax Basis Balance Sheet Process and Remediation
PwC works with companies to leverage technology in the labor intensive process of maintaining tax basis reconciliations as well as assist companies with remediation of variances in the cumulative tax basis balance sheet.
Tax Depreciation Services (TDS)
PwC leverages its fixed asset professionals and proprietary software to (1) help companies accurately track fixed asset depreciation, gain/loss, and book-tax differences for tax reporting purposes and (2) provide an automated interpretation of asset activity and attributes including location and intercompany transactions and reconcile book ledger activity on an asset by asset basis to tax. This technology enabled service offering helps clients maintain consistent reporting for federal and state income tax reporting and has additional benefits related to property tax maintenance and tax basis balance sheet support.
Geospatial Solutions
PwC has developed technology that uses location data to unlock tax savings and insights. For example, GPS data and telematic information from a client’s fleet can be utilized to claim fuel tax refunds and automate fleet tax compliance.
Renewable Energy
PwC works with companies to (1) identify credits and incentives available for qualifying new construction, leasehold improvements, or retrofits, (2) develop tax efficient strategies for investments in alternative and renewable energy to realize the full value of these incentives, and (3) manage risks by assisting companies with the certification requirements and computations to establish sound calculation and documentation methodologies.
Like-Kind Exchange Services
PwC works with companies to structure capital expenditures
(i.e. acquisitions, new construction, and renovations) in a manner that qualifies the resulting property as replacement property in a like-kind exchange (LKE).
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