FIXED ASSET REVIEW ANALYSIS
(ALSO KNOWN AS FIXED ASSET RECLASS)

In 1996, Revenue Procedure 96-31 was established, and the application of this Rev. Proc. could significantly increase cash flow for federal taxpayers.  Rev. Proc. 96-31 is also known as the initiation of the Accelerated Cost Recovery Method, which affects the classification of capitalized fixed assets.

Rev. Proc. 96-31 allows taxpayers that have claimed less depreciation than to which they were entitled, to look at past tax years, identify the missed opportunities, and claim all prior missed benefits in the current year of filing.  Rev. Proc. 96-31 allows taxpayer to claim all missed benefits in closed tax years as well, and those years remain closed.

Revenue Procedure 96-31 has been modified over the years through several subsequent Rev. Procs.: Rev. Proc. 97-27; Rev. Proc. 97-37; Rev. Proc. 98-61; Rev. Proc. 99-49; Rev. Proc. 02-09; Rev. Proc. 02-19, but the benefits of Fixed Asset Review are potentially very significant.

Unclaimed depreciation from all applicable past tax years are combined, and claimed in the current year of filing.  By combining missed depreciation from several, or many years, into one year, the taxpayer is positioned for a cash flow windfall.

Usually taxpayers are conservative in fixed asset life classifications for a variety of reasons, and may be unaware of all of the favorable changes in depreciation in the last several years.  It is imperative for taxpayers to not only properly classify an asset as real or personal property, but also to clearly substantiate the classification through invoices, engineering analysis and other documentation.

Fixed Asset Review Analysis is a comprehensive review reclassification of certain assets on a taxpayer’s fixed asset lists.  A building that qualifies for a Lookback Cost Seg study is usually only one asset on a list of fixed assets that may number into the thousands of assets.  Very few professional Valuation firms have the knowledge or depth of experience to provide comprehensive Fixed Asset Review Analysis services. 

Kevil Valuation is one of the pioneering firms of this complex service.