Time to Clean House with Asset Retirement
Regardless of the size of your business, somebody should be responsible for maintaining your company's fixed asset or depreciation schedule. Since in most cases this is not a full-time job, it may be neglected. Updating accounting records is unavoidable for most of us. However, many of us are incredibly busy. Who has time to pull out a fixed asset list - just to make an addition? If your company is large enough to employ an asset manager, you may be up to speed with fixed assets. If not, who is responsible for managing this schedule and do they have the information they need? New tax regulations that went into effect Jan. 1 allow organizations to go back and write off those assets on the books that are long gone. The regulations even allow for partial dispositions of "units of property" that previously were not permitted.
Once 2014 passes, so will the opportunity to recognize a late partial disposition. Going forward, once the regulations are adopted, there will be no provision to go back and retire assets that were disposed of in prior years. Partial dispositions will only be available on timely filed income tax returns, including extensions. Maybe now we will more enthusiastically pull those schedules, mark them up and consult a professional to help with asset retirement.
Cathy Harris, CPA, Director, Harbor Tax Group. Cathy has followed the proposed, temporary and final regulations on tangible property since 2006.