ANALYSIS
Kim Mahanna specializes in transportation and business tax planning for Smith, Schafer & Associates, Ltd., in Rochester, Minn. For more information on this topic or tax-planning questions, visit
www.smithschafer.com.
What does all of this mean for your business? From school buses to real estate, the way in which you record expenditures made to update, replace and repair any tangible property will need to be closely evaluated. Example: You purchased a building five years ago that has a 39-
year depreciable life. Four years ago, you took the front canopy off of the building, replaced some windows and changed the exterior facade. Under the regulations, the removal of the canopy would have required you to conduct an engineering study on the costs of the building in order to allocate a portion of the original cost of the building, which would have been abandoned and written off at the time of removal. If the facade and the new windows improved the value of the asset, then those costs would be capitalized and depreciated over 39
years. Te statute of limitations for these costs and depreciation for the assets appears to stay open from the point of purchase to the date of disposition of the asset in full. If the cost of the canopy should have been abandoned at the time its removal, then the subsequent depreciation of those costs would not be deductible. (Editor's note — See an example chart on page 68.) If you receive notification of an audit and the IRS is using the
above-mentioned regulations, then any asset you have improved or abandoned during the three years prior will result in a reallocation of depreciation expense over the three-year period, as well as over the remaining life. However, improvements or abandonments made to an asset prior to the three-year timeframe could result in non- deductible current and future depreciation without offset for loss on abandonment.
Outsourcing means savings.
Routings, vehicle maintenance, school bell time management, capital investment, operator training and many other specialties.
Pupil Transportation is a complex business that includes many aspects such as routing, vehicle maintenance, school bell time management, capital investment, operator training and many other specialties. But when you get right down to it, the two most important reasons school districts and private school systems outsource their student transportation are safety and savings. By far, according to independent research, the safest way for children to get to and from school is on yellow school buses. It’s safer than walking, riding a bike, public transportation, taxis and even being dropped off and picked up by a parent. Independent research also tells us that outsourcing can save school districts 10% or more in their transportation costs.
www.atlanticexpress.com 7 North Street, Staten Island, NY 10302
busdev@atlanticexpress.com 1-800-336-3886 ext. 8073
70 School Transportation News March 2013
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