Common CMEA Accounting Applications
Here are some common applications where accountants appreciate the withstandable scrutiny of documents delivered by Appraisals Communique CMEAs (Certified Machinery & Equipment Appraiser).
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1031 Exchanges1031 Exhanges are still one of the best-kept secrets of the IRS. To defer taxes, assets require a legitimate valuation for a like-kind exchange to pass IRS scrutiny. |
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Buy/Sell AgreementWhen assets from a business are sold, fixed and tangible assets often must be valued separately from the business' intangible assets. |
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Converting from C Corp to S CorpThe Federal Tax Code requires an appraisal of the assets in order to convert from a C Corporation to an S Corporation. |
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Cost SegregationCost segregation is a process to identify personal property assets that often get buried or lumped together within real property asset. To maximize depreciation deduction, each of the personal property assets would have to be valued separately with a certified report to substantiate the taxable value. |
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Employee Stock Ownership Plans (ESOPs)If your business is considering or already has an employee stock ownership plan (ESOP), know that initial asset values contributed must start out with accurate appraisals of tangible assets such as machinery/equipment. Book value is not accurate and will not hold up in a dispute. |
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Estate PlanningTo ensure that, after the death of a client, his/her property passes exactly to those whom he trusts and loves, legal trusts and wills must contain accurate values for all items. |
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Financing / SBA LoansBusinesses often use their tangible assets as collateral to support loans. Often, the loan amount is derived from 40 to 60% of the value of the pledged assets. To obtain the maximum loan amount, a business owner would need to provide a certified appraisal report. |
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GiftingThe IRS requires an appraisal for each item gifted. |
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LiquidationsWhen it is time for your client to cash out on his/her business, he/she must have accurate books regarding asset values to transition smoothly from business ownership to liquid cash for the next adventure. |
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PartnershipIf you are joining a partnership or adding a new partner to an existing legal relationship, all tangible assets introduced as capital contributions must be valued. |
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Property TaxesPersonal property taxes are assessed based on market value; however, there maybe a conflict between what a local municipality derived as market value versus what the business owner may derive. A certified machinery and equipment appraisal would be necessary to contest the assessed value. |
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Sarbanes-OxleySince the government created the Public Company Accounting Reform and Investor Protection Act of 2002 (also known as Sarbanes-Oxley) in response to Enron and like accounting scandals, business owners must be careful to comply and not be caught in the undertow. All tangible assets must be valued and substantiated. |
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Tax PurposesNo one wants to receive an objection from the IRS. Sleep better feeling the IRS has less reason to challenge the art of accounting. And if they do, you'll be ready with beans in an indisputable row. |
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