Common Tax Depreciation Shortfalls & Solutions to Solve Them

Common Tax Depreciation Shortfalls & Solutions to Solve Them

Cody Dougherty
Manager, Tax Depreciation Services

30 Second Summary

  • The burden of asset management can be overwhelming for busy tax departments.
  • Tax-dependent fixed asset software can help by streamlining processes, reducing errors, and enhancing overall efficiency. Learn how.

Businesses face numerous challenges when it comes to managing their fixed assets. From tracking depreciation to ensuring tax compliance, the burden of asset management can be overwhelming. Tax-dependent fixed asset software can help by streamlining processes, reducing errors, and enhancing overall efficiency. By properly evaluating the tax depreciation practices that you already have in place, you can determine how to fully leverage these powerful software solutions to optimize, automate and improve your tax depreciation management process.

When it comes to improving your tax depreciation process, the first step is to identify shortfalls in the practices that you already have in place. Questions to ask include: Where did we spend most of our time? Were any areas flagged as deficient? Are we doing anything manually that can be streamlined?

Tax departments commonly identify the following challenges in their tax depreciation processes, which software solutions could help solve:

  • Scenario Calculations. When was the last time you were able to fully analyze, with supporting reports, the effects of various elections? From a tax perspective, this could be an ADS election, straight-line election, or electing out of bonus depreciation.
  • Reporting Capabilities. Standalone programs offer fully customizable data fields. This allows a user to load in any data they would need, and then generate reports using that field. For example, a tax department may want to have the location of the asset imported into a system, which assists with apportionment and property tax filings.
  • Mass Asset Changes and Updates. Using a standalone program gives the ability for a tax department to make mass asset changes. This includes additions, disposals, transfers, method changes, life changes, convention changes, and bonus election changes.
  • System Updates. Tax law updates are handled by the software provider, which ensures the system stays updated with the ever-changing laws.
  • Dependence on IT and Other Intercompany Departments. Once the software has been implemented, which usually requires IT, the tax department can independently maintain their records with little dependence on the company’s accounting, finance, and IT departments.

Fixed Asset Solutions That Can Help

GTM frequently helps clients optimize, automate, and improve their tax depreciation overcome the following challenges:

  • Unmatched Book & Tax Fixed Asset Detail. Disconnects between book and tax records can cause reconciliation, asset identification, and transaction identification issues. This issue will snowball year over year until assets are disposed of or the decision is made to peel back the underlying detail of the assets. GTM has developed unique techniques to match book and tax records to ensure that future period tax depreciation processes run smoothly.
  • Alteryx Workflow Builds. GTM leverages Alteryx to build repeatable workflows to process activity, identify assets in question, and provide These workflows allow your team to spend time on more valuable areas of tax depreciation review.
  • Depreciation Book Builds. Now that the 100% bonus depreciation environment has passed, companies are experiencing an increase in scenario book building as a means to mitigate tax liability. GTM provides clients with a fully customizable and limitless amount of reporting to satisfy any strategy they intend to employ.

Amid ever-changing guidance surrounding fixed assets, it is imperative to stay informed on the rules that will affect how you calculate tax depreciation. Tax reform can stress a company beyond their capacity, luckily, we are here to help.

GTM is a Sage Fixed Asset business partner. Our Tax Depreciation Services Team consists of Sage certified implementers and SQL database experts. We take a unique approach to tax depreciation services by coupling the tax technical aspect with the software knowledge to offer a full-scale tax depreciation service for our clients. To learn more about GTM’s Tax Depreciation Services or to speak with someone who can guide you through the process, contact us below.

About The Author(s)

Cody Dougherty
Manager, Tax Depreciation Services
Learn More
Cody is a Manager in GTM’s State and Local Tax Practice based in the Philadelphia Metro Office. Since joining GTM in September 2017, he has...