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Arizona
Business Personal Property Taxation
Many find business personal property, which includes
furniture, fixtures and equipment used in your
business, to be the stepchild of the Arizona tax
system--and the least understood. If you are using
the exact data from your federal income tax schedules
to prepare your Arizona State return, you are
most likely filing incorrectly.
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detailed list of all assets is needed to properly
prepare the Arizona Business Property Tax Statement.
Items currently held must be properly classified
and placed on the various schedules, and great care
given to removing items sold or retired.
There
are several areas where we consistently find reporting
errors:
- Leasehold
Improvements.
Often items listed as leasehold improvements
are being valued by the Assessor as part of
the real estate--a double entry! A component-by-component
analysis is required, as well as an understanding
of the Arizona real estate tax basis.
- Fully
Depreciated Assets.
Federal depreciation schedules allow for the
full depreciation of assets, which, at the end
of their lives, become non-taxable. Arizona
regulations require taxation on any item still
in use. Until deleted, they are taxed.
- Business
Acquisitions.
When buying a business, there can be substantial
tax consequences in establishing the depreciable
basis of assets. Much depends how the transaction
is handled. Some methods lead to State reported
numbers differing from those reported to the
IRS.
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