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Tax Incentives Exposed: Are You Saving Big or Taking Big Risks? · Bennett Thrasher Presents: Beyond The Ledger

• 0:08
  SPEAKER_05: Welcome back to Beyond the Ledger, where we go beyond the numbers to explore the strategies, risks, and opportunities shaping today's business landscape.
• 0:17
  SPEAKER_05: I'm your host, Shard A Lakefield.
• 0:19
  SPEAKER_05: When it comes to tax incentives like cost segregation and RD credits, most companies assume they're maximizing value.
• 0:27
  SPEAKER_05: But in reality, the biggest risk often isn't what you're claiming.
• 0:31
  SPEAKER_05: It's how those claims are being built, supported, and integrated into your broader tax strategy.
• 0:38
  SPEAKER_05: Today's conversation gets into the real differences behind the providers companies rely on from boutique to full service public accounting firms, and where those differences can either create opportunity or expose risk.
• 0:51
  SPEAKER_05: We'll unpack what actually makes the study defensible, where companies tend to leave money on the table, and how increased IRS scrutiny is reshaping the way businesses should approach these incentives altogether.
• 1:04
  SPEAKER_05: Joining us today is Dwayne Sivley, a director at Bennett Thrasher and a leader in the firm's cost segregation practice, driving cash flow opportunities through strategic depreciation while ensuring studies are technically sound and audit ready.
• 1:18
  SPEAKER_05: Also joining us is Nina Desai of Harder in Bennett Thrasher's Credits and Incentives Practice, focused on identifying, maximizing, and defending tax credits, including RD incentives within a broader integrated tax strategy.
• 1:32
  SPEAKER_05: Thank you all for being back on.
• 1:34
  SPEAKER_05: It's always a pleasure.
• 1:36
  SPEAKER_05: This might be round three.
• 1:44
  SPEAKER_05: So I'm really excited to start this one.
• 1:46
  SPEAKER_05: And our least our listeners, I'm sure, are eager to learn more.
• 1:50
  SPEAKER_05: So let's start by level setting.
• 1:53
  SPEAKER_05: When people hear boutique firm, it can mean different things.
• 1:56
  SPEAKER_05: So how would you all define a boutique firm and how does that really differ from a public accounting firm?
• 2:04
  SPEAKER_00: So I I'll take, I'll just kind of start out and then Nina can add it if she wants.
• 2:08
  SPEAKER_00: But um, so you know, usually when you look at a boutique firm, they're offering like one or a couple of different services.
• 2:15
  SPEAKER_00: So, you know, maybe they're only cost segregation or their only RD tax credits.
• 2:21
  SPEAKER_00: Um, or sometimes you'll get firms that offer maybe two or three.
• 2:25
  SPEAKER_00: Um, but the big thing that usually they are missing is they're not full service accounting firms.
• 2:31
  SPEAKER_00: So they don't offer like tax and financial audits.
• 2:34
  SPEAKER_00: Um, they're really just specifically geared toward that one function.
• 2:39
  SPEAKER_00: Um and so you can kind of look into that, like the different people that work there.
• 2:43
  SPEAKER_00: They they they sometimes have a tax background and then they sometimes don't.
• 2:48
  SPEAKER_00: Oh where I feel like in the accounting firm, you at least get like a mix of those type of people.
• 2:55
  SPEAKER_00: So you'll get the specialty people and you'll get tax people.
• 2:58
  SPEAKER_00: And so I do feel like the studies generally get like a we'll say a more well-rounded uh look.
• 3:04
  SPEAKER_00: Where I'm not saying you wouldn't get that in the others, but you know, I will say you're for sure going to get it in in a public accounting firm.
• 3:12
  SPEAKER_04: Interesting.
• 3:12
  SPEAKER_04: I know that I think you covered all the topics.
• 3:15
  SPEAKER_04: And a lot of times, too, you'll see like there's differences in size.
• 3:18
  SPEAKER_04: Um, also like regulations that the public accounting firms have to find by versus specialty taps, oftentimes you won't see that.
• 3:25
  SPEAKER_04: So there are a couple additional nuances there.
• 3:27
  SPEAKER_04: And then even to Dwayne's point, you'll see that they really have like their niche, like their niche that they focus on as well.
• 3:33
  SPEAKER_04: So to Dwayne's point, sometimes it might be one specialty for a service, sometimes it might be a multitude of them.
• 3:38
  SPEAKER_04: And so um that oftentimes is kind of where you'll see a big differentiator.
• 3:43
  SPEAKER_04: Interesting.
• 3:43
  SPEAKER_04: Okay.
• 3:44
  SPEAKER_05: I didn't know that.
• 3:46
  SPEAKER_05: So yeah, you know, having a well-rounded experience.
• 3:50
  SPEAKER_05: Yeah, absolutely.
• 3:52
  SPEAKER_05: So taking a step further, where do you um where do those differences actually show up in the work?
• 3:58
  SPEAKER_05: Specifically, how does a cost segregation study from a boutique firm compare to one from a firm like Bennett Thrasher?
• 4:06
  SPEAKER_00: So, I mean, uh generally most people will look to there's an audit techniques guide, right, for auditing cost segregation studies.
• 4:13
  SPEAKER_00: So it kind of goes through and it says, like, you know, here's what a quality study looks like, here's what kind of individual it should be prepared by, all of that, right?
• 4:23
  SPEAKER_00: So I I think one of the key maybe differentiators that that I see, because we do have clients that, so let's just say we have a client that there's one entity, it's owned by two different partners, something like that.
• 4:37
  SPEAKER_00: You know, maybe we do the work for one partner and then a different accountant does the other partner, right?
• 4:44
  SPEAKER_00: So sometimes that other partner will bring in another firm.
• 4:48
  SPEAKER_00: And so we'll end up maybe having to review the study because we're incorporating it into a tax return.
• 4:53
  SPEAKER_00: And that's usually where we kind of see those differences.
• 4:55
  SPEAKER_00: And so um, when when I look at those, you know, I try to compare it to that auto techniques guide and see how that went, right?
• 5:04
  SPEAKER_00: And so I would say generally they're kind of getting there somewhat.
• 5:09
  SPEAKER_00: Um the only thing is it's like when you start getting into like how the study applies to the tax return, that's kind of where I feel like that that stock gap kind of starts happening because they don't have those tax professionals.
• 5:21
  SPEAKER_00: They're not seeing past tax returns and things like that.
• 5:24
  SPEAKER_00: So if we look at the individuals specifically that are preparing it, um, you know, it says it needs to be prepared by an individual with expertise and experience.
• 5:33
  SPEAKER_00: And so it goes very much into saying like it really shouldn't just be construction for cost segregation, it really shouldn't be just tax.
• 5:42
  SPEAKER_00: So I'll just kind of give you an example.
• 5:44
  SPEAKER_00: If you were to take someone who I only know tax, right?
• 5:49
  SPEAKER_00: Right.
• 5:49
  SPEAKER_00: So they may go in and like they understand like land improvements are 15-year life.
• 5:54
  SPEAKER_00: But at the same time, what you know, what is a land improvement as far as um the return?
• 6:01
  SPEAKER_00: So they may qualify something that they shouldn't um or miss something that they could have taken or something like that, because maybe they don't understand that construction side as well.
• 6:09
  SPEAKER_00: But then you take the opposite, and this is what I see in the boutique firms a lot because they don't have that tax experience always is they're excellent at construction and and doing those pieces.
• 6:20
  SPEAKER_00: But when you get into like a complicated tax matter, like does this study even, you know, as far as like passive loss or um, you know, um a look back study where they may have made an election, seeing the past on the returns and everything, that they're not seeing all of that piece, and so they're only looking at that construction piece.
• 6:41
  SPEAKER_00: And I do feel like um we do run the risk sometimes of uh of getting that full integration into the return and understanding those those tax positions.
• 6:52
  SPEAKER_04: Yeah, that's a really good point.
• 6:54
  SPEAKER_04: Shade, do you mind if I just add on to that as well?
• 6:56
  SPEAKER_04: Of course.
• 6:57
  SPEAKER_04: Probably applique.
• 6:58
  SPEAKER_04: I mean, this is certainly applicable on our RD tax credits as well.
• 7:02
  SPEAKER_04: But to Twain's point, I will say one of the big benefits to working with an accounting firm is that we do collaborate and we try to work like as a team.
• 7:11
  SPEAKER_04: So oftentimes I would say, like, usually the tax partner or the partner who is preparing and overseeing the return, we kind of consider them like the quarterback and they coordinate with all the different specialty services to make sure that we're thinking about you know solutions and ideas for the for the client holistically as opposed to just focusing on one narrow specialty, which is I think exactly what Dwayne is touching on there.
• 7:32
  SPEAKER_04: So I think that's really, really important.
• 7:34
  SPEAKER_04: And that's probably one of the big benefits too of working, you know, with a public accounting firm as opposed to just working on the specialty side.
• 7:40
  SPEAKER_04: And we see that often too, where um, you know, a specialty firm will come and say, oh, you can take advantage of this credit, but they don't even utilize the credit.
• 7:51
  SPEAKER_04: Or um they'll talk about amending tax returns to claim credits for prior years, but they don't think about all the tax filings, the K1s, all the the impact there that might that they need to be considering.
• 8:02
  SPEAKER_04: And so it is really nice when you collaborate.
• 8:04
  SPEAKER_04: I think that's kind of the the big part there is that we all need to be working together before you're making any decisions that impact your tax filing, even for planning considerations.
• 8:12
  SPEAKER_04: Thank you.
• 8:15
  SPEAKER_00: I'm gonna pop back.
• 8:16
  SPEAKER_00: Sorry.
• 8:16
  SPEAKER_05: Yeah, no problem.
• 8:18
  SPEAKER_05: No, the information is better.
• 8:20
  SPEAKER_00: When when Nina was talking about before, kind of like an accounting firm, um, and like uh I would say not restrictions, but like our, you know, way of doing business and and being safe and like following the rules and everything, right?
• 8:36
  SPEAKER_00: So I do feel like between a boutique firm and the accounting firm, sometimes I see motivations be different, right?
• 8:43
  SPEAKER_00: So like um if they're going in, like they're not really looking like I want to look at the client's full tax picture and see what I can help them with.
• 8:52
  SPEAKER_00: They're kind of like, I want to sell this study, right?
• 8:56
  SPEAKER_00: So whether maybe they need it in the end, it's kind of like I felt like they're like, we're not seeing the whole tax position.
• 9:02
  SPEAKER_00: So that was up to you to figure out, you know?
• 9:04
  SPEAKER_00: And so they're kind of leaving that on the client and and it gets blurred sometimes.
• 9:08
  SPEAKER_00: Like I don't feel like they they tell them, like, go check this out and make sure this study is applicable to you, that your accountant agrees that that it's gonna fit into your tax return, you know, correctly.
• 9:18
  SPEAKER_00: I I think they're really wanting to sell a study, and some of that gets muted.
• 9:22
  SPEAKER_00: It's not like they're so much doing it on purpose as much as it's kind of just a only earner.
• 9:29
  SPEAKER_05: The only thing that they're working on, they can't fully see the full picture because they're not well versed in everything else.
• 9:34
  SPEAKER_00: So And I do think you'll see a difference in pricing sometimes.
• 9:38
  SPEAKER_00: There are boutique firms, especially larger ones that maybe do have little, because like I said, there's a large variety of firms out there.
• 9:45
  SPEAKER_00: Um you can get some smaller ones where the pricing gets very low, right?
• 9:49
  SPEAKER_00: And so what do you get with that?
• 9:51
  SPEAKER_00: Like you don't get that full tax integration, you don't get that consulting with your tax return.
• 9:57
  SPEAKER_00: You are just getting like, you know, a piece of the puzzle where it's like our study is like a full look at everything, right?
• 10:05
  SPEAKER_00: Right?
• 10:06
  SPEAKER_00: Safe the whole bit, where that's kind of like, okay, I've paid for a piece of that process, you know.
• 10:12
  SPEAKER_00: So where does that extra cost come in and that extra risk come in from that?
• 10:17
  SPEAKER_04: Yeah.
• 10:17
  SPEAKER_04: And sorry, Dwayne, I feel like we're gonna keep the up and back and forth here.
• 10:21
  SPEAKER_04: But you know, to add to that too, oftentimes, like kind of like what Dwayne is saying, the business model is different.
• 10:26
  SPEAKER_04: So you're the first person that you'll speak to oftentimes will be like a salesperson.
• 10:30
  SPEAKER_04: They'll probably gift you through like the signed engagement letter.
• 10:32
  SPEAKER_04: And here you're working directly with Dwayne.
• 10:35
  SPEAKER_04: You're working directly with me on the RD study or the cost tech study to really see like, what are your expenses?
• 10:41
  SPEAKER_04: What is your business model?
• 10:42
  SPEAKER_04: What are you working on?
• 10:43
  SPEAKER_04: Where is the opportunity?
• 10:44
  SPEAKER_04: And I think, Dwayne, this is really appropriate to say before we even go back to the client with our results, we usually will speak to the tax partner, the person who's working on their actual tax return and be like, okay, these are this is what we're seeing.
• 10:55
  SPEAKER_04: Are there any issues?
• 10:56
  SPEAKER_04: Can they utilize the credit?
• 10:58
  SPEAKER_04: Because yeah, in a perfect world, we could Dwayne, we could probably sell even more than we do.
• 11:02
  SPEAKER_04: But part of our role is, you know, transparent and communicating with the client.
• 11:06
  SPEAKER_04: Can you actually benefit from this?
• 11:07
  SPEAKER_04: Are there any risks that we're not thinking about with claiming this credit or taking advantage of the COMSEG?
• 11:13
  SPEAKER_04: Or is there any potential clawback that we need to be thinking about as you're planning for future years?
• 11:18
  SPEAKER_04: And so having that big picture look and even thinking about future years and planning for just having that knowledge of what the company wants to do and what the client's looking to do in a few years is really important and really helpful, I would say, with the work that we do.
• 11:31
  SPEAKER_05: I'm gonna jump back in and I'll it's not because I think I'm gonna jump in here in a minute and ask a question that just popped in my head.
• 11:38
  SPEAKER_05: So go ahead, Dwayne.
• 11:39
  SPEAKER_00: You know, uh I will say um over the past, we'll say year or something, right?
• 11:45
  SPEAKER_00: On LinkedIn, I've seen like a couple of people pop in and say, like, I did a and it was a negative against cost sag, right?
• 11:51
  SPEAKER_00: So immediately I'm like, what?
• 11:53
  SPEAKER_00: Um and so it was kind of like, you know, I did a cost sag and it was the worst thing ever because I sold the property quickly and I had all of this like recapture, you know, and like just kind of different things like that.
• 12:05
  SPEAKER_00: And I'm like, the mistake you made was not necessarily not doing the cost seg or doing the cost seg.
• 12:11
  SPEAKER_00: The mistake you made was you went to some small firm that talked you into a study because they wanted to sell a study, you know, and and it and it looked good to you at the time, but like you if you were gonna do that, you should have run it through your accountant, right?
• 12:27
  SPEAKER_00: Or if you would have gone to a public accounting firm and that would have been fully integrated, they would have asked you, like, do you plan on selling this soon?
• 12:34
  SPEAKER_00: Because that's one of our first questions that we ask is like, how long do you plan on holding this property?
• 12:39
  SPEAKER_00: And then we kind of explain why we're asking that.
• 12:42
  SPEAKER_00: Um, and so I don't know that that always happens at that other end.
• 12:47
  SPEAKER_05: What would prompt someone to choose a boutique firm versus a public accounting firm?
• 12:55
  SPEAKER_05: Like, what kind of decisions are they trying to make to choose one or the other?
• 13:00
  unknown: Okay.
• 13:01
  SPEAKER_05: I'm just curious.
• 13:02
  SPEAKER_05: I'm like, okay, so you can get a more, you know, like little assessment of everything and a bigger picture.
• 13:07
  SPEAKER_05: Why would you I just think it would create more risk than anything?
• 13:11
  SPEAKER_05: So I just wanted to kind of ask, why would someone that's a very good question?
• 13:16
  SPEAKER_04: Yeah, I think to Dwayne, I'll just start and then Dwayne, feel free to jump in.
• 13:19
  SPEAKER_04: I think Dwayne's point right, obviously, cost is a big perspective, right?
• 13:23
  SPEAKER_04: But I think that's also interesting too, because you'll find that a lot of the boutique firms they charge a contingency fee.
• 13:29
  SPEAKER_04: So their fee is oftentimes directly correlated with the results that they provide to their client.
• 13:34
  SPEAKER_04: Okay.
• 13:34
  SPEAKER_04: Where in public accounting, we can't charge a contingency fee.
• 13:38
  SPEAKER_04: Most of I mean, Dwayne, or I would say for most of our services, we charge a fixed fee.
• 13:41
  SPEAKER_04: Obviously, you can do hourly consulting as well.
• 13:44
  SPEAKER_04: But um, that is one of the big differences.
• 13:46
  SPEAKER_04: And I all say, right, when you think about contingency fees, you'll get the clear you get a higher fee if you get a higher credit or if you're able to claim a higher credit for your client.
• 13:56
  SPEAKER_04: That oftentimes creates a little bit of inherent risk.
• 13:59
  SPEAKER_04: And, you know, I also just want to add here we are talking about the differences between, you know, a public accounting firm versus a specialty firm.
• 14:06
  SPEAKER_04: But you know, Dwayne and I do work with a lot of specialty firms that we have good relationships with as well.
• 14:10
  SPEAKER_04: But I just want to add that I think when it works really well is when they're collaborating with us, when we're collaborating together versus them just doing their job and then selling a study and then we take the results and try to figure out how to what to do with that or if we should even use it sometimes.
• 14:25
  SPEAKER_04: I have had clients that they've they've uh engaged in work to like amend several returns, and we were like, this is not a good idea for you, but we would not recommend this.
• 14:35
  SPEAKER_04: So um I think when you collaborate well, I I think that's when it works the best.
• 14:40
  SPEAKER_04: I actually forgot what the question was, Sharda.
• 14:42
  SPEAKER_05: It just went off with it.
• 14:43
  SPEAKER_05: No, I was just curious why would someone choose one versus the other?
• 14:47
  SPEAKER_05: I was just curious about it.
• 14:48
  SPEAKER_05: So I guess it just really depends on what they're looking for, and but like you said, it does make sense when you're able to partner.
• 14:55
  SPEAKER_00: On the Cossack side too, like I I've seen people say, like, I have all this construction background because there's a certification you can get uh from the American Society of Cost Segregation Professionals.
• 15:07
  SPEAKER_00: And that that's a great, I feel like that is a great um um, you know, credential to have, right?
• 15:14
  SPEAKER_00: Um but it really does not, it exposes it, it teaches you kind of like what's tax is related to cost seg at that moment, what the auditechniques guide says, right?
• 15:27
  SPEAKER_00: It doesn't have this ongoing stuff, and it doesn't talk about how it fits into their tax return and and that side of it, right?
• 15:35
  SPEAKER_00: And so I do think they kind of get sold sometimes on that, like I'm a certified, you know, cost segregation person.
• 15:40
  SPEAKER_00: And so they're like, oh, good to go, right?
• 15:42
  SPEAKER_00: And it's like I you're still missing out on that piece.
• 15:46
  SPEAKER_00: Like I think that's a selling point for some people is that certification.
• 15:50
  SPEAKER_00: But um, and I'm probably jumping subjects here, but you know, technically to represent the client before the IRS, you have to be an enrolled agent, a CPA, or an attorney, right?
• 16:02
  SPEAKER_00: And so most of those firms, not most, but a lot of those don't have that, right?
• 16:08
  SPEAKER_00: Um, they have that ASCSP designation for COSEG.
• 16:11
  SPEAKER_00: And so really the only thing you could do is you you can't negotiate directly with the IRS, you can't sign agreements, um, you can't uh represent for the return, the tax return itself or other years.
• 16:26
  SPEAKER_00: Basically, the only thing you can do is um be an expert witness for technical explanations, and and that's it at that point.
• 16:34
  SPEAKER_00: Otherwise, someone else is handling the rest of it.
• 16:37
  SPEAKER_00: Because I have people go bid it out and they're like, oh, this firm told me it's like unlimited audit protection, you know, like as far as um defending the study.
• 16:46
  SPEAKER_00: And I'm like, well, actually, they cannot represent you before the IRS.
• 16:51
  SPEAKER_00: Like maybe it's unlimited technical explanations, um, but there definitely is a difference there.
• 16:58
  SPEAKER_04: I was just gonna add to that, right?
• 16:59
  SPEAKER_04: Because a lot of our when we are bidding for some work, sometimes that does come up where they're like, oh, well, they're gonna their fee already includes, you know, audit defense.
• 17:08
  SPEAKER_04: And I'm like, yeah, but they're charging you a ton up front, and you might not even keep that.
• 17:12
  SPEAKER_04: Why don't you just so that's also something I'd I'd also like to bring up because I I've had that question come up, well, this is what they're offering.
• 17:19
  SPEAKER_04: Are you doing that?
• 17:20
  SPEAKER_04: I'm like, well, no, that's not included in our engagement.
• 17:22
  SPEAKER_04: We obviously help you and can help you should that happen, but that's a lot to pay up front for something that you're not even aware of.
• 17:28
  SPEAKER_00: Well, even though it kind of speaking about those certifications, like a public accounting firm, you generally at most well, all the firms I've worked for, like you cannot move to manager level without some sort of certification, right?
• 17:42
  SPEAKER_00: So you can be a staff, you can be a senior, you can be a supervisor, but to be like a manager, senior manager, director, partner, you have to be uh usually an enrolled agent, the CPA, or an attorney, right?
• 17:54
  SPEAKER_00: And so you you definitely have that piece that I'm talking about if you're dealing with someone at a public accounting firm as far as that representation.
• 18:04
  SPEAKER_05: Okay.
• 18:05
  SPEAKER_05: So as companies evaluate these those options, there's always a trade-off.
• 18:10
  SPEAKER_05: So what are some of the risks that can come with working with a boutique firm?
• 18:14
  SPEAKER_05: We kind of touched on it, but were there any other additional points that we can kind of um identify?
• 18:21
  SPEAKER_04: I kind of want to piggyback off of what we said earlier and I know we've kind of jumping topics, and I do want to say what Dwayne had mentioned is that you know, um, he's had an experience, right?
• 18:31
  SPEAKER_04: Where, or you know, in some cases, maybe a specialty firm will just focus on maybe one service line or selling one thing and not think about the big picture.
• 18:39
  SPEAKER_04: But I just have an example that I could share where that happened recently.
• 18:43
  SPEAKER_04: Um that the client was trying to work with a specialty service um provider on the RD tax credit.
• 18:51
  SPEAKER_04: And so they were kind of going through the process and they made our tax partner aware of it.
• 18:56
  SPEAKER_04: And so got me on the call to talk to them.
• 18:59
  SPEAKER_04: And I said, okay, that's great, but haven't you thought about section 174?
• 19:03
  SPEAKER_04: And I try not to talk about throughout code sections.
• 19:05
  SPEAKER_04: I know that's not exactly fun, but I just want to provide the history of that so we kind of understand why this was important to share.
• 19:11
  SPEAKER_04: So, as a reminder, prior to enactment of the Tax Cuts and Jobs Act, all taxpayers could immediately deduct their RD expenses, right?
• 19:19
  SPEAKER_04: Beginning with the Tax Cuts and Jobs Act in 2022, all taxpayers were then required to capitalize and amortize all their domestic RD over five years and their international RD over 15 years.
• 19:31
  SPEAKER_04: Um, and this is during that period as well.
• 19:33
  SPEAKER_04: So it was for a 2024 tax filing before OB3 even came into play.
• 19:38
  SPEAKER_04: And so they were working with this RD specialty provider to get an RD study and they were really excited.
• 19:44
  SPEAKER_04: They're like, we're gonna save all this money, we're gonna get these credits.
• 19:47
  SPEAKER_04: And I said, that's true, you have that credit available, but do you also know about section 174?
• 19:52
  SPEAKER_04: And they had no idea that they had a compliance requirement that were that they have to then capitalize and amortize their domestic expenses, which would then raise their taxable income.
• 20:02
  SPEAKER_04: And so they were shocked.
• 20:04
  SPEAKER_04: And for me, that's really interesting because you can't tell one side of the coin without explaining the other side.
• 20:10
  SPEAKER_04: You kind of have to explain, okay, yes, you there's a credit available too.
• 20:13
  SPEAKER_04: There's also this compliance requirement.
• 20:14
  SPEAKER_04: So whether or not you claim the credit or not, you should be considering this for your tax return filing if you're saying that you're doing RD.
• 20:21
  SPEAKER_04: So I think sometimes it's if it is so narrow that you kind of maybe sometimes you're not looking at the big picture or thinking about other things.
• 20:28
  SPEAKER_04: And I think that's really important to share and and to think about as before you engage a provider is big picture.
• 20:35
  SPEAKER_04: Are they really just gonna sell you one thing or are they gonna think about your overall, you know, um tax outlook?
• 20:41
  SPEAKER_00: I think on on my side, one of the problems I see on the cost eggs is um like basis reconciliation.
• 20:48
  SPEAKER_00: So when you let's just say you build a building, right, or you remodel one or something, like your your financial books match like what you're putting in service, right?
• 20:58
  SPEAKER_00: Things have to balance out.
• 21:00
  SPEAKER_00: That's what it kind of is about, right?
• 21:01
  SPEAKER_00: And so um they will be kind of siloed in that they're creating this basis over here, but they're not really looking sometimes at the financials to match.
• 21:11
  SPEAKER_00: And so then what happens is that study gets done, it comes in, right?
• 21:16
  SPEAKER_00: Your tax return, sometimes people are down to the war and stuff, boom, it does not match, right?
• 21:21
  SPEAKER_00: So then the client is a lot of times like stuck on a call, you know, between the two, trying to get this thing reconciled at that point.
• 21:30
  SPEAKER_00: So not only does it not match, but then it makes you the middleman where you're trying to deal with that.
• 21:35
  SPEAKER_00: Whereas um, you know, in our public accounting firm, if we're doing their tax return and we're doing the cost segregation study, I'm dealing with the tax team on that, right?
• 21:44
  SPEAKER_00: So that's when we're talking about a lower price, like you know, that that is so much like faster for us to be able to do that than you personally using your own time to kind of straighten this out.
• 22:00
  SPEAKER_00: Almost like, you know, if you pay the lower price, you're probably going to pay for it in your own time as far as having to do this this back and forth between the two firms.
• 22:08
  SPEAKER_04: And I think we know time is everything, right?
• 22:10
  SPEAKER_04: And part of the reason our clients are engaging with us is because they want an experienced professional to handle it and they want to obviously they want to ink us in whatever we need, but they don't want to be involved in it.
• 22:21
  SPEAKER_04: They're busy.
• 22:22
  SPEAKER_04: So that's kind of one of our goals too.
• 22:24
  SPEAKER_05: I don't know how to do this.
• 22:25
  SPEAKER_05: That's why I'm coming together.
• 22:26
  SPEAKER_04: Right.
• 22:27
  SPEAKER_04: Exactly.
• 22:27
  SPEAKER_04: That's kind of our goal is to make their lives a little bit easier.
• 22:30
  SPEAKER_04: And so if we sense that we can do that, it's always helpful if we can just go walk over to another person's office and be like, hey, I'm seeing this.
• 22:36
  SPEAKER_04: What are you seeing?
• 22:37
  SPEAKER_04: Or what do you think about this versus them being the middle person?
• 22:41
  SPEAKER_04: And sometimes we'll see where they'll like try to connect this specialty person with the with the tax preparer.
• 22:47
  SPEAKER_04: And um I don't I think that's always the best scenario, right?
• 22:51
  SPEAKER_04: Where you can speak directly, but that oftentimes that happen.
• 22:54
  SPEAKER_04: So that's just one thing to keep in mind.
• 22:56
  SPEAKER_04: I guess an example that I have doing too is um on RD credits, right?
• 23:00
  SPEAKER_04: So if you have ownership and and I'm not going to get and try and try not to get too technical here, but if you own multiple companies, right, sometimes you're considered part of a group.
• 23:09
  SPEAKER_04: And then as part of your tax filing, you have to calculate the credit as one big group and then divvy it out amongst the entities, amongst the entities.
• 23:16
  SPEAKER_04: Well, sometimes if you don't know that this this individual owns multiple companies, a majority interest in multiple entities, then you're not even calculating it, the credit properly.
• 23:26
  SPEAKER_04: And so then just by that alone, you're exposing yourself.
• 23:29
  SPEAKER_04: And so um, that's an instance that we see auction where I'm like, wait, what about this company?
• 23:33
  SPEAKER_04: Did we factor this one in?
• 23:35
  SPEAKER_04: And then you have to try to go back and make a consistency adjustment or try to fix it, or even sometimes you're even talking about amending prior year returns, which is never fun.
• 23:43
  SPEAKER_04: And then sometimes in cost savings that you have at that point you've already lost and trying to deal with fixing things.
• 23:49
  SPEAKER_04: So I I think you're better off hanging up front for good quality product than trying to go back later and fix it.
• 23:54
  SPEAKER_04: Absolutely.
• 23:55
  SPEAKER_05: Okay, so on the other side of that equation, what advantages do companies gain when they work with a full service public accounting firm on a cost segregation study?
• 24:05
  SPEAKER_05: I know you guys touched on a little bit.
• 24:06
  SPEAKER_05: Well, Duane, you did, but yeah, added bonuses.
• 24:10
  SPEAKER_00: Just that full, like complete solution, you know, from finish.
• 24:14
  SPEAKER_00: So, like, you know, we'll just take it like on mine, on the studies, right?
• 24:18
  SPEAKER_00: When I do the benefits analysis in the beginning, I have access to the returns, right?
• 24:23
  SPEAKER_00: They're they're in our system.
• 24:24
  SPEAKER_00: So I'm looking to see like, did they have income?
• 24:27
  SPEAKER_00: Like, what did their income look like?
• 24:29
  SPEAKER_00: Like while I'm in there, I might glance at the rest of their fixed assets and see are there some other opportunities out there as well?
• 24:35
  SPEAKER_00: Um, I can speak to the partner.
• 24:37
  SPEAKER_00: If they have an odd tax situation, like I can grab a senior manager, a partner, you know, down the hall through IM real quick, jump on a call, and we can kind of discuss the situation and work it out.
• 24:50
  SPEAKER_00: You know, and then once they move forward with the study, um, you know, we're gonna work with tax, we're gonna make sure that it it matches the financials.
• 24:58
  SPEAKER_00: Uh we're gonna questions for tax, give it to them in the format that they need to get it into the fixed access system quicker.
• 25:04
  SPEAKER_00: Um, you know, and then in the end, the the partner also feels more comfortable signing the return, um, you know, because they have to feel comfortable, their their signature is on the return, right?
• 25:16
  SPEAKER_00: So um, they have to feel comfortable with that as well.
• 25:18
  SPEAKER_00: Where sometimes that outside study, you know, they'll want to review that a little bit internally, and we may have a little bit of back and forth on that.
• 25:25
  SPEAKER_00: Um, so just that that full integration.
• 25:27
  SPEAKER_00: So like you're getting the best study that you can, um, but you're also minimizing risk and everyone is on a comfort level, no waste of time, the whole bit.
• 25:38
  SPEAKER_05: Where do companies tend to leave the most value on the table when their provider isn't fully integrated into their broader tech strategy?
• 25:46
  SPEAKER_04: Yeah.
• 25:46
  SPEAKER_04: So I would say the big thing, and I know that I feel like the big takeaway here, and I know I keep repeating myself, but I do think it's really important and applicable, is that getting the holistic picture of the company, right?
• 25:56
  SPEAKER_04: Not just where they are today, but where they want to be in the next few years, five years, 10 years, what are their goals?
• 26:02
  SPEAKER_04: What are they working towards?
• 26:04
  SPEAKER_04: What are some of their pain points?
• 26:05
  SPEAKER_04: And when we have those conversations, you know, in our firm with our clients, we all get together.
• 26:10
  SPEAKER_04: It's not just the tax partner or an RD partner joining as, you know, the cost tech director.
• 26:17
  SPEAKER_04: We all get together and we put our heads together to think about the best solutions that we can come up with for our clients.
• 26:22
  SPEAKER_04: You know what's the thing too, right?
• 26:24
  SPEAKER_04: Anytime we're thinking about incentives, sometimes there's overlap incentives that clients can take.
• 26:30
  SPEAKER_04: Yes, they could take X and Y, but sometimes you can't take both at the same time.
• 26:34
  SPEAKER_04: Or there is an order ordering rules that you have to keep in mind.
• 26:37
  SPEAKER_04: So when we all kind of get together and think about what we think is the best or even the best solution or the best options we can provide to our clients from a tax planning perspective, I really think that's where the magic happens.
• 26:49
  SPEAKER_04: And I would even say, I think that's kind of the secret sauce for our firm is really just the collaboration that we do and the excitement that we get that we have and we can help a client.
• 26:59
  SPEAKER_04: We're thinking through um all of the things that they're going through and where they want to be in the future.
• 27:04
  SPEAKER_04: Because that's actually fun for us to be kind of serve as that trusted advisor when we can be part of that planning perspective.
• 27:10
  SPEAKER_04: And when clients are not coming to us about what happened in the past, but when they actually come with us about, hey, this is what I want to work towards, or this is really what I want to do, and getting us involved at the beginning.
• 27:21
  SPEAKER_04: That's I think I really think that's where I had the most fun in our job too.
• 27:24
  SPEAKER_00: We just had one of these like last Friday, we toured a facility and it was kind of a combo meeting.
• 27:29
  SPEAKER_00: So the tax partner went, um, the tax senior manager went, Nina was there, I was there, our assault group was there.
• 27:36
  SPEAKER_00: Wow.
• 27:37
  SPEAKER_00: Um, and just listening to like, you know, you know, what's going on with your business right now?
• 27:41
  SPEAKER_00: What do you guys see as needs?
• 27:43
  SPEAKER_00: Like, how can we help coordinate?
• 27:45
  SPEAKER_00: And then just kind of like even them answering like a assault question about like they're going into certain states or something, like then that's me, like, oh, they have growth coming along, you know.
• 27:55
  SPEAKER_00: And then Nina's asking questions as we're touring the facility, you know, about like, you know, well, how do you handle this piece?
• 28:02
  SPEAKER_00: You know, like who signs off on this?
• 28:03
  SPEAKER_00: Do you, you know, do you bid this out?
• 28:05
  SPEAKER_00: Do you own the rights on this?
• 28:07
  SPEAKER_00: So um, you know, just that whole approach and and it's all there in one piece and integrated.
• 28:14
  SPEAKER_04: Well, and then even being just for that example, even just being on site, Dwayne, and you'll have to provide the specifics, but there was an example of either some piece of equipment that they had, and you were like, because it wasn't attached to the wall, um, it could change, or it maybe it was, but because of the way that it was structured, it changed your analysis too about, you know, the depreciable life on that.
• 28:35
  SPEAKER_04: Was it a piece of equipment?
• 28:36
  SPEAKER_04: I can't quite recall.
• 28:37
  SPEAKER_00: Um I think we were talking about like um the um manufacturing specifically that you could actually like take more um uh maybe more stuff that might otherwise be considered building, you know, as personal property, as other personal property.
• 28:53
  SPEAKER_00: Right.
• 28:54
  SPEAKER_00: So I I was gonna think too on the um the visit as well, like it helps us learn each other's, you know, roles and everything too.
• 29:03
  SPEAKER_00: So like I can recognize RD opportunities, I can recognize salt opportunities, Nina can recognize opportunities for me, and we can bring those kind of things to the client.
• 29:13
  SPEAKER_00: Where if we're working in a silo, like I just do coseg, you know, I don't really care about this or something, you know, it it's just um, I guess the word holistic approach, you know, to like um to their uh their financial situation.
• 29:27
  SPEAKER_04: It really is.
• 29:28
  SPEAKER_04: Well, and to that point too, it's you know, we can't all know everything.
• 29:33
  SPEAKER_04: We all can't like I can't prepare a tax return very well, right?
• 29:36
  SPEAKER_04: That's why I stay in my lane, right, with what I do, but I know the people that do.
• 29:39
  SPEAKER_04: So that being part of those conversations, we kind of hear the trigger words, we know what to identify, we know because one person also isn't in every single meeting, right?
• 29:48
  SPEAKER_04: So it's really important that if I hear something that would impact Dwayne, or if I hear something that would impact state and local tax, I'm like, hey, I was in this meeting, this came up, you guys probably should talk.
• 29:58
  SPEAKER_04: It's really important that we serve in that role.
• 30:00
  SPEAKER_04: And I think that's really where, again, having the holistic approach and working in this public accounting setting has been really beneficial for us and for our clients as well.
• 30:08
  SPEAKER_05: And it's a great special experience that you guys are able to provide for them as well and help each other out as well, just identifying those opportunities to help them have a more holistic approach, like you all said.
• 30:20
  SPEAKER_05: So it's very special.
• 30:22
  SPEAKER_05: So for leaders who want to get this right from the start, what are the key questions they should be asking before engaging a provider to make sure the study or credit analysis is truly defensible and audit ready?
• 30:38
  SPEAKER_00: I mean, I'll pop in and just say on on my side, uh I would ask if you were gonna use one of those providers, I I would definitely ask, like, what are the potential scenarios that would restrict me from using this, right?
• 30:52
  SPEAKER_00: Like I would I would ask them, like, you know, yes, this sounds good, you know.
• 30:58
  SPEAKER_00: But like let's not just talk about the good, let's talk about the other side, right?
• 31:02
  SPEAKER_00: And and and for I feel like sometimes the approach in that is an all good scenario, you know.
• 31:08
  SPEAKER_00: There's not the the underlying like, okay, well, what what what else do I need to be looking for to be worried about?
• 31:14
  SPEAKER_00: Right.
• 31:15
  SPEAKER_00: Um, because I don't think that always gets asked.
• 31:18
  SPEAKER_04: Yeah.
• 31:19
  SPEAKER_04: To Dwayne's point, I I feel like I would ask about, okay, it's kind of to piggybacking off of that is credit utilization.
• 31:26
  SPEAKER_04: Okay, you're saying I have all this credit, can I actually use this?
• 31:29
  SPEAKER_04: Like, and I don't know if they could really answer that without having the whole picture, right?
• 31:33
  SPEAKER_04: So making sure that if you are engaging with a specialty provider, you at least speak to your tax advisor and make sure that they're also willing to have a conversation, right?
• 31:42
  SPEAKER_04: You want to make sure that you're thinking through that.
• 31:44
  SPEAKER_04: Um, also just ask about audit experience, right?
• 31:47
  SPEAKER_04: How many years have you been working in this field?
• 31:50
  SPEAKER_04: Kind of confirm, are they more siloed?
• 31:52
  SPEAKER_04: Are they more holistic?
• 31:53
  SPEAKER_04: You know, what approach they take in doing a study?
• 31:55
  SPEAKER_04: Let's say, you know, this doesn't happen too often, but it does sometimes happen where, you know, you go through a benefits analysis and you get maybe one piece of financial information, then something comes out that, okay, no, those numbers might not have been right.
• 32:08
  SPEAKER_04: What's their approach?
• 32:09
  SPEAKER_04: How do they handle that?
• 32:10
  SPEAKER_04: Do they they should be making adjustments to their study based on the actual numbers?
• 32:14
  SPEAKER_04: But if they're uh you so unfortunately, sometimes you do see things where things aren't changed when they should be.
• 32:20
  SPEAKER_04: Um, I can give one example that you know, we're currently prospecting a client and they're very confident that they maintain the IP rights and the financial risk of development for one of their projects.
• 32:30
  SPEAKER_04: And then I said, that's great, but I would like to review a contract to just confirm that that's what the contract says.
• 32:37
  SPEAKER_04: The contract and they did not have any IP rights.
• 32:40
  SPEAKER_04: And so I had to go back to the client and I said, you know, this is what the contract says.
• 32:44
  SPEAKER_04: Is there some other reference or some other agreement that you have in mind?
• 32:47
  SPEAKER_04: But based on what I'm saying, you would not be able to qualify this project towards RE credit.
• 32:52
  SPEAKER_04: So I just, you know, I think someone that also maybe digs in a little bit deeper sometimes.
• 32:56
  SPEAKER_04: And obviously, there's only so much that you can investigate.
• 32:59
  SPEAKER_04: We we listen to our clients, we trust our clients, right?
• 33:01
  SPEAKER_04: They're coming to us for a reason, but sometimes we do need to do a little bit more due diligence.
• 33:05
  SPEAKER_04: So that would be something I will also ask about.
• 33:07
  SPEAKER_00: Nina kind of touched on like how long they've been in business, right?
• 33:11
  SPEAKER_00: So I would say like two, how long, how long have they been in business and how many people it like, you know, if you're looking at like one, two people shop or something, right?
• 33:20
  SPEAKER_00: Are they gonna be around to defend that or answer questions later, right?
• 33:25
  SPEAKER_00: Where um, you know, Bennett Thrasher's been around a long time and it's gonna be around for, you know, a long time.
• 33:30
  SPEAKER_00: And so um, there's really not that concern about that.
• 33:34
  SPEAKER_00: Where in smaller firms, I I think there is a question of like, uh, are you going to be there, right?
• 33:40
  SPEAKER_04: Yeah.
• 33:41
  SPEAKER_04: It's a valid point.
• 33:42
  SPEAKER_04: I mean, we saw that a lot within when the employee retention came out.
• 33:46
  SPEAKER_04: There were a lot of companies that kind of seemingly came out of the woodwork that were saying that, you know, we're specialty practice and we'll help you claim employee retention credits.
• 33:55
  SPEAKER_04: Our firm was helping with employee retention credits as well.
• 33:57
  SPEAKER_04: But a lot of those firms don't exist anymore or they're not around.
• 34:01
  SPEAKER_04: And now you've got clients that are dealing with IRS audits or their credits were denied, and there's no one there to defend them.
• 34:08
  SPEAKER_04: So that's a very good point, Dwayne.
• 34:10
  SPEAKER_05: And given the current landscape with increased IRS scrutiny and evolving regulations, how should businesses be thinking differently about approaching these incentives today?
• 34:23
  SPEAKER_00: I think I'm just gonna speak on the cost, like like one good bullet point, right?
• 34:28
  SPEAKER_00: Is like 100% bonus depreciation sounds fantastic, right?
• 34:32
  SPEAKER_00: But let's just take an$800,000 item that might not qualify, right?
• 34:38
  SPEAKER_00: So a hundred percent of eight hundred thousand that shouldn't have been qualified is eight hundred thousand exposure.
• 34:45
  SPEAKER_00: You know what I mean?
• 34:46
  SPEAKER_00: So I do feel like with opportunity sometimes comes um increased uh risk, right?
• 34:53
  SPEAKER_00: So I I think there's some great stuff that's come out as far as like um, you know, the expensing with uh qualified production property, the hundred percent bonus, all these things.
• 35:05
  SPEAKER_00: But at the same time, if you're taking all those deductions, like hopefully you're taking them correctly, um, because that is a much um larger uh risk amount that's out there.
• 35:17
  SPEAKER_04: Yeah, and I'll just add to that on the RD.
• 35:19
  SPEAKER_04: Obviously, there's research and development tax credit out there, right?
• 35:22
  SPEAKER_04: That's what we're talking about, um, to help, you know, incentivize companies for doing innovation in this country.
• 35:28
  SPEAKER_04: And then I just want to uh kind of touch point touch base on OB3 as well.
• 35:32
  SPEAKER_04: Right now you can immediately deduct your RE expenses, but a big part of that is that you also need to make sure you're documenting it, right?
• 35:39
  SPEAKER_04: So it sounds really great in theory to claim credits.
• 35:42
  SPEAKER_04: And if there's I always say this if you're doing the work, you should get a credit for it.
• 35:47
  SPEAKER_04: There's no doubt about that.
• 35:48
  SPEAKER_04: Let's dig in, let's investigate, let's explore that opportunity.
• 35:51
  SPEAKER_04: Um, that's why these credits and incentives are put into place.
• 35:54
  SPEAKER_04: It's to help companies, right?
• 35:55
  SPEAKER_04: We want to keep everyone in business.
• 35:57
  SPEAKER_04: We want to uh help the country.
• 35:59
  SPEAKER_04: But all that's to say is you want to make sure you're documenting your efforts, right?
• 36:02
  SPEAKER_04: Because you can claim everything and then if there's no documentation that substantiates your efforts, if you know it comes under exam, it can be very problematic.
• 36:11
  SPEAKER_04: So document it in real time.
• 36:13
  SPEAKER_05: Document, document, document.
• 36:15
  SPEAKER_05: Yes, pretty much.
• 36:17
  SPEAKER_05: Do I all thought you were gonna say something else, do I?
• 36:20
  SPEAKER_05: No, we've been talking a lot.
• 36:26
  SPEAKER_00: There's lots of exciting stuff out there, there's lots of opportunity.
• 36:29
  SPEAKER_00: It it's just doing it right and um and that making sure that that you're covered and that you have someone that's gonna stand by you like going forward, and someone that's gonna look out for your interests that knows your whole um your whole uh business.
• 36:45
  SPEAKER_03: So thank you, Nina.
• 36:49
  SPEAKER_05: Thank you, Dwayne.
• 36:50
  SPEAKER_05: This was a great conversation, and it gave a broader perspective on what a company should be thinking about and how do they go about doing these things and making important choices and documenting and great timing and choosing the right team to help help them through any process.
• 37:08
  SPEAKER_05: So I really appreciate it.
• 37:09
  SPEAKER_05: I hope I see you again on another conversation.
• 37:12
  SPEAKER_05: Um thank you, and you guys have a great rest of the day.
• 37:17
  SPEAKER_05: You as well.
• 37:18
  SPEAKER_05: Thank you.
• 37:20
  SPEAKER_05: That wraps up today's conversation with Dwayne Sibley and Nina DeSai.
• 37:24
  SPEAKER_05: If there's one takeaway, it's this.
• 37:27
  SPEAKER_05: When it comes to cost segregation and tax credits, it's not just about identifying the opportunity.
• 37:32
  SPEAKER_05: It's about how the opportunity is built, supported, and integrated into your broader tax strategy.
• 37:38
  SPEAKER_05: The difference between checking the box and getting it right can have a lasting impact, not just on value, but on risk.
• 37:47
  SPEAKER_05: Thanks for tuning in to Beyond the Ledger.
• 37:49
  SPEAKER_05: For more insights and expert perspectives, visit btcpa.net and explore our latest resources.
• 37:56
  SPEAKER_05: And don't forget to like, follow, and subscribe so you don't miss future conversations.
• 38:01
  SPEAKER_05: Until next time, I'm Sharday Layfield, and we'll see you on the next episode.