NGCOA Makes Significant Progress on IRS Depreciation Initiative
Charleston, SC The National Golf Course Owners Association, with the assistance of KPMG, LLP, is making significant progress towards resolving the issue of allowing depreciation of tees, greens and sand bunkers with the Internal Revenue Service.
Three positive developments have occurred since the first of the year:
The IRS issued internal guidance to local and regional IRS personnel that is intended to temporarily suspend current audit activity as it relates to the depreciation of greens, tees and sand bunkers in certain cases.
Through the efforts of KPMG, LLP, this issue has been entered into the IRS Chief Counsel's 2001 Work Plan, which means that an attorney has been assigned to the depreciation issue. Inclusion on the work plan means it is likely that the issue will be resolved by the end of this year, but it requires that the issue be resolved no later than the end of 2002.
The depreciation issue of one of seven issues selected for the IRS Industry Issue Resolution pilot program. The IIR process is aimed at establishing a consistent IRS position on industry issues.
Taken together, these three developments indicate that we are well on our way to seeing a resolution to the depreciation issue, said Mike Hughes, NGCOA executive director. With the expertise provided by KPMG and the support of many NGCOA members, we have made great progress towards achieving our goal of changing the tax code to allow for the depreciation of tees, greens and sand bunkers. This will have a strong, positive impact on all golf courses operating results.
Every for-profit golf course owner will benefit by substantiating depreciation deductions already taken, or will be allowed to realize depreciation deductions not yet claimed. KPMG, LLP estimates, on average, greens, tees and sand bunkers typically constitute approximately 30 percent or more than $1 million of the cost of a golf course built with modern construction techniques. Therefore, the potential tax benefit (solely related to depreciation deductions) is equal to $400,000 per modern course assuming a combined federal and state income tax rate of 40 percent.
For more information on this issue, contact Bill Ellis with KPMG, LLP, at (404) 222-3322 or via email at firstname.lastname@example.org.
The National Golf Course Owners Association, an international trade association representing more than 4,300 golf courses, is devoted exclusively to promoting the interests of golf course owners and operators.