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You Ain’t Seen Nothing Yet

A Bedford/Source Advisors Special Report

Expert panel shares insights about using a team approach to navigate the new tax landscape and latest provisions impacting your real estate and construction clients.

With a new tax landscape on the horizon, there’s never been more pressure (and more opportunities) for CPAs to help their real estate and construction clients maximize deductions and increase cash flow.

“We’re looking at some of the biggest changes to the tax regulation, code and stimulus in a generation,” observed panelist Rick Telberg, Founder and CEO of CPA Trendlines at the recent Ohio Society of CPAs Virtual Real Estate Conference produced in association with Bedford Cost Segregation /Source Advisors.











Top row from left: Max Vignola, Greg Bryant, Josh Malancuk 
Middle row from left: Karen Koch, Blake Christian, Blake Christian 
Bottom row from left: Stephen Lukinovich, Andy Ackermann 


“If it takes a village, it takes a team approach more than ever,” noted Telberg. “No individual CPA and very few firms can do it on their own. It’s just too complicated, too vast, too far-reaching, too fast-changing. You need to enlist specialist partners to help you.”

Take property taxes.

One attendee asked if it was common for companies that own manufacturing facilities to be undervalued for property taxes in Ohio. Panelist, Josh Malancuk, CPA, CMI – President, JM Tax Advocates said he’s found that manufacturing properties are erroneously assessed about 80% of the time and usually the larger and more specialized properties are over-assessed. “Specialty insulation and flooring items related to the chilling process are examples of items I see that fall under a seven-year or short-life asset for the Feds and also fall into exempt personal property relative to Ohio’s definition of property tax,” related Malancuk.

Malancuk said he’s seen many instances of the chilling equipment being picked up as an air conditioner rating on real estate. That’s a simple example of where we often find double taxation of the same property or excessive taxation in the case of Ohio where personal property is exempt all together,” Malancuk added. 

Green Book

When it comes to the Treasury Department’s new Green Book detailing the Biden Administration’s tax proposals, CPAs certainly will have their hands full keeping up. Moderator Karen Koch, CPA, MT, Senior Director of Bedford/Source Advisors said she is seeing more and more provisions for energy efficiency. These provisions “require many certifications and necessitate having people on your team who are engineers, energy design experts to help you qualify for this legislation,” Koch added.

Telberg said the so-called Green Regs are among the most frequently cited concerns CPAs mention in his firm’s surveys of accountants. “Depending on how you approach them, Green Regs can be a boom for your practice or a pain in the behind,” noted Telberg. “It’s going to take smart CPAs working with smart business clients to take full advantage of that. Business clients can’t keep up with all the Green Regs on their own; they need to enlist their CPAs. But CPAs alone can’t keep track of all the Green Regs on their own; they’re going to have to rely on specialist,” he added.

Koch said there’s a great deal of confusion in the marketplace about energy provisions. She’s spoken with many CPAs who have clients being told by overzealous energy-efficiency equipment manufacturers and designers that they can qualify for tax incentives when in fact they do not know the filing tax structure or whether the client can benefit. The CPA is the one who puts it on the return and who determines if the provision is applicable and beneficial.

As accountants, we are good at compliance, debits and credits and running the cash flow side of the business,” said Koch. But when clients tell us they have three lighting quotes, how are we going to interpret those? That’s part of the frustration for CPAs. It’s not just about which light fixture costs the least. We have to help our clients understand the expected performance of that fixture,” she added.

As the CPA, Koch said you want to make sure you’re the one sitting at the head of the client table—the one who gets to pick who is on the client’s expert team. “So do your due diligence. Get familiar with reliable specialists who can be your ‘back of house’ support so you minimize your risk and provide your client with the maximum benefit,” advised Koch.

R&D Credits

Another takeaway from the Ohio Society of CPAs Virtual Real Estate Conference was that more clients than you think can qualify for valuable R&D credits. For instance, many people in the construction, architecture and engineering professions don’t think about applying for R&D credits for regular activities they conduct. But in many cases, they’re leaving money on the table.

Take the burgeoning trend toward energy-efficient LEED certified construction. According to panelist Max Vignola, CCSP, Director Technical Sales R&D, Bedford/Source Advisors, this orientation has flowed into architecture, engineering, and construction because you are looking at new materials and new ways of prototyping. “Suppose you are experimenting with new types of concrete foundations due to the coastal environment or other conditions related to the site?” asked Vignola. “When a company is experimenting and proving out the foundation model, you will have some wage and material expenditures for the development of a new compound or new mixture of concrete. That’s a form of innovation that can quality for R&D credit,” noted Vignola.

R&D credits can also come into play with the innovation of design. “While you strive to make something esthetically pleasing, you must also make sure it is structurally sound,” said Vignola. “We may look at a building from an esthetic standpoint and say: ‘Wow, that’s a really interesting building.’ There’s probably a purpose behind it. Sometimes the esthetic appeal had to be designed in a very special way—outside of the box thinking—to hide an eyesore in the original.”

Vignola pointed to the example of a curtain wall system on the outside of a building. “The curtain wall system is pleasing to the eye, but the engineering and innovation that went in to the system’ design is another example of how you can qualify for valuable R&D credits,” said Vignola. “Whenever you are stepping outside the ‘comfort zone’ of engineering, architecture, and construction for the purpose of durability or structurally sound esthetic purposes, chances are there is some innovation that qualifies for R&D credit.”

Software development is another area that cuts across all industries, noted Vignola. “A large construction company might be investing lots of money into software development to ensure that materials, people, trucks, etc. are on the right schedule. Or they may have designed management services or payment portals for their customers or design review portals. Software development is going into every industry and smart companies and their CPAs are pulling out opportunities for R&D credits,” added Vignola.


When it comes to managing and harvesting tax credits, an audience member asked if you could forego the carryback year?

According to Vignola, you must follow the same rules as Section 38. If you have unused credits, the order of operation is to look at the previous year first and then you have your carry forward schedule up to 20 years. Section 41 really doesn’t change anything. “It’s a great benefit if you have some credit potential, especially when looking at a lookback study. If there are years when you haven’t performed an R&D tax credit study, you can go back and calculate these credits, look at the carry forward potential of all these credits not previously used,” added Vignola.

“It’s very important to go back and build those base years,” noted Koch: “You only have the credits available for carryback and carry forward on the years when you amend the tax return.”

According to Vignola, the entire credit revolves around the history of having R&D activities. “Whether you are looking at the regular method or alternative simplified method, they’re both from a base period perspective. You want to show that R&D is something your client is continually investing in and has plans to continue doing so in the future,” he added. “The main difference is that the regular method looks at gross receipts and whether or not the company’s investment in R&D is commensurate with the increase in revenue. By contrast, the simplified method just looks at how much a company is spending on qualified activities in a given year,” explained Vignola.

Other Credits for Those in the Construction and Real Estate Industries

When it comes to tax credits for building low-income housing, Andy Ackermann, CPA, CVA– MCM CPAs and Advisors explained there two types of allocations:

  • 9% Projects for new construction or substantial rehabilitation, and
  • 4% Projects for acquisition, new construction, and tax-exempt bond deals.

When it comes to structuring entities for income tax planning purposes, Stephen Lukinovich, CPA, PFS, CVA – MCM CPAs & Advisors, LLP walked attendees through the four types of grouping elections you need to know:

  1. Economic Unit Election
  2. Rental Real Estate Aggregation Election
  3. Passive Activity: 100 hour – 500 hour Grouping Election
  4. QBI Aggregation Election – 20%/2.5% Deductions

Meanwhile, Blake Christian, CPA/MBT, tax partner in the Park City, Utah office of HCVT, LLP explained how Opportunity Zone investors can further enhance their deductions with cost segregation studies. Blake’s key takeaways:

  • OZ can be combined with Cost Segregation/ Bonus Depreciation for up-front benefits.
  • No depreciation recapture after 10-Year hold.
  • 180-day reinvestment period is very liberal.
  • LLC operating agreement and S Corp documents should address reinvestment protocol.
  • Related-party rules (+20%) can create havoc in OZ structuring – but workarounds exist.
  • Leverage is your friend in the Land of OZ.
  • Use 1031, leases and asset contributions in non-conforming states (CA, MS, NC, MA & NY).

Additionally, Greg Bryant, CCSP Senior Managing Director of Bedford/Source Advisors walked attendees through the six stages of a real estate asset’s life cycle and the various tax considerations one faces from the feasibility and pre-construction phase, to the design and construction phase, to the repositioning and ultimate sale or disposition of the asset.

“This is going to be a make-or-break time for accounting firms,” noted Telberg. “Either they are going to invest in this change and lean into the learning curve while dealing with all new rules, regs and tax issues. Or they’re going to opt out and think very seriously about quitting or retiring. We thought we had a merger frenzy before the pandemic. Well, you ain’t seen nothing yet,” he added.


With one of the most significant tax overhauls in a generation coming on top of building supply-chain and labor shortages and a rapidly accelerating post-COVID economic rebound, CPAs have an unprecedented opportunity to provide value to their real estate and construction clients. For practitioners who stay ahead of the curve, we know you’ll be ready for the challenge. 

For additional questions or a copy of the slide presentations, contact  
Amber McAuliffe (amcauliffe@ohiocpa.comor Mandy Hohler (mhohler@ohiocpa.com).  

Interested in contact the presenters directly?  

Andy Ackermann, CPA, CVA
MCM CPAs and Advisors | andy.ackermann@mcmcpa.com

Greg Bryant, CCSP
Bedford/Source Advisors | greg.bryant@sourceadvisors.com

Blake Christian, CPA/MBT
HCVT, LLP | blakec@hcvt.com

Karen Koch, CPA, MT
Bedford/Source Advisors | karen.koch@sourceadvisors.com

Stephen Lukinovich
MCM CPAs & Advisors | stephen.lukinovich@mcmcpa.com

Josh Malancuk, CPA, CMI
JM Tax Advocates | joshua@jmtaxadvocates.com

Rick Telberg
CPA Trendlines | Rickt@telberg.com

Max Vignola, CCSP
Bedford/Source Advisors | max.vignola@sourceadvisors.com