TPRs and Form 571-L, business property statements.

• Position: Member alert - Brief article

With the recent increase by the IRS in the expensing threshold from $500 to $2,500, the amount of expensed equipment on the books and records of small businesses will probably increase dramatically. But in a proposed Letter to Assessors to be issued by the Board of Equalization, it was made clear that Revenue and Taxation Code Sec. 441 does not conform to that IRS treatment.

According to R&TC 441, the Business Property Statement must show all taxable property owned, claimed, possessed, controlled or managed by the filing entity. The statement includes instructions that clarify that reportable equipment includes items that may be expensed for accounting or tax purposes.

Businesses or accountants who prepare 571-Ls from the company's depreciation schedules may therefore be under-reporting. If the business is subsequently audited by the county, then it may face substantial escape...