DC Velocity - September 2014

inbound

Some owners of warehouses and distribution centers will find 2014, and the years to follow, a little more taxing than usual.

Effective this past Jan. 1 and starting with the current tax year, new Internal Revenue Service (IRS) rules will change how owners of such facilities can deduct certain improvements to their property. The IRS will consider the improvements tantamount to placing a new asset in service if they qualify as a “betterment” to the property, such as installing a new machine that does the same job better than the old one; a “restoration” of the asset, such as replacing a warehouse roof damaged in a hailstorm; or an “adaptation” to the facility, such as partitioning a warehouse to create a temperature-controlled section.

The change means that asset owners can no longer fully deduct those repair costs in the tax year that the work was done. Instead, they will be required to write off the expenses over the asset’s useful life.

Asset owners will be allowed to deduct the original value of the component being replaced, minus the number of years of the projected useful life that it was in operation, said Dean Sonderegger, a senior product management executive at Bloomberg BNA, a unit of Bloomberg L.P. that provides legal, tax, regulatory, and business information. For example, an asset owner could write off $25,000 if the asset being replaced originally cost $50,000 and was removed from service five years into its estimated 10-year useful life.

“The changes could reduce the value of depreciation-related deductions by between 5 and 10 percent,” Sonderegger said. The rules may also spark interest in leasing certain assets rather than owning them, he added.

The new rules will not apply to work performed as routine maintenance, as long as the asset owner provides a documented maintenance schedule, Sonderegger said. Also, the rules will effectively exempt assets with a value of $5,000 or less.

New rules affect write-
offs for DC improvements Here’s a development that adds new meaning to the term
“item-level RFID.” The National Football League (NFL) and
Zebra Technologies have partnered to outfit 17 NFL stadiums
with tracking technology that, for
the first time, will track individual
players’ performance.

Zebra receivers installed throughout the stadiums will communicate with radio-frequency identification (RFID) transmitters placed inside the shoulder pads of each player. The technology will capture precise location measurements, in real time, during the game. Zebra will collect data on each player’s position, speed, and distance. The information will then be registered and compiled into a database.

The technology will enable the NFL to accurately capture player data, such as acceleration and total distance run, the NFL and Zebra said in a joint statement.

Vishal Shah, the NFL’s vice president of media strategy, said the technology will help teams improve training, scouting, and evaluation by providing deeper insight into a player’s performance. It will also help teams and the NFL’s partners enhance “the fan experience,” Shah said.

Our lineup of bloggers just keeps getting stronger. We welcome the newest member of the group, Joseph C. “Joe” Andraski, whose “Andraski on Collaboration” blog will explore supply chain collaboration and related practices and technologies.

Andraski, who currently heads the supply chain consulting firm Collaborative Energizer LLC, has had a long and storied career. After coming up through the transportation and logistics ranks at Standard Brands, he was for many years a supply chain executive at Nabisco. He subsequently served as president and CEO of the retail and consumer industry standards organization Voluntary Interindustry Commerce Solutions (VICS) Association. Andraski has long championed supplier-buyer collaboration in retail as well as the use of item-level radio-frequency identification (RFID).

Andraski has received numerous professional recognitions, including the Council of Supply Chain Management Professionals (CSCMP) Distinguished Service Award, the VICS Milliken Achievement Award, and the Salzberg Medallion.