Archive for the Data Center Cost Segregation: Tax Incentives Category

“What is Datapod?” Series-Part 3

Posted by on May 17, 2012  |  No Comments


We would like to follow up our latest blog “Accounting and Tax Benefits of Modular, Portable Data Center Infrastructure” with the benefits of cost segregation and the Datapod™ System.


Cost segregation is a strategic tax savings tool that allows companies and individuals, who have constructed, purchased, expanded or remodeled any kind of real estate to increase cash flow by accelerating deprecation deductions and deferring federal and state income taxes. Because the entire Datapod system (everything in the container and the container itself) is not considered to be a building, you would capitalize the total cost of the system (including the installation costs) and depreciate it over five years for tax purposes.

Attached is a benefit estimate that takes 100% of a $1,000,000 cost and moves it from 39 years to 5 years.  You can see that the Datapod system–compared to a million dollars of traditional new data center costs–will provide you with an improved cash flow of over $65,000 in year 1 and nearly $290,000 in years 1-5, cumulatively.  This analysis assumes a 35% federal income tax rate. Consideration of state income tax will enhance the results.  Note: This is provided purely for illustrative purposes; the fees and yields are merely examples and are not meant to be indications of actual fees or results.

Sample Benefit Estimate and Fee Quote (Click Here To Download Larger View)

Universal Networking Services works closely with a dedicated cost segregation team that includes engineers and tax experts that have performed thousands of tax projects resulting in hundreds of millions of dollars in benefits.   The initial assessment to determine qualification is free.  If you think you may qualify for cost segregation and want to increase your cash flow please feel free to contact us to learn more.

Accounting and Tax Benefits of Modular, Portable Data Center Infrastructure

Posted by on May 11, 2012  |  No Comments

White Paper 115

This white paper is provided to highlight the opportunities and benefits of involving a finance or tax professional who is knowledgeable in the acquisition and deployment of data center physical infrastructure (DCPI) assets. Applying the accounting options available within the framework of what is known as Generally Accepted Accounting Principles (GAAP), DCPI assets may be better aligned with the goals and objectives of a particular business, institution, or organization. This document is not intended to provide or offer advice on tax planning, as only a qualified or certified financial professionals may actually provide tax advice.

Among the difficulties faced by owners of DCPI assets, is the absence of perceptive financial treatment of the individual portions of mission critical systems. Frequently, the UPS, power distribution unit (PDU), and branch circuit panels installed in the construction of a building (or as a major “improvement project“) will be booked as a “building improvement” and depreciated along with the concrete, steel, boilers and pipes of the building. The “building” will likely have a long depreciable life, which may be upwards of 30+ years. However, DCPI equipment typically has a relatively short useful life, even though the UPS, PDU, and related branch circuits may remain on the books long after they are declared obsolete. For many companies, improper booking of high technology DCPI such as UPS systems and PDUs routinely causes substantial problems in the form of overstated “real property” asset value, and the obligation to take a “write-down” in the year that the UPS and related parts are “retired”. A glossary is provided in the appendix of this paper to define various terms used throughout.

Recent improvements in the design and manufacture of DCPI equipment, particularly UPS systems, PDUs, and (to some extent) air conditioning, has opened up the opportunity to treat DCPI as “business equipment”, rather than a part of the building in which the equipment is installed. This achievement is the direct result of scalable, modular, and fully manufactured systems requiring little or no field wiring other than the connection of the input power (which may be accomplished through “cord and plug connected” means).

This improved DCPI works well in a dynamic business climate where technology changes frequently and economic cycles and leaseholds may be substantially shorter than real estate investment periods. The integration of this DCPI into a corporation, institution, or organization’s economic model is not difficult, because nearly all corporations, institution, or organizations have experience with the management of business equipment, including computers, copy machines, production machinery, and company owned vehicles.

“Accounting and Tax Benefits of Modular, Portable Data Center Infrastructure” Full White Paper (Click Here To Download)

Executive Summary:

Well-informed accounting treatment of data center physical infrastructure (DCPI) assets provides significant opportunities to contribute to improving the financial performance of a business, institution, or organization. Design and manufacturing improvements in modular, scalable UPS systems, power distribution units (PDUs), and computer room air conditioners have not only created technological benefits, but provide entirely new DCPI asset management opportunities with direct and measurable financial benefits.

Contents:

  • “Traditional” vs. factory-built solutions
  • Understanding property taxes and related government fees
  • Financial planning for DCPI assets
  • Implementation of an asset management strategy for DCPI (Steps 1-7)
    • Step 7:  Cost segregation

Cost segregation:

By applying different depreciation rates to different components of a building, a business, institution, or organization may lower its corporate income taxes and thereby make available more cash flow. Cost segregation, as practiced by financial professionals with experience in corporate income tax accounting, is largely an exercise in recognizing and separately accounting for the costs of 5, 7, 10, 15, and 20 year property from the 30 or 39 year property classifications. The property in the each of the classifications from 5 to 20 years, in addition to being properly separated from the 30 or 39 year categories, once properly identified, are eligible for accelerated depreciation. Accelerated depreciation allows a business, institution, or organization paying corporate income tax to further increase deductions during the early life of the equipment.

Businesses, institutions, and organizations that own high technology assets can benefit the most from employing cost segregation methodology, so long as each asset can pass the so called function and use test and the inherent permanency test. The function and use test is intended to determine whether an asset serves any purpose in the operation of the building, as carefully differentiated from the business conducted within the building. If the asset is determined not to serve any purpose in the operation of the building, it is then subject to the inherent permanency test, where ease of removal and the complexity of the removal process are evaluated. Modular, scaleable, factory built DCPI performing the work or mission of a business, institution, or organization, routinely pass both tests easily.

Conclusion:

The impact of tax and tax related asset management strategies on the total cost of ownership of DCPI can be significant. These savings are entirely separate to gains in energy efficiency and the cost of maintenance, compared to an old, oversized legacy or traditional UPS system, with high electrical energy consumption, escalating repair, deferred maintenance, and real estate costs. Personal property, real estate, and corporate income tax savings, and tax related savings (such as the tax component of rent) can produce direct financial benefits, in excess of 20% of the installed cost of a properly sized, installed, and “booked”, factory-built UPS and PDU solution.

The key to successful implementation of a tax and tax related asset management strategy is involving a financial professional along with the IT professionals, and facility managers involved in the deployment of DCPI, and:

  • Consider treating all factory-built DCPI solutions as business equipment
  • Consider declaring factory built DCPI as personal rather than real property
  • Create realistic depreciation schedules
  • Avoid life cycle errors creating stranded asset requiring a “write-down” against earnings
  • Reassess permit and inspection requirements for factory built DCPI
  • Plan for asset portability and asset reassignment; and incorporate tax related savings including
  • Plan for reduction in construction costs for a dedicated UPS room
  • Lower monthly or annual rents or allocation cost associated with dedicated UPS rooms, hallways, and common areas required to access the dedicated UPS rooms

Modular, scalable UPS systems, PDUs, and computer room air conditioners have not only created technological benefits, but provide entirely new DCPI tax and asset management opportunities with direct and measurable financial benefits. While this white paper is intended to highlight these opportunities, its primary message is the benefit of involving a tax professional in any team planning improvement to a data center or network room DCPI. The results will be dramatic.

White Paper Written By:

Barry Rimler

Organizations that own high technology assets can benefit the most from exercising cost segregation strategies, so long as each asset can pass the function and use test and the inherent permanency test.  Modular, scaleable factory built Data Center Physical Infrastructure (DCPI) performing the mission of a business routinely pass both tests with ease.

Tax and tax related asset management strategies create a significant impact on the total cost of ownership of DCPI.  These savings are entirely separate to gains in energy efficiency.  Successful implementation of cost segregation strategies involves a financial professional along with the IT professionals and facility managers in the deployment of DCPI.

Universal Networking Services works closely with a dedicated cost segregation team that includes engineers and tax experts that have performed thousands of tax projects resulting in hundreds of millions of dollars in benefits.   The initial assessment to determine qualification is free.  If you think you may qualify for cost segregation and want to increase your cash flow please feel free to contact us to learn more.

APC White Paper Podcasts Directory

Posted by on February 7, 2012  |  No Comments

Waite Ave, Vice President of Operations

We hope you enjoy this directory of APC’s White Paper Podcasts.  Listen when you want, where you want. Learn what you need to know! APC’s Podcasts provide you a convenient way to stay informed on current trends in the data center.

These recorded excerpts of APC’s most popular white papers provide the techniques, guidelines and tools you need to make the most effective decisions regarding your IT installations.

The complete white paper text with graphics and citations are also provided  via PDF version.

At Universal Networking Services, our philosophy is simple:  knowledge is key to data center efficiency! To explore more gateways to priceless educational opportunities please visit UNS’s Data Center Institute. We are proud to announce we offer customized on-site training available through UNS’s Data Center Institute Training Series. For more information on tailoring a custom training program specific to your facility’s needs please contact us .

Data Center Projects: Standardized Process (#140):

As the design and deployment of data center physical infrastructure moves away from art and move toward science, the benefits of a standardized and predictable process are becoming compelling. Beyond the ordering, delivery, and installation of hardware, any build or upgrade project depends critically upon a well-defined process as insurance against surprises, cost overruns, delays, and frustration. This paper presents an overview of a standardized, step-by-step process methodology that can be adapted and configured to suit individual requirements.

Data Center Projects: System Planning (White Paper #142 and Part 1 of 2 Podcast):

System planning is the Achilles’ heel of a data center physical infrastructure project. Planning mistakes can magnify and propagate through later deployment phases, resulting in delays, cost overruns, wasted time, and ultimately a compromised system. Much of the trouble can be eliminated by viewing system planning as a data flow model, with an orderly sequence of tasks that progressively transform and refine information from initial concept to final design

Data Center Projects: System Planning (White Paper #142 and Part 2 of 2 Podcast):

System planning is the Achilles’ heel of a data center physical infrastructure project. Planning mistakes can magnify and propagate through later deployment phases, resulting in delays, cost overruns, wasted time, and ultimately a compromised system. Much of the trouble can be eliminated by viewing system planning as a data flow model, with an orderly sequence of tasks that progressively transform and refine information from initial concept to final design.

A Quantitative Comparison of High Efficiency AC vs DC Power Distribution for Data Centers (#127):

A Quantitative Comparison of High Efficiency AC vs DC Power Distribution for Data Centers

Cooling Strategies for Ultra-High Density Racks and Blade Servers (#46):

Cooling Strategies for Ultra-High Density Racks and Blade Servers

Increasing Data Center Efficiency by Using Improved High Density Power Distribution (#128):

Increasing Data Center Efficiency by Using Improved High Density Power Distribution

Rack Powering Options for High Density (#29):

Alternatives for providing electrical power to high density racks in Data Centers and Network Rooms are explained and compared. Issues addressed include quantity of feeds, single-phase vs. three-phase, number and location of circuit breakers, overload, selection of plug types, selection of voltage, redundancy, and loss of redundancy. The need for the rack power system to adapt to changing requirements is identified and quantified. Guidelines are defined for rack power systems that can reliably deliver power to high density loads while adapting to changing needs.

The Seven Types of Power Problems (#18):

Many of the mysteries of equipment failure, downtime, software and data corruption, are often the result of a problematic supply of power. There is also a common problem with describing power problems in a standard way. This white paper will describe the most common types of power disturbances, what can cause them, what they can do to your critical equipment, and how to safeguard your equipment, using the IEEE standards for describing power quality problems.

Neutral Wire Facts and Mythology (#21):

This Technical Note discusses many common misunderstandings about the function of the neutral wire and its relation to power problems. The subjects of dedicated lines, phase reversal, isolation transformers, and grounding are addressed. Various myths are described and criticized.

Accounting and Tax Benefits of Modular, Portable Data Center Infrastructure (#115):

Well-informed accounting treatment of Network-Critical Physical Infrastructure (NCPI) assets provides significant opportunities to contribute to improving the financial performance of a business, institution, or organization. Design and manufacturing improvements in modular, scalable UPS systems, power distribution units (PDUs), and computer room air conditioners have not only created technological benefits, but provide entirely new NCPI asset management opportunities with direct and measurable financial benefits.

Understanding EPO and its Downtime Risks (#22):

An Emergency Power Off (EPO) system is intended to power down a single piece of electronic equipment or an entire installation from a single point by activating a push button. EPO is employed in many applications such as industrial processes and information technology (IT). This white paper describes the advantages and disadvantages of EPO for protecting data centers and small IT equipment rooms containing UPS systems. Various codes and standards that require EPO are discussed. Recommended practices are suggested for the use of EPO with UPS systems.

Essential NCPI Service Requirements for Next Generation Data Centers (#12):

Data Centers are a significant investment to the corporations and IT departments who they serve. Whether or not they actually achieve the availability of the design is highly dependent on the quality of the service personnel and their ability to meet the challenges specific to data center management. This paper presents a categorized and prioritized collection of those service challenges and the requirements needed to overcome them. It is based on information obtained in systematic interviews with data center clients and users.

Essential NCPI Management Requirements for Next Generation Data Centers (#14):

The management of physical infrastructure in data centers can no longer be considered independently of the IT management architecture. In order to manage rapid change and achieve demanded levels of availability while controlling Total Cost of Ownership, IT managers can no longer afford to rely on the primitive, customized management solutions of the past. These solutions are no longer effective and must be replaced by systems based on, and integrated with, open IT management standards. With this in mind, this paper describes the requirements for management of next-generation Network-Critical Physical Infrastructure from the perspective of the ITIL framework.

Watts and Volt-Amps: Powerful Confusion (#15):

This note helps explain the differences between Watts and VA and explains how the terms are correctly and incorrectly used in specifying power protection equipment.

Reducing the Hidden Costs Associated with Upgrades of Data Center Power Capacity(#73):

Failure to adopt modular standardization as a design strategy for Network-Critical Physical Infrastructure (NCPI) is costly on all fronts: unnecessary expense, avoidable downtime, and lost business opportunity. Standardization and its close relative, modularity, create wideranging benefits in NCPI that streamline and simplify every process from initial planning to daily operation, with significant positive effects on all three major components of NCPI business value – availability, agility, and total cost of ownership.

Standardization and Modularity in Network-Critical Physical Infrastructure (#116):

Description: Failure to adopt modular standardization as a design strategy for Network-Critical Physical Infrastructure (NCPI) is costly on all fronts: unnecessary expense, avoidable downtime, and lost business opportunity. Standardization and its close relative, modularity, create wide-ranging benefits in NCPI that streamline and simplify every process from initial planning to daily operation, with significant positive effects on all three major components of NCPI business value – availability, agility, and total cost of ownership.interpretation.

Mean Time Between Failure: Explanation and Standards (#78):

Description: Mean Time Between Failure is a reliability term used loosely throughout many industries and has become widely abused in some. Over the years the original meaning of this term has been altered which has led to confusion and cynicism. MTBF is largely based on assumptions and definition of failure and attention to these details are paramount to proper interpretation. This paper explains the underlying complexities and misconceptions of MTBF and the methods available for estimating it.

Ten Steps to Solving Cooling Problems Caused by High Density Server Deployment (#42):

High-density servers present a significant challenge. Here is a 10-step approach for cooling efficiency, cooling compactly and power density in existing data centers.

Monitoring Physical Threats in the Data Center (#102):

Excerpt of APC white paper #102 discusses monitoring physical threats in the data center.

Network-Critical Physical Infrastructure: Optimizing Business Value (#117):

Excerpt of APC white paper #117 discusses network-critical physical infrastructure (NCPI).

Strategies for Deploying Blade Servers in Existing Data Centers (#125):

Excerpt of APC white paper #117 discusses network-critical physical infrastructure (NCPI).

The Advantages of Row and Rack-Oriented Architectures for Data Centers ( #130, Part 1 of 2):

Latest generation high/variable density IT equipment creates conditions that room cooling was never intended to address. Part one reviews room-, row- and rack-based cooling architectures that can address these issues.

The Advantages of Row and Rack-Oriented Architectures for Data Centers ( #130, Part 2 of 2):

Description: Latest generation high/varible density IT equipment it equipment creates conditions that room cooling was never intended to address. Row- and rack-oriented cooling architectures address these issues. Excerpt two offers a comparison of these architectures.

Implementing Energy Efficient Data Centers ( #114):

Description: Electricity usage costs have become an increasing fraction of the total cost of ownership (TCO) for data centers. Learn how to quantify electricity savings gained through appropriate design of the network-critical physical infrastructure and IT architecture.

Avoiding Costs from Oversizing Data Center and Network Room Infrastructure (#37):

Description: The single largest avoidable cost associated with typical data center and network room infrastructure is oversizing. Learn how you can prevent this unnecessary cost.

Management Strategy for Network-Critical Physical Infrastructure ( #100):

Description: Strategies for choosing a management solution for the physical infrastructure of IT networks, where management of individual devices is necessary to have visibility to the many data points required for reliable operation

Universal Networking Services Releases Website Update

Posted by on January 10, 2012  |  No Comments

Universal Networking Services Releases Website Update

The updated website, www.criticalpowerandcooling.com,  features clearer navigation, more focused content and a cleaner user interface for enhanced usability for all data center professionals.

St. Petersburg, Florida (January 9th, 2011):  Universal Networking Services (UNS), a leading provider of mission-critical power and cooling infrastructure products and services today announced the release of several high-level updates to their popular website:  www.criticalpowerandcooling.com.  Going beyond merely selling products, UNS’s website offers to educate and inform users on the latest in data center power and cooling technologies.

The new streamlined website includes several enhancements that are functional and interactive.  Clearer navigation to the latest industry information in power, cooling, modular, fire and monitoring can be accessed through the updated “Data Center Solutions” portal. The “Data Center Institute” section provides White Papers and tools essential to the data center professional while the “Efficiencies Strategies” section showcases UNS signature Critical Facility Energy Profile (CFEP) service.  UNS is proud to dedicate a page so to the Datapod System, an innovative modular, scalable data center that delivers an optimized IT environment as well as a page regarding cost segregation, a strategic tax savings tool.  Integration of social media tools allows website visitors to access additional data center industry news via RSS news feed from UNS Blog, Twitter and LinkedIn.

Waite Ave, Vice President of Operations, states “Today’s IT departments face complex challenges that demand forward looking IT solutions.  With that in mind, UNS has developed a website that provides educational opportunities and showcases the latest in technologies for data center power and cooling.  Education that will lay the critical foundation to run an efficient data center.  At UNS, our philosophy is to offer the data center professional the tools and resources to lower their Total Cost of Ownership (TCO) and maximize efficiencies offered by the advancements in today’s data center architecture.  We are very excited to share our updated website to empower the data center community to find real-time solutions to their unique challenges.”

About Universal Networking Services:

UNS specializes in mission-critical power and cooling solutions for wiring closets, server rooms, and data centers.  UNS provides product acquisition, design/ engineering, installation management and maintenance services.

To learn more about UNS,  please contact Waite Ave at w.ave@apcdistributors.com or 281-825-9790.

Tax Benefits of Modular, Portable Data Center Physical Infrastructure (DCPI)

Posted by on April 19, 2011  |  No Comments

Tax and tax related asset management strategies create a significant impact on the total cost of ownership of DCPI.  Modular, scalable UPS systems, PDUs, and computer room air conditioners have not only created technological benefits, but provide entirely new DCPI tax and asset management opportunities with direct and measurable financial benefits.

WHAT IS COST SEGREGATION?

Cost Segregation is a strategic tax savings tool that allows companies and individuals, who have constructed, purchased, expanded, or remodeled any kind of real estate to increase cash flow by accelerating depreciation deductions and deferring federal and state income taxes.

WHAT ARE THE BENEFITS OF A COST SEGREGATION STUDY?

  • Generates immediate increase in cash flow through accelerated depreciation deductions.
  • Reduces income taxes and can also reduce real estate property taxes.
  • Provides an easy opportunity to claim ‘catch up’ depreciation on previously misclassified assests.
  • Provides an independent third-party analysis that will withstand IRS review.

Cost segregation, is an exercise in recognizing and separately accounting for the costs of 5, 7, 10, 15, and 20 year property from the 30-39 year property classifications. The property in each of the classes from 5-20 years, once properly identified, are eligible for accelerated depreciation. This allows a business, institution or organization paying corporate income tax to further increase deductions during the early life of the equipment.

Organizations that own high technology assets can benefit the most from exercising cost segregation strategies, so long as each asset can pass the function and use test and the inherent permanency test. Modular, scaleable, factory built Data Center Physical Infrastructure (DCPI) performing the mission of a business routinely pass both tests with ease.

Tax and tax related asset management strategies create a significant impact on the total cost of ownership of DCPI. These savings are entirely separate to gains in energy efficiency. Successful implementation of cost segregation strategies involves a financial professional along with the IT professionals, and facility managers involved in the deployment of DCPI.

UNS, LLC works closely with a dedicated cost segregation team that includes engineers and tax experts that have performed thousands of tax projects resulting in hundreds of millions of dollars in benefits. The initial assessment to determine qualification is free. If you think you may qualify for this deduction and want to increase your cash flow please contact Universal Networking Services (UNS, LLC) for a free cost segregation benefit estimate and fee quote.  Contact, Waite Ave, Managing Partner at w.ave@apcdistributors.com or 281-825-9790.

Universal Networking Services, LLC Listed in Modular/Container Data Centers Procurement Guide: Optimizing for Energy Efficiency and Quick Deployment

Posted by on February 17, 2011  |  No Comments

Universal Networking Services, LLC proud to announce listing in Lawrence Berkeley National Laboratory’s “Modular/Container Data Centers Procurement Guide: Optimizing for Energy Efficiency and Quick Deployment.”

The guide was prepared by Lawrence Berkeley National Laboratory on behalf of the General Services Administration.

To view the procurement guide please visit:  Modular/Container Data Centers Procurement Guide: Optimizing for Energy Efficiency and Quick Deployment


Cost Segregation Tax Benefits For Modular Data Centers

Posted by on December 7, 2010  |  No Comments

Here is some information regarding benefits of cost segregation and the datapod system. UNS, LLC can provide a free cost segregation benefit estimate and fee quote with the Datapod system. Because the entire system (everything in the container and the container itself) is not considered to be a building, you would capitalize the total cost of the system (including the installation costs) and depreciate it over five years for tax purposes.

Attached is a benefit estimate that takes 100% of a $1,000,000 cost and moves it from 39 years to 5 years.  The Datapod system–compared to a million dollars of traditional new data center costs–will provide you with an improved cash flow of over $65,000 in year 1 and nearly $290,000 in years 1-5, cumulatively. This analysis assumes a 35% federal income tax rate. Consideration of state income tax will enhance the results.

CLICK ON TO VIEW:  ESTIMATE OF POTENTIAL TAX SAVINGS AND FEE (Cost Segregation)

To learn more about this subject please contact Waite Ave at w.ave@apcdistributors.com or 1-888-486-7725, ext. 201.

Cost Segregation For Data Centers

Posted by on September 1, 2010  |  No Comments

Cost Segregation is a strategic tax savings tool that allows companies and individuals, who have constructed, purchased, expanded, or remodeled any kind of real estate to increase cash flow by accelerating depreciation deductions and deferring federal and state income taxes.

WHAT ARE THE BENEFITS OF A COST SEGREGATION STUDY?
Generates immediate increase in cash flow through accelerated depreciation deductions.Reduces income taxes and can also reduce real estate property taxes.Provides an easy opportunity to claim ‘catch up’ depreciation on previously misclassified assets.Provides an independent third-party analysis that will withstand IRS review.

Cost segregation, is an exercise in recognizing and separately accounting for the costs of 5, 7, 10, 15, and 20 year property from the 30-39 year property classifications. The property in each of the classes from 5-20 years, once properly identified, are eligible for accelerated depreciation. This allows a business, institution or organization paying corporate income tax to further increase deductions during the early life of the equipment.

Organizations that own high technology assets can benefit the most from exercising cost segregation strategies, so long as each asset can pass the function and use test and the inherent permanency test. Modular, scaleable, factory built Data Center Physical Infrastructure (DCPI) performing the mission of a business routinely pass both tests with ease.

Tax and tax related asset management strategies create a significant impact on the total cost of ownership of DCPI. These savings are entirely separate to gains in energy efficiency. Successful implementation of cost segregation strategies involves a financial professional along with the IT professionals, and facility managers involved in the deployment of DCPI.

UNS, LLC works closely with a dedicated cost segregation team that includes engineers and tax experts that have performed thousands of tax projects resulting in hundreds of millions of dollars in benefits. The initial assessment to determine qualification is free.

To learn more please contact Waite Ave at w.ave@apcdistributors.com or 1-888-486-7725, ext. 201.