Customer Success Story: Washington Post Reports Saving $60+ Million with Fixed Asset Software
Using BNA Fixed Assets™ Web, the Washington Post Company identified additional depreciation opportunities in three subsidiaries to substantially reduce its tax burden and free up cash.
Challenge:
Find hidden assets within real property to accelerate depreciation and improve cash flow.
Solution:
BNA Fixed Assets™ Web
Results:
Washington Post Company identified more than $60 million in depreciation opportunities using BNA Fixed Assets Web reporting.
Managing Billions of Dollars in Assets
Since its founding in 1877 as a local newspaper, The Washington Post Company (WPC) has grown to 64 domestic and 133 foreign legal entities that include newspaper and magazine publishing, television broadcasting, cable television, electronic information services, and test preparation services.
Dean Rohrbaugh, WPC's Director of Tax Information Services, manages more than 157,000 fixed assets throughout the company. WPC has relied on BNA Fixed Assets since 2004 for real-time management and visibility of fixed assets data across the enterprise. So when completion of a new building occurred recently, triggering interest in a cost segregation study, Rohrbaugh knew he could rely on the BNA Fixed Assets software to support that analysis.
BNA Fixed Assets Web Enables Cost Segregation Studies
Cost segregation studies help identify hidden assets within real property, such as mechanical systems, that qualify for shorter tax lives and therefore more rapid depreciation. WPC and its external accounting firms used BNA Fixed Assets Web to help conduct not only the one cost segregation study, but three studies in several wholly owned WPC subsidiaries – Cable ONE, Newsweek, and Kaplan.
These studies were intended to verify that leasehold improvements were reclassified correctly to optimize depreciation opportunities. The external accounting firms were given direct access to WPC's BNA Fixed Assets system, which enabled the firms to generate the reports they needed to conduct the studies. By comparing invoices and other construction documents with the fixed asset data, the existing assets could be properly segregated into the different asset classes with faster recovery periods.
“Doing these three cost segregation studies resulted in more than $60 million in additional depreciation across three years, which adds up to significant tax savings and improved cash flow.”
--Dean Rohrbaugh, Director of Tax Information Services, Washington Post Company
Starting at Cable ONE
With more than $100 million in assets per year being entered into BNA Fixed Assets Web for the Cable ONE business alone, Rohrbaugh believed that a cost segregation study could lead to greater tax depreciation deductions. So in 2009, WPC began taking a hard look at the Cable ONE assets and running reports. "Given the sheer volume of assets and dollar value, we thought it would be a good opportunity," said Rohrbaugh.
Working with his team of outside auditors, the results were eye-popping, with a number of assets being identified as having shorter recovery periods than, for instance, 39-year building assets. For example, some of the cable company's assets should have been classified as repairs and maintenance, while others should have been classified as machinery and equipment. The savings generated by the additional depreciation justified the expense of conducting the study many times over.
Uncovering Additional Savings at Kaplan and Newsweek
The results at Cable ONE lead Rohrbaugh to start looking at other subsidiaries, and he next turned his attention to the Newsweek and Kaplan businesses. Similar to Cable ONE, the cost segregation study conducted at Newsweek identified yet more hidden assets and opportunities to claim additional depreciation through accelerated recovery periods.
Kaplan, too, had hidden assets that Rohrbaugh uncovered. The company owns a large amount of leasehold equipment in its many Kaplan centers across the U.S. The cost segregation study showed that much of this equipment qualified as 15-year property and it also qualified for bonus depreciation – resulting in more than $10 million in additional depreciation.
The Bottom Line Gets an Additional $60 Million
"Doing these three cost segregation studies resulted in more than $60 million in additional depreciation across three years, which adds up to significant tax savings and improved cash flow," said Rohrbaugh. The additional depreciation resulted in millions of dollars in tax savings and cash flow benefits for WPC in 2009 and beyond.
More Studies Planned
Rohrbaugh plans to conduct more cost segregation studies in the near future. "For Kaplan, we started by doing studies for only three of the more than 40 plus subsidiaries with the Kaplan Group. Based on the extremely positive results of these first three, we're now planning to conduct cost segregation studies for many more of the remaining subsidiaries," commented Rohrbaugh.
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About BNA Fixed Assets Software
BNA Fixed Assets software provides you with the ability to document your depreciation and amortization policies through Asset Type templates and allows you to automate the enforcement and implementation of these policies when performing data entry for fixed assets. This eliminates potential errors from misclassifying assets, automates the process of entering assets, enforces the use of a company’s depreciation and amortization policies, greatly reduces the volume of data required to enter each asset in the system, and, above all, guarantees compliance with GAAP rules and IRS regulations.
BNA Fixed Assets provides an annual automatic update of its fixed asset software as well as periodic updates as tax law changes. What’s more, BNA Fixed Assets speeds the data entry process by allowing you to copy and paste data for multiple assets from an Excel spreadsheet into BNA Fixed Assets, for greater efficiency and accuracy. With BNA Fixed Assets, you’ll benefit from having the best fixed asset software available on the market today to maximize productivity, comply with GAAP rules and IRS regulations, and meet all of your financial and tax reporting requirements.
Learn more about BNA Fixed Assets Software »
About BNA Software
Founded in 1983, BNA Software develops professional software solutions for tax, accounting, and financial planning professionals. With category-standard software including BNA Income Tax™ Planner and BNA Fixed Assets, BNA Software is the solution of choice for accounting, law, and financial planning firms, as well as corporations of every size. More than 60,000 customers including the IRS, depend upon BNA Software for the highest degree of tax, regulatory, and compliance expertise available in the market.
