Bloomberg BNA surveyed 100 tax and accounting leaders at firms with average revenues of $7.5 billion to find out how U.S. businesses’ capital investment has changed since the recession, and to what degree changes in tax policy actually impact their financial decision making.

1. U.S. CORPORATE CAPITAL
EXPENDITURES:
CONSCIOUSLY UNCOUPLED
FROM FEDERAL TAX INCENTIVES
Bloomberg BNA, Software ProductsSeptember 2014

2. INTRODUCTION
U.S. businesses ended 2013 with more than $1.6 trillion in cash reserves,
leading analysts to believe that 2014 would mark the start of a corporate
spending spree.
More than halfway through the year, U.S. capital expenditures remain
underwhelming, begging the question: Could the 2013 expiration of two key
corporate tax breaks – bonus depreciation and Section 179 expanded expensing –
be to blame?According to tax and accounting leaders at large U.S. organizations,
it’s not.
METHODOLOGY
Bloomberg BNA, provider of expert software for tax and accounting professionals, commissioned a study conducted by
The Blackstone Group, surveying 100 tax and accounting leaders at firms with average revenues of $7.5 billion to
understand how U.S. businesses’ capital investment has changed since 2008, and how tax policy changes impact financial
decision making at large companies.

3. CAPITAL EXPENDITURES LEAVE
MUCH TO BE DESIRED
40% 16%
3x as many firms have grown investments compared
to those who have cut back, but expenditures remain
modest.
40% of respondents claim their organizations' annual
capital expenditures have increased, compared to 16%
that claim their firms’ capital expenditures have
decreased
Asset intensive firms, defined as organizations in
which at least a quarter of all assets are fixed assets,
prove more eager to invest than non-asset intensive
organizations.
49% of respondents from asset intensive firms claim an
increase in CapEx since 2013, compared to 29% from
non-asset intensive firms
Decreased
CapEx
Increased
CapEx
49% 29%
Non-Asset
intensive
firms
Asset
intensive
firms

4. 2014 INVESTMENTS:
A NEW NORMAL
51%
Same CapEx
9%
37%
CapEx increase
CapEx
decrease
2014
According to respondents, few fluctuations are
expected for the remainder of 2014.
51% of respondents expect their firms’ CapEx to stay the
same37% expect CapEx to increase9% expect CapEx to
decrease
31% 34%
U.S. tax and accounting leaders appear content with
the status quo.
Only 31 percent of tax and accounting professionals feel
that their firms’ CapEx should be greater than they
currently stand Just over one-third (34%) agree that their
organizations have more cash on hand than normal

5. FIRMS CAN LIVE WITH, AND
WITHOUT, TAX BREAKS
14% 83%
CapEx not
impacted
CapEx
impacted
While the majority of respondents’ businesses have
used incentives like bonus depreciation and expanded
expensing in the past, most feel that the expiration of
both has not impacted capital expenditures.
83% feel the expiration of these incentives has not impacted
CapEx14% feel the expirations have impacted CapEx
19% 9%
Non-Asset
intensive
firms
Asset
intensive
firms
Not surprisingly, asset intensive firms are more likely
to sense a connection between tax policy and
investments.
19% of asset intensive firms feel the expiration has
impacted CapEx, compared to 9% of non-asset
intensive firms

6. A SEPARATION OF POLICY
AND PURCHASING
The majority of surveyed respondents (82%)
admit that their own jobs are impacted by
regulatory changes related to depreciation.
56% of respondents claim
that even if tax breaks
reduced their firms’ cost of
capital by 10 percent, CapEx
would not increase
Only 30% of tax and
accounting professionals feel
that the current U.S. tax policy
climate inhibits their firms’
willingness to make CapEx

7. INTERNAL ERRORS AND
EXTERNAL SCRUTINY
If the fluid nature of
U.S. tax policies isn’t
giving corporate tax
and accounting
leaders pause, what
is?
In the tax year 2011, the IRS reported that active corporations
held more than $10 trillion in depreciable assets. If 6% of
those assets are depreciated incorrectly, roughly $600
billion in assets are vulnerable to improper accounting
practices.
39% of respondents
believe that auditor
scrutiny has grown
around their firms’
capital asset
accounting
$600
BILLION
$10
TRILLION
On average, tax &
accounting leaders feel
around 6% of assets are
incorrectly depreciated

8. CONCLUSIONS
SHORT TERM SAVINGS
MAY BACKFIRE DOWN
THE ROAD
Businesses’ sluggish spending is
the new standard, but lacking
investments could have long-term
repercussions. With Asian
and European economies
ramping up CapEx, U.S. firms’
reluctance to spend may hurt
their ability to compete globally.
UNFAZED AND
INDIFFERENT TO
INCENTIVE EXTENSIONS
Tax policy, and the expiration of
hyped tax incentives, are not to
blame for slow-moving U.S.
corporate investments. Firms’
ambivalence toward these
breaks, and their potential
revival, calls into question the
ability of bonus depreciation and
Section 179 expanded expensing
to revitalize spending.
A TIME TO REFLECT
Tax policy may be of marginal
concern to firms, but internal
accounting treatments and auditor
scrutiny is not. Given the Obama
Administration’s push to expand the
tax base by eliminating loopholes,
companies may use this period of
CapEx moderation to focus on
internal compliance controls and
asset management, fending off
unwanted attention or penalties.

9. HOW DOES YOUR FIRM
MEASURE UP?
For more information about how your firm can create
a stronger, more comprehensive fixed asset and
depreciation management program, visit
HTTP://BNASOFTWARE.COM/FIXEDASSETS
bnasoftware.com
twitter.com/BBNAtax
800.424.2938 facebook.com/bnasoftware
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INVESTMENTS?
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