Among our areas of expertise at DeWitt PLLC is the valuation of operating assets for tax purposes.
In business, an asset is anything a company owns or controls that has an economic value. These assets are generally divided into one of two categories: fixed and operating. Fixed assets refer to items that have a physical presence, such as furniture, land, buildings, or equipment. They are usually tangible and held by the company for a long period of time.
Meanwhile, operating assets are those items that a business needs to carry out its core activities to generate revenue. Operating assets include such things as inventory, cash, prepaid expenses, and accounts receivable. They can also include intangible assets, like licenses for manufacturing certain products that the company sells.
Once a company decides to sell an asset or use it for investment purposes, that asset no longer becomes an operating asset. For instance, assets held for sale that no longer contribute to a company’s operations, or investment properties that the company owns, are not operating assets.
However, these assets are still included when investors compare the business’ total assets to their amount of operation assets. A company that continually generates profits without investing a lot in operating assets is generally preferable to investors.
About the Author
For over a decade, Suzanne DeWitt of Miami has overseen her own law firm, DeWitt PLLC, which primarily handles international banking and taxation matters for high-net-worth individuals and institutional clients.