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A Turnkey Solution

With thousands of Cost Segregation Studies completed for clients nationwide, we have a proven, turnkey process that is efficient with minimal disruption to you.  Because our professionals have stepped into a variety of situations from manufacturing plants to retail properties, we can quickly ascertain what’s needed to get the Cost Segregation Study completed.  

Our Process Works Like This

  1. We review tax depreciation schedules to identify areas of potential reclassification with an emphasis on assets placed into service after 1987 and with a tax life of 27.5 to 39 years.
  2. We will review invoices, construction cost details, blueprints and tour your facility in order to determine the proper tax classification.
  3. We will provide you with our factual determination about your property’s tax life and recalculate depreciation and the applicable 481(a) adjustment.
  4. We will prepare and draft Form 3115 (IRS form for Application for Change in Accounting Method) when applicable.
  5. We will review the documentation and calculations with you.
  6. Finally we will provide a detailed report and explain recommendations for any future property acquisitions or modifications with you.

Our reports also comply with the IRS standards stipulated in the Audit Techniques Guide for Cost Segregation Studies and we have a proven track record with the IRS. It is  critical to work with a firm that can not only distinguish between tangible personal property and a building’s structural components, but also has an understanding of the IRS Revenue Procedures and supporting case law.

Property Reclassification

If you have invested heavily or borrowed money to grow your business, you more than likely understand the concept of the “time value of money.” Reclassifying your property gives you, the taxpayer, an opportunity to realize large tax deductions within the current tax year.

New Purchase

The following graph illustrates the future tax benefits of assets placed into service in the current year. $2,000,000 reclassed to a seven year life.

  • Year 1
    25
  • 50
  • 75
  • 100
  • Year 5
    50
  • 50
  • 50
  • 50
  • 50
  • Year 10
    50
  • 50
  • 50
  • 50
  • 50
  • Year 15
    50
  • 50
  • 50
  • 50
  • 50
  • Year 20
    50
  • 50
  • 50
  • 50
  • 50
  • Year 25
    50
  • 50
  • 50
  • 50
  • 50
  • Year 30
    50
  • 50
  • 50
  • 50
  • 50
  • Year 35
    50
  • 50
  • 50
  • 50
  • 50
  • Year 40
    50
    • $0
    • $50,000
    • $100,000
    • $150,000
    • $200,000
*ATNPV $374,956.47
  • 1st Year Tax Savings
  • 2nd Year Tax Savings
  • 3rd Year Tax Savings
  • 4th Year Tax Savings
  • 5th Year Tax Savings
  • $103,192.00
  • $175,408.00
  • $119,408.00
  • $79,408.00
  • $50,928.00
*After Tax Net Present Value 6% Discount Factor Assuming a 40% Effective Tax Rate

PURCHASED IN PRIOR YEARS

The following graph illustrates assets placed into service 7 years ago. $2,000,000 reclassed from 39-year life to a 7-year life.

  • Year 1
    25
  • 50
  • 75
  • 100
  • Year 5
    50
  • 50
  • 50
  • 50
  • 50
  • Year 10
    50
  • 50
  • 50
  • 50
  • 50
  • Year 15
    50
  • 50
  • 50
  • 50
  • 50
  • Year 20
    50
  • 50
  • 50
  • 50
  • 50
  • Year 25
    50
  • 50
  • 50
  • 50
  • 50
  • Year 30
    50
  • 50
  • 50
  • 50
  • 50
  • Year 35
    50
  • 50
  • 50
  • 50
  • 50
  • Year 40
    50
    • $0
    • $100,000
    • $200,000
    • $300,000
    • $400,000
    • $500,000
    • $600,000
    • $700,000
    • $800,000
*ATNPV $358,115.51
  • 1st Year Tax Savings
  • $645,288.00
*After Tax Net Present Value 6% Discount Factor Assuming a 40% Effective Tax Rate

TAX COURT DECISION AND IRS PROCEDURES

U.S. tax court decision and recent IRS procedures permit large cash tax savings opportunities.

Tremendous tax savings opportunities are often trapped inside the cost of a company’s building purchase price or construction costs. Recent changes in case law and rulings provide large opportunities to optimize depreciation for federal tax purposes.

Rev. Proc. 2011-14 allows a taxpayer to file for an AUTOMATIC change of accounting method (Form 3115) to correct under-depreciated assets and catch up the amount of missed depreciation from when the asset was placed in service [section 481(a) adjustment]. This adjustment can be deducted in the current year. Further benefits expand as a result of a recent US Tax Court decision in Hospital Corporation of America (HCA). In a pro-taxpayer decision, the Tax Court narrowed their definition of real property for federal tax purposes. Many building improvements that were once considered real property and depreciated over a 39-year life can be classified as personal property and depreciated over a 5- or 7 year life.

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