CASE STUDIES

Cost Segregation Present Value Savings Analysis for an Apartment Complex

The best way to illustrate the direct financial benefits of a Cost Segregation Study is through the following case study:

A taxpayer constructed an apartment building for $2.2 million and placed it in service in 2005. Initially, $200,000 is identified for furniture and equipment such as stoves, dishwashers, and other appliances. The remaining $2 million of project costs are treated as 27.5-year property.

Assume the following:
  • 16% of the construction-related costs should have been classified to a 5-year depreciable life, as identified by the Cost Segregation Specialist
  • 9% of the cost should have been classified to a 15-year depreciable life, as identified by the specialist
  • 41% federal and state tax rate
  • 8% expected rate of return
Here is how the depreciation deductions would compare in the first 5 years with a Cost Segregation Study verses without a Cost Segregation Study.



The potential benefits derived from a Cost Segregation Study could be significant whether a company is adding a $500,000 expansion or building a new $40 million hotel. The benefits of a study are magnified even more if it falls within the bonus depreciation time period.


The R & D Tax Credit - A Missed Opportunity...Until Now


Specialized Molding Medical Company
$265,000+ Tax Credits Identified
Revenues: $21,000,000

Woodworking Machine Manufacturer
$200,000+ Tax Credits Identified
Revenues: $15,000,000

Metal Fabricator and Stamper
$300,000+ Tax Credits Identified
Revenues: $30,000,000

Plastic Injection Mold Builder
$395,000+ Tax Credits Identified
Revenues: $26,000,000

Precision Sheet Metal Production and Machining
$215,000+ Tax Credits Identified
Revenues: $12,000,000

Shipping Container Manufacturer
$400,000+ Tax Credits Identified
Revenues: $80,000,000

Plastic Injection Molding and Mold Builder
$300,000+ Tax Credits Identified
Revenues: $13,000,000

  • Owner of $15,000,000 senior living facility received a 5 year tax benefit of $980,000.

  • Owner of 3 auto dealerships received a 5 year tax benefit of over $1,200,000.

  • Owner of a large office building received a first year cash benefit of over $500,000.

  • Prototype client hired us for both our cost segregation and R&D services and received a total of over $650,000 in net cash savings.

  • Michigan manufacturing firm received a cash refund over of $850,000.

  • A doctor located in Dallas, TX purchased a medical building for $3,200,000 and received a 5 year cash benefit of over $180,000 after engaging us.

  • Large law firm engagement to perform a Cost Segregation Study and an Abandonment Study on their newly purchased and renovated office building. The results totaled over $300,000 in cash flow benefits.

  • Recently performed a cost segregation study on a $40 Million retail mall in Seattle, WA and the tax savings were in the millions of dollars.

  • Hired by a North Carolina CPA firm to work with one of their clients who purchased 3 office buildings in 2006. After completing the cost segregation studies, the result was over $420,000 in net cash savings.
 

If we can't save your company money, you pay us nothing!
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