Projects

Distribution

Beverage

Engagement Overview:

Bedford was engaged by the owner of a large beverage distribution company to condut a cost segregation study on their facility. The objective of the study was to identify assets that could be moved to shorter recovery periods in order to accelerate depreciation and defer taxes.

Property Overview:

This two-story distribution facility was completed in 2000 for a total development cost of $5,452,789. The facility is comprised of 102,000 square feet with 18,000 square feet allocated to offices, 20,000 square feet to refrigerated storage and 68,000 square feet to general warehouse.

Engineering Process:BeverageDistribution

Our engineers examined all the design and construction documents, contractor payment requisitions and other related data to determine the cost basis for every component of the building. Next, our engineer conducted an on-site study to identify, measure, quantify and photograph the existence of all assets eligible for accelerated depreciation. Finally, our team (on-site engineer, senior engineer and tax specialist) reviewed the cost segregation study and certified its completeness and accuracy.

Estimate of Benefits & Savings:

The pre-engagement estimate we provided to the firm and client showed a potential reallocation of $817,918 or 15% to shorter depreciable lives. The projected tax benefit was $170,176 in NPV savings over the next 10 years with $154,454 in tax savings available for the current tax year.

Results:

The cost segregation study reallocated $1,417,725 or 26% of the assets to shorter recovery periods. As a result, the property owner’s tax savings is projected to be $308,740 in NPV savings over the next 10 years with $317,535 in tax savings available for the current tax year.