Projects

Manufacturing

High Tech

Engagement Overview:

Bedford was engaged by the owners of a high tech manufacturing facility to conduct a cost segregation study. 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:

The facility consists of a single story concrete block building which has a total footprint of approximately 141,200 square feet located on approximately 34 acres. The property has a cost basis of $1,729,000 and was placed in service in November 2003.

Engineering Process:

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 client showed a potential reallocation of $622,440 or 36% to shorter depreciable lives. The projected tax benefit was $132,981 in NPV savings over the next 10 years with $66,353 in tax savings available for the current tax year.

Results:

The cost segregation study reallocated $714,077 or 41.3% of the assets to shorter recovery periods. As a result, the property owner’s tax savings is projected to be $156,655 in NPV savings over the next 10 years with $65,807 in tax savings available for the current tax year.