Projects

Manufacturing

Manufacturing Facility

Engagement Overview:

Bedford was engaged by the owner’s of a manufacturing facility to conduct a cost segregation study for their factory/warehouse. 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 property has a footprint of approximately 17,900 square feet with a total gross area of approximately 37,300 square feet and occupies a 1.87 acre site. The two story building is set into the side of a hill with the front entry to the building at the lower level and the back entry to the building at the upper level. The inline fan manufacturing facility has a cost basis of $2,730,439 and was placed in service in May 2004.

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 owner’s showed a potential reallocation of $559,740 or 20.5% to shorter depreciable lives. The projected tax benefit was $108,592 in NPV savings over the next 10 years with $18,567 in tax savings available for the current tax year.

Results:

The cost segregation study reallocated $466,905 or 17.1% of the assets to shorter recovery periods. As a result, the property owner’s tax savings is projected to be $85,751 in NPV savings over the next 10 years with $17,158 in tax savings available for the current tax year.