Projects

Warehouse

Warehouse Facility

Engagement Overview:

Bedford was engaged by a CPA firm to conduct a cost segregation study for one of their clients. 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 warehouse is a 78,120 square foot facility used for the storage and warehousing of furniture products. The building sits on approximately 235,000 square feet of land in a developed industrial park. The facility has a cost basis of $1,417,646 and was placed in service in November 2003.

Engineering Process:Warehouse

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 CPA & client showed a potential reallocation of $212,647 or 15% to shorter depreciable lives. The projected tax benefit was $39,198 in NPV savings over the next 10 years with $21,117 in tax savings available for the current tax year.

Results:

The cost segregation study reallocated $519,034 or 36.6% of the assets to shorter recovery periods. As a result, the property owner’s tax savings is projected to be $105,207 in NPV savings over the next 10 years with $63,007 in tax savings available for the current tax year.