Projects

Restaurant

Dunkin Donuts

Engagement Overview:

Bedford was engaged by a Dunkin Donuts franchisee to conduct a cost segregation study to identify the assets of a newly constructed structure eligible for reclassification and bonus depreciation – ultimately saving the owner taxes.

Property Overview:

The property is a 2,800 square foot facility built in 2003 for $718,000. The facility has extensive “Specialized Use” assets including excess electrical, HVAC, plumbing and other systems as well as other shorter life assets due to the retail use.

Engineering Process:

Our engineers thoroughly examined all design and construction documents, contractor payment requisitions and other related data to determine the cost basis for every aspect of the facility. Our site reconnaissance consisted of multiple site visits during the course of construction to document the installation of all assets (including Special Use Assets) eligible for accelerated and Bonus Depreciation. A complete reconciliation of costs was performed following completion of construction.

Estimate of Benefits & Savings:

The CPA assured the franchisee that there was no need for Bedford’s services as $137,000 (19%) had already been identified in the contractors Schedule of Values by the CPA. Bedford’s pre-engagement estimate projected a potential reallocation of $312,000 (43%) to shorter depreciable lives, resulting in a potential tax saving of $60,200.

Results:

The study resulted in $384,000 or 53.5% of the assets being moved to shorter depreciable lives. As a result of the cost segregation study, the property owner saved an additional $92,300 for the current tax year.

Owner's Quote:

"My CPA was initially not too enthusiastic about me conducting a cost segregation study on the property - because he had all the new construction cost data. However, the outcome of the study pleasantly surprised us both."