Projects

Automotive

Ford Dealership

Engagement Overview:

Bedford was engaged by a regional accounting firm to conduct a cost segregation study for one of their clients - one of the largest automotive dealers in the world. 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 is a single story combination office building containing approximately 130,380 square feet of office and maintenance on the ground floor and approximately 1,800 square feet of office area on the second level. The property has a cost basis of $14,960,980 and was acquired and placed in service in December 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 firm and client showed a potential reallocation of $2,014,898 or 17% to shorter depreciable lives. The projected tax benefit was $324,669 in NPV savings over the next 10 years with $17,198 in tax savings available for the current tax year.

Results:

The cost segregation study reallocated $5,939,509 or 39.7% of the assets to shorter recovery periods. As a result, the property owner’s tax savings is projected to be $1,159,023 in NPV savings over the next 10 years with $72,247 in tax savings available for the current tax year.