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Retail
Engagement Overview:
Bedford was engaged by a 23-person CPA firm to conduct a cost segregation study for one of their key 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:
Headquarters for one of the world’s largest numismatic retailers consisting of 96,000 sf constructed in 1998. The facility has extensive special security, electric, HVAC and other systems utilized to provide controlled, ambient conditions for collectible coins and currency. The property was placed in service in 1999 and has a cost basis of $5,751,523.
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:
Our pre-engagement estimate provided to the CPA & client showed a potential reallocation of $862,729 or 15% to shorter depreciable lives. The projected tax benefit was $179,499 in NPV savings over the next 10 years with $162,916 in tax savings available for the current tax year.
Results:
The cost segregation study reallocated $1,242,329 or 21.6% of the assets to shorter recovery periods. As a result, the property owner’s tax savings is projected to be $299,533 in NPV savings over the next 10 years with $389,922 in tax savings available for the current tax year. Note: “Special Use” assets for this property were valued at $320,191 which represented over 30% of the assets that were moved.
CPA's Quote:
"Bedford’s engineers surpassed our expectation in terms of identifying and moving assets to a shorter depreciable life. They are exceptionally knowledgeable in identifying assets that fit the “Special Use” provisions identified in tax court cases. Outstanding result and great people to work with."
CFO's Quote:
"We were at first a little skeptical when our CPA suggested that we conduct a study to accelerate the depreciation of our assets. However, we very quickly embraced the approach and were very pleased with the engineering team that they selected to conduct the study. Bedford’s personnel are very knowledgeable, competent and easy to work with. Their process was not too intrusive and caused a minimum of disruption. Exceptional results and benefits. I recommend Bedford’s team without any reservation.”