Here is an example of how a smaller project, such as a fast food restaurant with a $500,000 investment, might yield the following results:

1. The cost segregation study would classify the investment, excluding land, into the     following categories for depreciation purposes:

Personal property

• Kitchen equipment, furniture and fixtures - $70,000
  
• Site-improvements - $200,000
  

Real property

• HVAC, electric, plumbing - $55,000
  
• Structural foundations, walls, etc. - $175,000

2. In most instances corporate accounting managers, accountants and CPAs have not     previously segregated the costs of the investment between real and personal property.

3. As a result of the study, more than 50% of the cost of constructing this facility was     reclassified from 39-year real property to 15-year and 5-year real property.

4. $9,465 in tax savings or increased cash flows are the benefit derived from the additional     depreciation of $27,250 in the first year.

Over the first five years of the project, the additional cash flows would be approximately $33,500 dollars and the net present value of the savings, over the life of the project, would be approximately $35,000.

To speak to a CPA about a cost segregation study, please contact your local office or use our information request form.