| Cost Segregation Study After the study was completed, approximately one-third of the costs were reclassified from 31½ and 39 year lives to shorter 15, 7, and 5 year lives. As a result, the company will be claiming accelerated depreciation deductions of over $900,000 over the next five years. These accelerated deductions will reduce the client’s taxes by over $400,000 during the period. |
A client of our firm had acquired new facilities and had renovated existing
buildings. With a total price tag of $6.2 million in construction
and acquisition costs, our client was looking for some ways to improve
overall cash flow. We floated the idea of performing a cost segregation
study of the company's properties. Our client was not familiar with
this area of the tax law but after we an explained the process, he decided
to go through with the study.
