This case study highlights how Calvetti Ferguson helped a large manufacturing client unlock powerful tax incentives through a combined Cost Segregation and Section 179D study. The result? Millions in accelerated depreciation, increased cash flow, and capital freed up for reinvestment.
Cost segregation and 179D studies are powerful tax planning tools that can yield significant savings when applied strategically—especially in newly constructed industrial and commercial buildings. For manufacturing companies, these studies can identify and reclassify building components for faster depreciation, ultimately deferring taxes and strengthening cash flow.
Background
The Vice President of Facilities and Compliance for a large manufacturing company engaged Calvetti Ferguson to evaluate potential tax incentives related to their newly constructed manufacturing and office facility. The building had been completed in a prior tax year, and the company’s accounting firm had applied the default 39-year straight-line depreciation method—overlooking strategies to accelerate depreciation and improve cash flow.
Value
The building’s total construction cost exceeded $30 million, presenting a strong opportunity to realize substantial tax savings. Calvetti Ferguson proposed a combined cost segregation and Section 179D study to unlock these benefits. This dual approach aimed to:
- Accelerate depreciation and unlock over $7.6 million in first-year deductions
- Identify and validate energy-efficient systems qualifying for 179D
- Reduce the client’s current tax liability and increase liquidity for reinvestment
The strategy not only delivered a significant financial benefit, compared to the original $769,000 annual depreciation, but also created operational flexibility and supported the company’s continued growth.
Analysis and Situation
Time was a critical factor, with tax deadlines approaching quickly. The existing CPA lacked the engineering expertise required for cost segregation and 179D studies, prompting the client to evaluate outside firms. Calvetti Ferguson was selected through a competitive bid process for our ability to execute both studies simultaneously, minimizing costs and operational disruption.
Our team mobilized quickly, reviewing construction documentation, modeling the facility using Department of Energy–approved software, and conducting a detailed site inspection. Special attention was given to identifying manufacturing-specific components, such as machinery pads and dedicated electrical systems, that could be reclassified as personal property under IRS guidelines.
The project was completed ahead of schedule, with the final outcome significantly reducing the client’s tax burden and maximizing their return on the new facility investment.
About Calvetti Ferguson Cost Segregation and 179D Services
At Calvetti Ferguson, we specialize in helping businesses identify and capture valuable tax incentives tied to their real estate investments. Our integrated team of tax and engineering professionals provides cost segregation and 179D studies that unlock cash flow, reduce taxes, and support long-term financial planning.
Key benefits of our studies include:
- Improved cash flow through accelerated deductions
- Reduced upfront tax burdens
- Maximized depreciation on qualified assets
- Enhanced return on real estate investments
We work with clients who are:
- Constructing or acquiring new commercial or industrial buildings
- Renovating or expanding existing facilities
- Seeking to improve their tax position and reinvest in operations
Contact Our Team
We partner with companies, private equity firms, and family offices to provide bespoke solutions to address their complex accounting, tax, and advisory needs. Complete the form below, and a team member will contact you within one business day to discuss your specific needs.