This case study highlights how Calvetti Ferguson helped an equipment manufacturer maximize tax deductions, improve cash flow, and minimize tax liabilities.

Cost segregation studies have become a valuable tool for manufacturing companies looking to accelerate tax deductions and improve cash flow.

We have provided a case study to show how companies in the manufacturing industry can receive tax savings from a cost segregation study. Throughout our analysis, the client can expect:

  • Potential tax savings: One of the primary benefits of a cost segregation study is the potential for significant tax savings. Clients may realize immediate tax benefits by accelerating depreciation deductions, improving their financial position.
  • Compliance with tax regulations: A thorough cost segregation study ensures compliance with relevant tax laws and regulations. By adequately documenting asset classifications and depreciation schedules, clients mitigate the risk of audits and penalties from tax authorities, providing peace of mind and financial security.
  • Strategic financial planning: Cost segregation offers clients valuable insights into their property’s tax implications and financial performance. With this information, they can make informed decisions about future investments, asset management strategies, and overall financial planning to optimize their real estate portfolio’s profitability and long-term success.

Background

The manufacturing client’s tax manager contacted Calvetti Ferguson for a cost segregation study, which they had not elected before. They wanted to take advantage of accelerated depreciation for two office/warehouse locations purchased in 2016 and 2023.

Our tax incentives team conducted a cost segregation study to free up cash flow. We worked with the client’s schedule to conduct site visits around the buildings’ closing dates. The project was completed within their deadline and in time to plan for their year-end close of books.

Value

The cost segregation studies benefitted the client with an estimated $620,000 of deductions for the 2023 tax year. The studies reduced their taxable income and generated additional capital that could then be reinvested into their business. After the study, the client owed no taxes with their return, freeing up over $120,000 that could be reinvested into their business.

Analysis and Situation

Prior to cost segregation, the client owed over $120,000 in taxes. Calvetti Ferguson performed a cost segregation study on both of their buildings. The client provided all closing documents, as-built construction plans, appraisals, and site survey documents. Once provided, Calvetti Ferguson was able to perform the site visit to document the condition of the site as required by the IRS.

Our team scheduled the site visits within a few weeks and completed their study in under 30 days to meet their tax filing deadline. The study helped identify more than $770,000 in cost basis that could be reclassified into five-, seven-, and 15-year depreciable tax lives.

About Calvetti Ferguson Cost Segregation Study Services

Cost segregation is a tax planning tool that allows companies and individuals to increase their cash flow by accelerating depreciation deductions and deferring federal and state income taxes.

The benefits of larger tax deductions from cost segregation studies are:

  • Improving cash flow
  • Reducing upfront income tax costs
  • Maximizing annual depreciation
  • Lowering the cost of capital
  • Increasing shareholder value

Some of the reasons to consider contacting Calvetti Ferguson for a cost segregation study are if you are involved in commercial real estate activities like:

  • Constructing a building
  • Purchasing real estate
  • Remodeling or renovating a facility

 

Contact Us

Calvetti Ferguson works with companies, private equity firms, and high-net-worth individuals nationwide. Regardless of the complexity of your compliance, assurance, advisory, or accounting needs, our team is ready to help. Please complete the form below, and we will follow up with you shortly.