Cost Segregation




     Engineering Studies
AmCorp Management, Inc. is the Nation’s 
most successful Expense Analysis Firm
most successful Expense Analysis Firm

 A C...
AmCorp Management, Inc. has been 
highlighted by the following media outlets.
highlighted by the following media outlets

...
AmCorp Management, Inc. is the Nation’s 
most successful Expense Analysis Firm
most successful Expense Analysis Firm

What...
Cost Segregation Engineering Opportunities


What qualifies for Cost Segregation opportunities
   – NNew construction
    ...
Current Status


Typical Depreciation schedules for different properties vary. 


 Class Property          Description    ...
Cost Segregation Reclassification Opportunities


Experience has shown that an average of 32% is typically eligible for Co...
The Reclassification Process


The IRS wrote the Standard:
•   Mandates 3rd party study
    Mandates 3rd party study
•   R...
What Could A Engineering Cost 
Segregation Mean To You.
Segregation Mean To You.

The New York Times
By ignoring generous ...
Here Is How It Works 
       Engineering Survey and Study of an Office Building
                         (Identifying 5 & ...
Partial List Of Other Components  That Can Be 
Re Classified To Accelerate Tax Benefits
Re‐Classified To Accelerate Tax Be...
A Few Examples Of How Our Clients Benefited

Office Building –
Purchased 2007 for $27,500,000 with 18 Units and 151,000 Sq...
A Few Examples Of How Our Clients Benefited

Motel ‐
Purchased 2005 for $10,925,000 with 32,000 Square ft.

Asset Class   ...
Who Needs A Cost Segregation Study?


Anyone who:
1. Owns a building with over $1,000,000 in property value.

2. Has net i...
The Process!

Building Owner
‐ Submit a Letter of Understanding
‐ Submit a copy of Depreciation Schedules (If Required)
  ...
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Cost Segregation

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Allows your company to realize the most tax benefits available by performing an engineering study recommended by the IRS

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Cost Segregation

  1. 1. Cost Segregation Engineering Studies
  2. 2. AmCorp Management, Inc. is the Nation’s  most successful Expense Analysis Firm most successful Expense Analysis Firm A Company with a singular focus. AmCorp Management, Inc. offers a RISK FREE analysis to  help companies locate and recover revenue that has been  lost through improper billing practices.  Our auditing team’s  sole practice is to identify and secure overcharges We have the highest recovery rate in the industry We ha e the highest reco er rate in the ind str AmCorp’s  Examiner's and Auditors have ‐ 20+ years experience 20+ years experience ‐ helped over 20,000 clients ‐ recover almost 2 billion in savings
  3. 3. AmCorp Management, Inc. has been  highlighted by the following media outlets. highlighted by the following media outlets Plus many more…
  4. 4. AmCorp Management, Inc. is the Nation’s  most successful Expense Analysis Firm most successful Expense Analysis Firm What is Cost Segregation? Cost Segregation is the process of identifying personal property  Cost Segregation is the process of identifying personal property assets that are grouped with real property assets, and separating  out personal assets for tax reporting purposes. A cost segregation  study identifies and reclassifies personal property assets to shorten  the  depreciation time for taxation purposes, which increases  h d i i i f i hi h i annual deductions, reduces  current income tax obligations,  thus increasing income and cash flow.  Personal property assets include a building’s non‐structural  elements,  exterior land improvements and indirect construction costs.  U.S. Treasury Department, 2004  “Cost Segregation is a lucrative Tax Strategy  that should be used in almost every major  purchase of Commercial Real Estate.”
  5. 5. Cost Segregation Engineering Opportunities What qualifies for Cost Segregation opportunities – NNew construction t ti – Purchase of existing property – Renovations or expansions – Leasehold improvements Leasehold improvements – Existing property placed in service after 1986 (“look‐backs”) – Real property stepped‐up through estate Each $100,000 in assets reclassified from a 39‐year recovery period to a five‐year recovery period results in approximately $22,000 in net present value savings, assuming an 8% discount ate and a 40% marginal tax rate. Journal of Accountancy Copyright 2005 by the AICPA Accountancy,
  6. 6. Current Status Typical Depreciation schedules for different properties vary.  Class Property Description Method 39 – Year Nonresidential (Commercial) Real Property Straight Line 27.5 – Year 27 5 Y Residential Rental Property R id ti l R t l P t Straight Line St i ht Li 15 – Year Land Improvements 150 DB 15 – Year Qualified Leasehold Improvements Straight Line (Extended from 12.31.05 to 1.1.08) ( ) 7 – Year Office Furniture, Fixtures, Equipment,  200 DB Certain Personal Property 5 – Year Cars, Trucks, Computer related equipment,  200 DB Certain Personal Property
  7. 7. Cost Segregation Reclassification Opportunities Experience has shown that an average of 32% is typically eligible for Cost Segregation.
  8. 8. The Reclassification Process The IRS wrote the Standard: • Mandates 3rd party study Mandates 3rd party study • Recommends engineering based studies • Enforces Audit Techniques Guide of 2004  Enforces Audit Techniques Guide of 2004 • Regulates compliance to Circular 230 SIMPLE TAX TREATMENT: SIMPLE TAX TREATMENT: 1. Catch‐up depreciation is taken in one year by filing IRS Form 3115 (Change of Accounting Method) 2. There are NO amended tax returns to file. f (File a new depreciation schedule) 3. Payments accompanying quarterly tax filings  may be immediately reduced. 
  9. 9. What Could A Engineering Cost  Segregation Mean To You. Segregation Mean To You. The New York Times By ignoring generous IRS guidelines when establishing depreciation schedules, 90% of real estate investors are unintentionally overpaying t i t ti ll i taxes.” ” The Journal of Accountancy: “Each $100,000 in assets reclassified from a 39‐year recovery period to a five‐year recovery period results in approximately $22,000 in net present value savings, assuming an 8% discount rate and a 40% marginal tax rate ” rate.
  10. 10. Here Is How It Works  Engineering Survey and Study of an Office Building (Identifying 5 & 7 Year Components) Decorative  Non‐ Structural Wall  Coverings and Trim Decorative  Ceiling Decorative  Lighting Decorative  Flooring Items not mentioned:  Fire Protection Equipment, Junction Boxes, Cabinets, Signs, Equipment, Gas lines, Electrical lines,  Data Room Equipment, Power Panels, Conduit, Data Lines, HVAC System, Cable Trays, Improvements,  etc…
  11. 11. Partial List Of Other Components  That Can Be  Re Classified To Accelerate Tax Benefits Re‐Classified To Accelerate Tax Benefits • Communication • Emergency Fixtures    • Mezzanines Stairs  • Systems Transformers • Waste Interceptors  • Platforms  • Hospitality Fixtures  • Security Systems • Structural Steel  • TV Outlets & Wiring  • Monitoring Systems  • Task Lighting  • Distribution Panels • Conduit/Wiring for  • Vents Beams Columns  • Distribution Wiring  specialty Systems  • Gas Systems • High Voltage Switchgear High Voltage Switchgear  • Flex Space Flex Space  • Vacuum Systems Vacuum Systems • Data Jacks  • Demountable Power Systems • Exhaust Systems  • Miscellaneous Outlets  • Shower/Deluge Fixtures • Waste Interceptors   • Emergency Power  • Supply & Waste Systems  • Audio/Visual Systems  • Computer Data/Power   • Gas/Compressed Air  • Buss Ducts  •SSupply/Exhaust   l /E h t • Mill Millwork Floor Coverings k Fl C i • N t li ti B i Neutralization Basins  • Kitchens • Window Treatments  • Humidity/Temp. Control  • HVAC Systems  • Wall Coverings  • Site Utilities  • Environmental Controls  • Demountable Walls  • Specialty refrigeration units • Computer Environ. Control  • Decorative Lighting  • Sewer • Communications  • Signage  • Drainage Systems   • Fire Protection Systems  • Sidewalk & Curbing  • Outdoor Lighting  • Specialized Air Systems • Parking Lots & Curbing  • Much more…  • Filtration/Sensing • Landscaping Fencing reak/Coffee Stations • Break/Coffee Stations • Swimming Pools  Swimming Pools • Sinks Drains • Foundations  • Specific‐Use Structures
  12. 12. A Few Examples Of How Our Clients Benefited Office Building – Purchased 2007 for $27,500,000 with 18 Units and 151,000 Square ft. Asset Class Asset Life Original Allocation Allocation After C.S. Study Personal Property 5 Year $0 0% $3,025,000 11% Personal Property 7 Year $0 0% 0 0% Land Improvements 15 Year $0 0% $3,300,000 12% Real Property 39 Year $27,500,000 100% $21,175,000 77% TOTAL ALL $27,500,000 100% $27,500,000 100% Financial Gain From Accelerating Depreciation Value of Property Accelerated $6,325,000 Percent of Property Accelerated 23% Year 1 through 6 Tax Benefit $1,454,750
  13. 13. A Few Examples Of How Our Clients Benefited Motel ‐ Purchased 2005 for $10,925,000 with 32,000 Square ft. Asset Class Asset Life Original Allocation Allocation After C.S. Study Personal Property 5 Year $0 0% $2,294,250 21% Personal Property 7 Year $0 0% 0 0% Land Improvements 15 Year $109,250 1% $437,000 4% Real Property 39 Year $10,815,750 99% $8,193,750 75% TOTAL ALL $10,925,000 100% $10,925,000 100% Financial Gain From Accelerating Depreciation Value of Property Accelerated $2,731,250 Percent of Property Accelerated 25% Year 1 through 6 Tax Benefit $682,912
  14. 14. Who Needs A Cost Segregation Study? Anyone who: 1. Owns a building with over $1,000,000 in property value. 2. Has net income and is a profitable tax paying entity. Qualifying Properties: 1.  Purchased or Built their facility within the last 12 months. 2. Purchased or Built their facility since 1987. 3. Facility with Renovations or Additions. 4. Any Change of Ownership. (Including Estates)
  15. 15. The Process! Building Owner ‐ Submit a Letter of Understanding ‐ Submit a copy of Depreciation Schedules (If Required) Submit a copy of Depreciation Schedules (If Required) ‐ Submit a Build or Purchase Statement AmCorp Engineering ‐ Create a detailed Engineering Study Estimate ‐ Deliver the Engineering Study Estimate to building owner Building Owner g ‐ Authorize Engineering Study ‐ Provides additional documentation AmCorp Engineering AmCorp Engineering ‐ Engineer will schedule a visit to walk through facility ‐ Engineer prepares and delivers to building owner a complete  Cost Segregation Engineering Study

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