1. WE MARRY THE SCIENCE OF ENGINEERING WITH THE PRINCIPLES OF TAX AND ACCOUNTING
REAL ESTATE SPECIALTY TAX INCENTIVES
PREMIUM COST SEGREGATION STUDY (see example Boston’s Faneuil Hall Marketplace)
A cost segregation study is an IRS approved federal income tax analysis that increases near
term cash flow by utilizing shorter recovery periods to accelerate the return on capital from
your investment in property. Whether it is newly purchased, renovated or constructed
property, or even retroactive to approx 2006, the components of a building may be properly
reclassified through a cost segregation study by using shorter recovery periods for
depreciation. The study carves out certain qualifying portions of a building into 5, 7 and
15-year life spans that are normally buried in 39 or 27.5 year categories. Most importantly, ETS
offers Engineering-Based Premium Cost Segregation Analysis in which we incorporate
principles of construction tax and energy planning (proactively measuring and
recommending materials and supplies in the pre-design phase to ensure personal property
as opposed to real property classification) and abandonments per the IRS Repairs and
Maintenance 263a regulations.
REPAIRS & MAINTENANCE STUDY (see example Assisted Living Facility)
Through a methodical analysis of your expenses for repairs and maintenance, ETS can help
you reduce your tax liability and improve cash flow by properly reclassifying these
expenditures. First, we will identify which asset costs are not properly classified, then
reclassify them as deductible repairs defined by I.R.C §162 and §263(a). Deductible repairs
may include“incidental repairs”that help to maintain efficient operating condition but do not
necessarily prolong its life and material value or adapt the property to a new or different use.
Expenses incurred or paid for incidental repairs and maintenance are not considered as
capital expenditures and may be reclassified to accelerate deductions in the current year.
EPAct 179D ENERGY TAX CERTIFICATIONS (see example Grocery Store Chain)
ETS specializes in the energy tax certification process required by the IRS that calculates the
tax deduction achieved for the installation of energy-efficient Lights, HVAC and Building
Envelope systems. For privately owned commercially building (where the owner or tenant
benefits) or public/government buildings (where the Designer receives the allocated
benefits) the deduction ranges from $0.60/sq. ft. and $1.80/sq. ft. for energy efficient
Lighting, HVAC (including boilers and chiller systems) and Building Envelope (Roof, Windows
and Insulation). This certification applies to new building and renovated existing buildings
completed since 2006. These studies can also be completed proactively to help maximize tax
benefits and energy efficiency. ETS has completed thousands of the highest quality 179D
certifications across the country and has perfected the process by working closely with the
IRS on a regular basis.
ABANDONMENT STUDY (see example Manufacturing Building)
When you undertake demolition or renovate a building and remove old Lighting, HVAC units
and other building parts, these assets are abandoned. As such, their book value can be
treated as a business deduction. According to the IRS, tangible personal property within a
structure can be written off when a building is demolished or remodeled. (Value must have
been identified prior to the demolition and it may not have been purchased with the intent
to demolish.)
Mis-Capitalized R&M Expenditures $4,820,974
Accumulated Depreciation 2009 ($1,596,429)
2010 Identified Expenses $1,940,277
2010 Renovated Analysis $1,312,006
Total Savings Opportunity $5,771,823
Nationally & Professionally Licensed Engineering Firm
• Where Engineering & Accounting ComeTogether •
OTHER OVERLOOKED OPPORTUNITIES INCLUDE:
Please contact us for more information or to schedule a complimentary consultation.
Michael F.D’Onofrio:Managing Director
Mobile:561-762-0044 Office:561-253-6640
mdonofrio@engineeredtaxservices.com
» Proactive Construction Tax & Energy Planning
» Renewable Energy Tax Credits for Solar, Geothermal,
Microturbines, etc.
» DEIRA (Detailed Engineering Insurance Replacement
Appraisal) to Reduce Insurance Premiums
LOCATION
San Jose, CA
Petaluma, CA
Sparks, NV
Modesto, Ca
Total Benefit
SQ FT
47,939
65,580
64,744
74,969
179D/sf
$1.20
$1.10
$1.10
$1.20
TOTAL 179D
$57,526.80
$72,138.00
$71,218.40
$89.962.80
$290,846.00
EXAMPLE OF 100,000 SQ FT LIGHTING RETROFIT
EPAct/179D Deductions
Abandonment
Total Benefit
Multiplied by 30% Tax Rate
Net Cash After Tax
$60,000
$45,000
$105,000
$31,000
Combined Study
Cost Segregation 1st Year Cash Benefit
Cost Segregation 5 Year Accumulated
179D/EPAct Deduction for Lighting ($0.60sf)
Abandonment Deduction
5 Year Combined Benefit
BENEFIT
$3,335,777.00
$7,492148.00
$240,000.00
$125,000.00
$7,638,148.00
» Energy Audits, Benchmarking
» Energy Star and LEED Consulting
» Reserve Studies
National Headquarters
303 Evernia Street,Suite 300
West Palm Beach,FL 33401