This document provides an overview of a proposed cost segregation study for a company's properties. A cost segregation study identifies personal property assets that are often grouped with real property for tax purposes. Reclassifying these assets allows the company to claim accelerated depreciation deductions, generating tax savings. The third party firm CSSI would perform the study by visiting sites, analyzing costs, and producing a report meeting IRS guidelines. This would reclassify assets like electrical, carpeting, and landscaping to shorter lives, providing estimated tax savings for the company over multiple years.

1. Cost Segregation Study Proposal
Overview Analysis
‘YOUR’ Company

2. Cost Segregation Studies
Overview
What?
Cost Segregation is an IRS-approved
process of identifying personal
property assets that often get buried
or lumped together within the Real
Property asset category. By
How?
Cost Segregation Services, Inc. (CSSI),
undergoing a cost segregation study, an independent third party, performs
these personal property assets are an engineered cost segregation study
reclassified to the shortest possible on your commercial property. Through
depreciable life to enable the real the study CSSI engineers identify and
estate owner to maximize his or her reclassify segments of your real
tax depreciation situation, thereby property into personal property. This
reducing the current income tax allows you to accelerate the
obligations. The tax savings generates depreciation of your building and/or
cash flow that owners can use to renovation into five-, seven- and 15-
reinvest in the business, purchase year categories rather than the
more property, apply to their principle conventional 27.5- and 39.5-year
payment or spend on themselves. schedules. Five- and seven-year items
include decorative building elements,
electrical for dedicated computer
equipment, and carpet. Fifteen-year
items include site utilities, landscaping
and paving.

3. CSSI Synopsis
CSSI is the premier engineering company providing cost segregation studies for U.S.
businesses. We have completed over 6,000 studies nationally.
Compliant Focused Independent
Our engineering background We are engineers singularly CSSI is classified as an
allows us to provide not only the focused on cost segregation. independent engineering
best possible results, but also Our goal is to support you and specialist meeting the exact
strictly adheres to all IRS your CPA with the most specifications stated by the IRS in
guidelines and recommendations. accurate results so you can regard to commercial property
In addition, we constantly monitor realize maximum savings and owners performing cost
changes to stay up to date on the increased cash flow. segregation studies.
most current IRS cost segregation
rules and regulations.

4. Property Analysis Summary
Total Analysis
Building Cost $ 13,655,000
Date Acquired
Tax Year: 2010 2011 2013
Current Method
Accumulated Depreciation Reported
39 year straight line method $ 1,171,982 $ 1,522,096 $ 2,222,324
Alternative Method
Cost Segregation Study Accumulated Depreciation
5 Year $ 1,800,234 $ 2,064,248 $ 2,306,909
7 Year $ - $ - $ -
15 Year $ 288,709 $ 359,869 $ 487,124
39 Year $ 883,031 $ 1,147,423 $ 1,676,207
Total $ 2,971,974 $ 3,571,540 $ 4,470,240
Results for Tax Year: 2010 2011 2013
Increased Accumulated Depreciation Expense $ 1,799,992 $ 2,049,444 $ 2,247,916
Tax Rate (Estimated) 36% 36% 36%
Estimated Accumulated Tax Savings Benefit $ 647,997 $ 737,800 $ 809,250
These Savings are based on an estimate of 10 locations.

5. Property Economic
Summary
YOUR Company
Cumulative Benefit at End After Tax
Estimated Cost Savings Benefit
of Ownership Fees
Property Name Purchase Date Cost Basis
2010 2011 2013 NPV FV
Building 1 1/1/07 $ 1,250,000 $ 62,000 $ 70,226 $ 72,917 $ 50,924 $ 813,170 $ 7,450
Building 2 7/1/10 $ 1,000,000 $ 12,483 $ 32,246 $ 50,710 $ 37,672 $ 757,791 $ 6,950
Building 3 6/1/06 $ 750,000 $ 45,761 $ 48,107 $ 47,058 $ 32,851 $ 485,719 $ 5,450
Building 4 9/1/04 $ 500,000 $ 32,022 $ 31,673 $ 30,973 $ 20,805 $ 263,721 $ 3,950
Building 5 3/1/08 $ 2,350,000 $ 101,510 $ 117,429 $ 139,662 $ 99,492 $ 1,715,794 $ 8,950
Building 6 8/1/08 $ 980,000 $ 46,133 $ 53,269 $ 63,253 $ 43,726 $ 754,084 $ 6,825
Building 7 4/1/07 $ 600,000 $ 32,133 $ 36,369 $ 37,826 $ 26,179 $ 418,027 $ 4,550
Building 8 5/1/09 $ 1,850,000 $ 58,971 $ 80,597 $ 105,302 $ 76,158 $ 1,418,456 $ 8,600
Building 9 11/1/02 $ 475,000 $ 29,947 $ 29,615 $ 28,951 $ 18,496 $ 201,006 $ 3,900
Building 10 12/1/06 $ 3,900,000 $ 227,036 $ 238,270 $ 232,598 $ 172,877 $ 2,556,052 $ 10,475
Totals $ 13,655,000
$ 647,997 $ 737,800 $ 809,250 $ 579,180 $ 9,383,821 $ 67,100

6. Net Present Value
Summary
Benefit Analysis at End of Ownership
Cumulative Net Present Value of Benefit $ 579,180
Cumulative Future Value of Invested Savings $ 9,383,821
Savings Overview
Estimated Accumulated Tax Savings Benefit
2010 $ 647,997
2013 $ 809,250
Fees Overview
CSSI Fees: For all Properties - Before Tax $ 67,100
CSSI Fees: For all Properties - After Tax $ 42,944
Discounted 10% CSSI Fees: For all Properties - Before
$ 60,390
Tax
Discounted 10% CSSI Fees: For all Properties - After Tax $ 38,650
Net Benefits to After Tax Cost Ratio (First Year of
15:1
Implementation)
Net Present Value to After Tax Cost Ratio 13:1
Double Click
Icon To View
Individual NPV NPV
Breakdowns

7. Overview
Project application for Cost Segregation of YOUR Company
commercial property facilities
Study cost to include:
1. All cost of travel
2. All related engineering costs
3. Study to be provided for all buildings on property
4. Study to be coordinated with YOUR Company
project and accounting personnel
5. Completed cost segregation study document for
ABC Company depreciation accounting
application

8. Cost Segregation Study Timeline
Cost Segregation Study in Progress… Start Date, Jan. 3, 2012------------Feb. 14, 2012
Jan. 3, 2012
Initiate Study
Jan. 3 – Jan. 17
Initiate Site Visits & Collect Data for all Properties
Feb. 7, 2012
Complete Engineering Analysis
Completed Study Review, Feb. 7, 2012----------------------------------------Feb. 14, 2012
Feb. 7 First Review Date of Draft
Review with Tax Consultants
Feb. 14, 2012
Delivery of Completed Study

9. Initiate Study
1. Agreement: Engagement letter approval
2. Review of project cost system with Project Management
3. Schedule Site Survey of completed projects
4. Review cost information for each location
5. Request and contact client coordinator

10. Site Survey
1. Validate and review source information from client
coordinator for each location
2. Complete site survey of all properties
3. Review any changes made to project definition for project
4. Review planned completion timetable
5. Review accounting methods for asset definition

11. Study Review
1. Sample Report Project completed
2. Review of completed cost detail
3. Review total site cost detail
4. Review accounting methods for asset definition
5. Gather final data for completion of cost segregation study

12. Cost Segregation Study Report
Final Review
s Review Draft, Feb. 17, 2012
- Review completed draft
- Include updated documentation
- Review results with tax professionals
s Final Report, Feb. 24, 2012
- Deliver cost segregation report
- Return any data and files

13. IRS Guideline: “For A Quality Study”
1. Preparation By an Individual with Expertise and Experience
2. Detailed Description of the Methodology
3. Use of Appropriate Documentation
4. Interviews Conducted with Appropriate Parties
5. Use of Appropriate Nomenclature
6. Use of a Standard Numbering System
7. Explanation of Legal Analysis
8. Determination of Unit Costs And Engineering “Take-Offs”
9. Organization of Assets Into Lists or Groups
10. Reconciliation of Total Allocated Costs to Total Actual Costs
11. Explanation of the Treatment of Indirect Costs
12. Identification And Listing Of Section 1245 Property
13. Consideration Of Related Aspects (e.g. IRC §263A. Change
in Accounting Method And Sampling of Techniques)

14. CSSI Report: Outline of Contents
s Executive Summary
s The Study
s Scope of Study
- Overview
- Methodology
s Investigation and Evaluation Certificate
s Engineer Qualifications
s Cost Summary
s Cost Detail
s Exhibits – Select photographs from site visit and
architectural drawings.

15. For years, CSSI has been delivering quality, affordable, engineer-based
cost segregation studies to a wide range of individuals and businesses.
Our team of experts can help easily apply the results to your company
owned locations and work with you and your tax professional to assure
successful results. In addition, our national coverage and expertise allows
us to work with customers and properties across the United States.

16. Thomas M. ‘Tom’ Lanahan
CSSI – National Sales Executive
tomlanahan@att.net
(251) 583-4377