Client Background

Our client, a prominent real estate developer, owned an $85 million mall in Texas. Seeking to maximize tax savings and optimize cash flow, they engaged our team to conduct a comprehensive cost segregation study.

Challenges Faced

The primary challenge was to identify building assets eligible for shorter depreciation periods under IRS Code Section 168 and properly allocate costs to maximize tax deductions.

Our Approach

Our team of seasoned experts in cost segregation embarked on a meticulous process:

1. Detailed Asset Identification:
   • We meticulously identified and categorized assets such as plumbing, HVAC systems, parking lots, cabinets, and other fixtures that qualified for accelerated depreciation.
2. Comprehensive Study Execution:
   • Leveraging our extensive experience and expertise, we conducted a thorough cost segregation study tailored to IRS guidelines and best practices.
   • Our approach was rooted in an auditor’s perspective, ensuring compliance while strategically utilizing IRS provisions to optimize tax savings.
3. Defensible Positioning and Audit Preparedness:
   • With a track record of completing thousands of studies, our team prepared detailed documentation and defended our findings in audits.
   • The director of our cost segregation group, a founding member of the American Society of Cost Segregation Professionals, provided leadership and expertise throughout the process.

Results Achieved

Our diligent efforts and strategic approach delivered substantial financial benefits to our client:

• Significant Tax Savings: By reclassifying eligible assets to shorter depreciation periods, we unlocked several million dollars in immediate tax savings for the client.
• Enhanced Cash Flow: The accelerated depreciation deductions generated from the study enhanced the mall’s cash flow, enabling reinvestment into the property and other strategic initiatives.
• Audit Defense Success: Our comprehensive documentation and expert defense of our positions in audits ensured the client’s tax benefits were upheld and protected.

Conclusion

Our cost segregation study for the $85 million mall in Texas exemplifies our commitment to maximizing tax savings through meticulous asset identification and strategic planning under IRS guidelines. By leveraging our expertise and adhering to rigorous standards, we enabled our client to achieve substantial financial advantages while ensuring compliance and audit readiness.

As leaders in cost segregation, backed by extensive industry experience and professional leadership, we continue to partner with real estate developers and investors to optimize their tax positions and enhance overall financial performance.