Manufacturing Facilities
Cost Segregation
Manufacturing facilities provide a fairly balanced short life asset mixture, with heavier emphasis on 15 year assets unless significant interior space is given over to use as offices. Beyond the typical findings, many facilities include short life assets such as special electrical service, overhead cranes and hyper-dense foundation pads for heavy equipment.
In addition to all extant short life assets, our studies break out the IRS mandated Units of Property when considering the long-term components present in your building.
Manufacturing facility studies typically pay back the cost of the study in the range of 8 to 1 up to more than 50 to 1 in the first year of study use. Note the actual results highlighted in the table below. First year savings range from roughly $20,000 up to in excess of $140,000.
Sample of Actual Study Results
Depreciable Basis
$2,514,112
$1,688,640
$1,872,496
$4,979,875
$1,444,320
Purchase Date
11/1/2013
11/1/2013
4/1/2015
10/1/2015
9/1/2015
Year of Study
2014
2014
2015
2015
2015
1st Year Additional Depreciation
$365,931
$229,593
$57,342
$204,547
$26,683
1st Year Tax Savings
$144,909*
$90,919*
$22,708
$81,001
$22,447
Year 1 Payback
50.5:1
34.3:1
15.0:1
26.8:1
8.3:1
Initial 5 Years Tax Savings
$258,216
$153,978
$108,553
$362,892
$100,215
5 Year Payback
96.6:1
61.9:1
72.9:1
120.2:1
37.9:1
* Results from “Catch Up” studies which allow the owner of properties purchased in previous
tax years to benefit from cost segregation in the current tax year without filing amended returns.
NOTE: The above listed tax savings are based on a 39.6% tax rate for the owner.