The recent release of the Temporary Regulations under Section 263(a) has changed the manner in which the residual basis of existing assets is handled following removal on remodeling projects. In the past, demolished assets had to be carried on the client’s books until the full cost had been recovered and ultimately retired. Now, however, the value of the removed real property assets can be written off as abandoned components in the year incurred that includes the retirement of the disposed assets.
During an asset disposition study, Lindon Engineering Services identifies and quantifies the value of removed 39-year real property components as a result of a renovation or remodel to an existing structure. The accumulated depreciation that has been acquired since the component has been placed in service is then deducted from the estimated value, and the remaining value is subject to a one-time expense deduction usually resulting in a lower tax liability and a more accurate accounting of a company’s assets.
CONSTRUCTION COST CONTROL
One of the more difficult tasks we encounter with cost segregation studies is determining and reconciling the total cost of the facility whose cost we are trying to distribute.
All too often we are faced with missing invoices, incomplete
or erroneous cost descriptions, arithmetically inaccurate totals or simply insufficient information. The problem appears to be caused by a variety of condition:
- inadequately trained personnel
- unfamiliarity with the construction process
- non-standard recording methods
- overworked accounting clerks
- lack of cost estimating principles
Lindon Engineering Services, having encountered these situations on numerous projects, has devised a service that addresses these deficiencies and proposes solutions. In essence we will collect all costs and maintain them in a summary consistent with the engineered sixteen-division format used in our cost segregation studies. The Cost Summary will be maintained throughout the construction phase and is available for use in the subsequent cost segregation study upon completion of the work. The intent of a construction cost control program is to reduce the cost of administrative tasks, provide accurate and organized construction cost data and shorten the time to complete post-construction analysis.
COST SEGREGATION ANALYSIS
WHAT IS IT?
A cost segregation study is a review of the costs associated with the acquisition or construction of a building and reclassifying the depreciable life of the various assets in order to improve the cash flow of the business by reducing the tax liability of the firm. This is accomplished by accelerating the depreciation on assets reclassified as personal property components. To determine which assets are to be reclassified, an engineering cost analysis of the facility is performed and the assets listed according to their use or function.
The reallocated assets are then assigned a cost by estimation methods or from the owner’s cost records and an appropriate depreciable life determined. The end result is that the owner receives an increased cash flow by trading a non-cash transaction (depreciation) for a cash transaction (lower tax payout) over the life of the facility.
Click HERE to use our Cash Flow Calculator for an example of the savings you could realize.
If you can respond yes to any of the following, a Cost Segregation Analysis may greatly improve your
cash flow by reducing your tax liability:
Have you recently purchased a new building?
Have you recently built or do you plan to build a new building?
Have you remodeled or expanded an existing building?
We have been performing cost segregation studies for over seven years for a large variety of
– Retail Outlets
– Medical and Dental Clinics
– Surgical Centers
– Nursing Homes
– Automobile Dealerships
– Distribution Centers
CALL US AT 812-285-1250 FOR A NO COST ESTIMATE OF YOUR POTENTIAL SAVINGS.
BUSINESS SOLUTION SERVICES
WHAT IS IT?
Our Business Solution Services provide our clients with costs savings by improving processes and increasing efficiency and productivity. During a study, various industrial engineering techniques are used to evaluate and improve upon current processes. Some of the methods that are applied include forecasting, inventory control, space utilization analysis, facility layout design, and more!
WHO CAN UTILIZE THIS SERVICE?
Industrial engineering techniques may have a wide array of applications in the manufacturing industry, but it is in no way limited to just manufacturing. Any business who has manufacturing operations, holds inventory, provides service to customers, or any number of other workflow processes can potentially benefit from these studies.
If any of the following describe your business, and industrial engineering study could help you reduce your operating costs:
- Constantly understocking/overstocking product in inventory
- Inaccurate demand forecasts
- Difficulty controlling processes or high scrap quantities
- Underutilization of machines or employees
- Poor space utilization
- High transportation costs (both within and outside the facility)
- Currently designing/redesigning a new facility layout or choosing a new facility location
- Low customer service rates (long wait times, long lines, etc.)
CONTACT US AT 812-285-1250 FOR A NO COST EVALUATION TO DETERMINE WHICH OF OUR SERVICES WOULD BE BEST SUITED FOR YOU!