Case Study: Cost Segregation for a Fast-Food Restaurant in Manning, South Carolina

Accelerated 5- & 15-Year Property: 57.30%

The report’s cost segregation results show $664,605.32 allocated to 5-year property and $649,068.16 allocated to 15-year property, with $978,962.51 remaining in the 39-year class.

Immediate Tax Impact

The report’s summary shows an immediate deduction of $1,329,361.98 and projected total deductions of $1,429,768 over the first five years. The study also identifies bonus depreciation of up to 100% in its summary.

Important: These figures represent deductions reported in the engineering study, not a guaranteed dollar-for-dollar tax savings amount. Actual tax savings depend on the taxpayer’s individual tax situation.

Depreciation Impact

Before Cost Segregation

The property’s depreciable basis would generally remain concentrated in long-life building property.

After Cost Segregation

ETS identified substantial portions of the basis for shorter recovery periods:

$1,313,673.48

Total basis reclassified to 5- and 15-year property

That’s 57.30% of the property’s $2,292,636 depreciable basis.

Property Snapshot

A 2,849-Square-Foot Restaurant With More Than $1.3M in Accelerated Basis

Property Type	Fast-Food Restaurant
Location	Manning, South Carolina
Building Size	2,849 sq. ft.
Year Built	1983
Total Property Cost	$2.56M
Depreciable Basis	$2.29M
Accelerated Basis	$1.31M
Immediate Deduction	$1.33M

What the Engineering Study Examined

The purpose of the ETS study was not simply to apply a percentage to the property’s cost. The engineering process identified individual Units of Property and analyzed their appropriate tax classifications.

ETS’s documented process included:

01 — Identify Assets

Break the property into individual Units of Property and specific project assets.

↓

02 — Inspect the Property

Conduct a physical inspection and document the property’s components.

↓

03 — Analyze Costs

Review project costs and apply engineering cost-estimation techniques where appropriate.

↓

04 — Classify Components

Assign qualifying assets to their appropriate depreciation classifications.

↓

05 — Allocate Indirect Costs

Allocate applicable architectural, engineering, permit, and other indirect costs to the appropriate assets.

↓

06 — Reconcile the Results

Compare the engineering findings against the property’s total project costs and records.

ETS states that its engineering process includes physical inspection, review of available blueprints and construction documentation, quantitative take-offs, unit-cost analysis, allocation of indirect costs, and grouping of assets by class life and placed-in-service date.

Why Cost Segregation Matters for Restaurant Properties

Restaurant properties can contain a combination of building components, specialty electrical systems, dedicated equipment, finishes, and other assets that may have different recovery periods.

An engineering-based cost segregation study analyzes these components individually rather than treating the entire property as a single building asset.

For this Manning, SC restaurant, the study identified:

$664,605

in 5-year property

$649,068

in 15-year property

$978,963

remaining in 39-year property

This resulted in $1,313,673.48 of the $2,292,636 depreciable basis being classified into 5- and 15-year property.

Financial Takeaway

For this Manning, South Carolina fast-food restaurant, ETS’s engineering-based cost segregation study identified more than $1.31 million of depreciable basis for shorter recovery periods and reported an immediate deduction of approximately $1.33 million.

The study demonstrates how a detailed engineering analysis can uncover depreciation opportunities that may not be apparent when a commercial property is treated as a single building asset.

Could your restaurant or commercial property qualify for accelerated depreciation?