Manufacturing Case Studies - Engineered Tax Services

R&D Case Study on a Custom Manufacturer in New York

1 Year Tax Savings: $689,289.00

Study Highlights
Wages	$6,696,996.00
Supplies	$0.00
Contract Research	$0.00
Total QREs	$6,696,996.00

Via the research and development tax (R&D) credit, the federal government will reward you for stimulating innovation, technical design, and manufacturing within the U.S. Two-thirds of U.S. states also offer an R&D tax credit. We can help you deploy this valuable tool to maximize your company’s cash flow and bottom line.

Cost Segregation Study For A $2.2 Million Manufacturer San Diego, California

$368,837.70 in first-year tax savings

Without a cost segregation study, this $2.2 Million manufacturer in San Diego, California, purchased in 2021, would have generated first-year depreciation of approximately $56,400. By applying a cost segregation study, the property investors accelerated depreciation for the first year to approximately $425,200.

This accelerated depreciation strategy allows the property investors to immediately reduce their tax liability and in turn, increase their bottom line by offsetting income. This detailed engineering-based Cost Segregation Study will also be used to help maximize improvements and renovation in addition to being used for potential savings with insurance premium costs and property tax appeals.

A Cost Segregation study is an IRS approved federal income tax tool that increases near term cash flow by utilizing shorter recovery periods for depreciation to accelerate return on investment. For newly constructed, purchased or renovated properties and also retroactive generally over the last 10 years, building components are properly classified into individual units of property and accurate recovery periods for computing depreciation deductions. The study identifies with forensic engineering detail the immediate Bonus Depreciation 5, 7 and 15-year personal property class lives qualifying portions of a building that are normally buried in 27.5 year residential or 39 year commercial categories.

R&D Case Study on a Car Part Designer in Michigan

1 Year Tax Savings: $102,243.00

Study Highlights
Wages	$460,784.00
Supplies	$48,790.00
Contract Research	$328,183.00
Total QRES	$837,451.00

Cost Segregation Study For Industrial Property In Grovetown, Georgia

$395,121.65 in first year tax savings

Without a Cost Segregation Study, this $1.5 Million Industrial Property in Grovetown, Georgia purchased in 2021 would have generated first year depreciation of approximately $38,400. By applying a Cost Segregation Study, the property investors accelerated depreciation for the first year to approximately $433,500.

This accelerated deprecation strategy allows the property investors to immediately reduce their tax liability and in turn, increase their bottom line by offsetting income. This detailed engineering-based Cost Segregation Study will also be used to help maximize improvements and renovation in addition to being used for potential savings with insurance premium costs and property tax appeals.

DISPOSITION STUDY FOR A WOOD MANUFACTURING FACILITY IN LOUISIANA

ETS determined and identified the unit of property cost basis for the improvements which were removed and destroyed for federal income tax purpose. Disposition studies serve as an opportunistic method to realize significant deductions that may otherwise have been overlooked. Such studies should be considered when commercial property is set to undergo a major renovation or demolition. To learn more or if you would like a complimentary consultation, please contact us at 561-253-6640 or email us here.

Location	Un-depreciated Amount
Chopin, LA – Manufacturing Facility	$208,222.46
Oakdale, LA – Manufacturing Facility	$276, 063.61
Total Building Cost	$484, 286.07
The purpose of this study was to identify and assign value to the building improvements for lighting that have been removed and replaced to enhance energy efficiency, maintain savings, and improve the quality of the lights. The retired assets were identified, valued, and discounted for the depreciation taken.

Disposition

When you undertake demolition or renovate a building and tear out old lighting, HVAC units, and other building parts, these assets are disposed of. As such, their book value can be treated as a business deduction. Tangible personal property within a structure can be written off when a building is demolished or remodeled. The value must have been identified prior to the demolition and it must not have been purchased with the intent to demolish. Learn more about the disposition studies here or visit our disposition calculator here.

Cost Segregation and 179D Energy Tax Credits for Manufacturers

By applying cost segregation, property investors accelerate depreciation, reduce tax liability and increase their bottom line. This aids in future benefits via abandonment, repairs, routine maintenance and overall asset management. ETS performs hundreds of cost segregation studies on a monthly basis for property owners, providing a detailed engineering review of assets including special purpose mechanical and electrical systems, decorative finishes, site improvements, and any process related to special purpose construction.

Study Type	Class Life	Percentage	Accelerated Tax
Cost Segregation Study	5-Year	26.3%	$869,608
Cost Segregation Study	15-Year	12.4%	$410,797
Cost Segregation Study	39-Year	61.3%	$2,074,635
179D Energy Policy Act			$48,830
Total Building Cost			$3,355,040
% amounts relate to how much was reallocated from the depreciated basis Cost Segregation is based on a 40% tax bracket for federal and State Taxes and performed on the ADR Asset Depreciation Range. Financial benefits are realized by maximizing net present value through deferring tax payments and using increased cash flow to strengthen your portfolio or scale your business. The tables above identify the difference between a cost segregation study and traditional 39.5 year capitalization. The line graph (if shown) demonstrates the impact of investment cash.

Engineered Tax Services, Inc. (ETS) has helped thousands of property owners nationally increase their cash-flow by accelerating depreciation through our cost segregation studies. Our cost segregation studies work to uncover potential tax savings and increase cash flow through reclassification and depreciation of property. ETS provides a “Detailed Engineering” review as part of our reporting process, working seamlessly with the IRS and your CPA firm for minimal disruption to your business.

Cost Segregation

179D Energy Policy Act

The 179D Energy Policy Act certification calculates the tax deduction achieved from the installation of energy-efficient assets, including HVAC, building envelope, and lighting. The building may qualify for up to $1.80 per square foot ($0.60 per square foot for each system); however, partial deductions are allowed for lighting. The 179D EPAct deduction is available for newly constructed or energy renovated commercial buildings as well as apartment buildings 4 stories or more. Commercial property owners who pay taxes can claim the benefit with the exception of government-owned buildings where the tax deduction may be allocated to the designer. In order to qualify for these deductions, an analysis of your energy savings is required by a qualified firm like Engineered Tax Services. The savings are significant can additional tax benefits are often identified through the engineering process. Contact ETS for more information.

179D Energy Study for a Manufacturing Facility in Princeton, MN

Location	Improvement	% Contribution	Tax Benefit
Princeton, MN – 30,280 sq. ft.			$54,504
	Lighting	%31.38
	Envelope	%8.07
	HVAC	%10.68
Total Building Cost			$54,504
This manufacturing building, completed in September 2010, qualified for all three energy efficient deductions, HVAC, Envelope and Lighting, each system provided for a tax benefit of $0.60 each, per square foot. Additionally, the combined energy efficient upgrades in the building result in a minimum of 50% annual energy savings, when compared to similar reference buildings.

179D Energy Policy Act

The 179D energy certification calculates the tax deduction achieved from the installation of energy-efficient assets, including HVAC, building envelope, and lighting. The building may qualify for up to $1.80 per square foot ($0.60 per square foot for each system); however, partial deductions are allowed for lighting. The 179D energy deduction is available for newly constructed or energy renovated commercial buildings as well as apartment buildings 4 stories or more. Commercial property owners who pay taxes can claim the benefit with the exception of government-owned buildings where the tax deduction may be allocated to the designer. In order to qualify for these deductions, an analysis of your energy savings is required by a qualified firm like Engineered Tax Services. The savings are significant can additional tax benefits are often identified through the engineering process.

Cost Segregation and 179D Energy Benefits for a Manufacturer in Illinois

Study Type (Manufacturer – Illinois)	Class Life	Percentage	Accelerated Tax
Cost Segregation	5-Year	%26.3	$869,608
Cost Segregation	15-Year	%12.4	$410,797
Cost Segregation	39-Year	%61.3	$2,074,635
179D Energy			$48,830
Total Building Cost			$3,355,040
% amounts relate to how much was reallocated from the depreciated basis Cost Segregation is based on a 40% tax bracket for federal and State Taxes and performed on the ADR Asset Depreciation Range. Financial benefits are realized by maximizing net present value through deferring tax payments and using increased cash flow to strengthen your portfolio or scale your business. The tables above identify the difference between a cost segregation study and traditional 39.5 year capitalization. The line graph (if shown) demonstrates the impact of investment cash.

Cost Segregation

COST SEGREGATION STUDY FOR A FOOD MANUFACTURER

Study Type	Class Life	Percentage	Accelerated Tax
Cost Segregation	5-Year	28.58%	$1,944,027
Cost Segregation	15-Year	21.46%	$1,459,869
Cost Segregation	39.5-Year	49.96%	$3,398,228
Total Building Cost			$6,802,216
% amounts relate to how much was reallocated from the depreciated basis Cost Segregation is based on a 40% tax bracket for federal and State Taxes and performed on the ADR Asset Depreciation Range. Financial benefits are realized by maximizing net present value through deferring tax payments and using increased cash flow to strengthen your portfolio or scale your business. The tables above identify the difference between a cost segregation study and traditional 39.5 year capitalization. The line graph (if shown) demonstrates the impact of investment cash.

Cost Segregation

COST SEGREGATION STUDY FOR A CHEESE MANUFACTURER

Study Type	Class Life	Percentage	Accelerated Tax Benefit
Cost Segregation	5-Year	26.36%	$231,947
Cost Segregation	15-Year	21.67%	$190,699.88
Total		48.03%	$422,647.37
% amounts relate to how much was reallocated from the depreciated basis Cost Segregation is based on a 40% tax bracket for federal and State Taxes and performed on the ADR Asset Depreciation Range. Financial benefits are realized by maximizing net present value through deferring tax payments and using increased cash flow to strengthen your portfolio or scale your business. The tables above identify the difference between a cost segregation study and traditional 39.5 year capitalization. The line graph (if shown) demonstrates the impact of investment cash.

Cost Segregation

1 Year Tax Savings: $689,289.00

$368,837.70 in first-year tax savings​

1 Year Tax Savings: $102,243.00

$395,121.65 in first year tax savings

$368,837.70 in first-year tax savings