Do you own a restaurant or a chain of restaurants? Using cost segregation is a great way to improve your cash flow. How does cost segregation work, and will it provide your business with the right returns you need?
Understanding Cost Segregation?
Cost segregation is a tax savings tool that allows companies to identify and qualify assets for accelerated depreciation. Some common assets include cabinetry, dedicated electrical, dedicated plumbing, and millwork. Other assets include oversized fans, range fans, landscaping, curbs, sidewalks, parking lots, and more. Several restaurants are packed full of these assets, opening a large area for accelerated depreciation.
How Does Accelerated Depreciation Work?
Accelerated depreciation allows a company to reclassify assets. When you accelerate the depreciation on these assets, you are eligible to increase cash flow and defer federal and state income taxes. While most organizations focus on furniture and assets that depreciate over five years, accelerated depreciation goes far beyond that by dissecting costs that are depreciated over 39 years.
The IRS Requirements
The IRS classifies the interior assets as “tangible personal property” and exterior assets as “land improvements.” Using cost segregation is known as the modified accelerated cost recovery system.
The Bottom Line
If you are wondering what cost segregation will do for your business, we will conduct a site survey and crunch numbers. Companies using cost segregation have saved hundreds of thousands of dollars in federal tax benefits. If you own a restaurant and you want to reduce or eliminate your tax burden, contact Engineered Tax Services at 800-236-6519 or e-mail us here!