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Auto Dealership Cost Segregation Case Study
Cost Segregation is a commonly used strategic tax planning tool that allows companies and individuals who have constructed, purchased, expanded or remodeled any kind of real estate to immediately reduce tax by accelerating depreciation deductions and deferring federal and state income taxes. The following is a case study for an auto dealership to demonstrate the benefits of accelerated depreciation on this property type.
Building Type: Auto Dealership
Summary of Benefits | Results |
---|---|
Additional Tax Deductions in First Year | $896,720 |
Net Present Value (NPV) Over 10 Years | $259,978 |
NPV Over Remaining Life of Property | $214,826 |
*Benefits typical for tax returns filed 2018-2022 |
Building Allocation After Study
Building Information
Purchase Price of Property (less land) | $3,490,000 |
Property Type | Auto Dealership |
Building Sq Ft | 30,000 |
Entire Site Sq Ft | 196,100 |
Date Acquired | July - Current Tax Year |
Federal Tax Rate | 29.6% |
State Tax Rate | 5% |
Combined Tax Rate | 34.6% |
ROI Factor | 8% |
Bonus Depreciation | 100% |
Calculate Your Tax Savings
Use our Cost Segregation Savings Calculator to estimate tax savings for your type of building. Enter building details for instant results at kbkg.com/costsegregation/calculator.
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Cost Segregation Insights
![[PRESS RELEASE] KBKG Welcomes Two New Directors to Atlanta-Based Operation [PRESS RELEASE] KBKG Welcomes Two New Directors to Atlanta-Based Operation](https://www.kbkg.com/wp-content/uploads/Press-Release-–-KBKG-Welcomes-Two-New-Directors-to-Atlanta-Based-Operation.jpg)
[PRESS RELEASE] KBKG Welcomes Two New Directors to Atlanta-Based Operation
02/23/2021Atlanta, Georgia – Nationwide tax specialty firm KBKG hired two new Directors, Amar Patel and Ian Williams, as part of their Southeast practice. Both Directors join KBKG with over 25 years of combined experience in Cost Segregation and Research & Development Tax Credits, two key services offered by the firm to CPAs and businesses. As … Read More

KBKG Tax Insight: Final Sec. 1031 Regulations Do Not Materially Affect Cost Segregation Studies
02/04/2021As featured in AICPA Tax Adviser – February 4, 2021 In November 2020, the IRS issued final regulations defining real property for Sec. 1031 like-kind exchanges (T.D. 9935). The new regulations were needed because the Tax Cuts and Jobs Act (TCJA), P.L. 115-97, amended Sec. 1031 so personal property is no longer eligible for a … Read More

Tax Deadline is Approaching – Now’s the Time to Request Your Cost Segregation Studies
12/07/2020Are you or your clients interested in performing a cost segregation study before the upcoming March 15 tax deadline? KBKG is committed to timely work. Since the months leading up to a tax deadline is our busiest time of year, we encourage you to start the process now to avoid any delays in filing your … Read More

KBKG Tax Insight: IRS Releases Guidance on Bonus Depreciation
12/03/2020On November 6, 2020, the IRS released Revenue Procedure 2020-50 providing guidance on implementing the most recent bonus depreciation regulations. These regulations, issued in September 2020, addressed feedback and slightly revised provisions of the 2019 proposed bonus regulations. Since the Tax Cuts and Jobs Act bonus depreciation rules have changed over the iterations of proposed … Read More

How Two Andersen Alumni Help Thousands of Businesses Secure Overlooked Tax Incentives to Improve their Bottom Line
11/10/2020The following article is featured on Andersen Alumni. Former alumni Gian Pazzia and CJ Aberin live by the Arthur Andersen motto: Think Straight, Talk Straight. As founding partners of KBKG, one of the largest independent specialty tax firms in the country, they have worked to preserve that legacy both professionally and personally. While both Gian … Read More

KBKG Tax Insight: Final Regulations Provide Additional Changes to Bonus Depreciation Rules
10/02/2020On September 21, 2020, the IRS and Treasury Department finalized the last set of final regulations related to bonus depreciation. The originally proposed versions of these regulations were issued on September 24, 2019. The changes made were primarily in response to feedback submitted by tax preparers. Following are a few highlights. Qualified Improvement Property: On … Read More

KBKG Tax Insight: Proposed 1031 Regulations Negative Impact on Cost Segregation – KBKG’s Comments to the IRS
08/10/2020On June 12, the IRS issued proposed regulations that define what real property is for purposes of 1031 exchanges. This was in response to changes in the Tax Cuts and Jobs Act (TCJA) that no longer allows personal property from being eligible for 1031 exchange. In their current form, the proposed regulations may create significant … Read More

Comments for Proposed Regulations 1.1031(a)-3 (REG-117589-18)
08/07/2020This letter was originally published by the ASCSP. Our Principals Lester Cook,CCSP and Malik Javed,CCSP are board members of the ASCSP. The American Society of Cost Segregation Professionals (ASCSP) wishes to commend the Treasury Department (Treasury) and the Internal Revenue Service (IRS) for the thoughtful effort clearly reflected in Proposed Regulations 1.1031(a)-3 (REG-117589-18) defining real … Read More

KBKG Tax Insight: Partial Dispositions & Deduction of Demolition Costs
07/07/2020Subsequent to the acquisition of a property, taxpayers often incur capital expenditures related to property renovations and improvements. As this work occurs, the existing components are often removed or disposed of. IRC Section 1.168(i)-8(d)(2) allows taxpayers to realize a gain or loss by making an election to partially dispose the adjusted basis of the aforementioned … Read More

KBKG Tax Insight: Concurrent IRS Form 3115 Template (DCN 244 & 7)
06/17/2020On April 17, 2020, the IRS released Rev. Proc. 2020-25 outlining how to implement the Qualified Improvement Property (QIP) changes that were part of the CARES Act of 2020 using Form 3115, Change in Accounting Method. Section 6.03(4)(b), states that a taxpayer making a change 244 to correct QIP and changed related to depreciation recovery … Read More