benefit_cost_segregation

benefit_cost_segregation - property and $800,000 to 5- year...

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Benefits from cost segregation MLC corporation purchases a nonresidential building for $12,135,000 (assume the land is owned by an independent third party). If the tax payer does not use cost segregation, it must use straight-line depreciation over 39 years. In contrast, suppose the accounting professional advises his client, or employer to retain an engineering consultant to prepare a cost segregation study. The engineer’s report shows that of the total purchase price, $50,000 should be allocated to 15-year
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Unformatted text preview: property and $800,000 to 5- year property, leaving $11,285,0000 assigned to the building. Assuming a 35% tax rate and a 5% discount rate, the cost segregation study produces a tax savings of over $130,000. See Table. Suggested: Use the Excel file to perform your own sensitivity analyses. Try changing (1) the amounts assigned to the different property classes, (2) the discount rate, and (3) the tax rate. Adapted from: Cost Segregation Applied, Journal of Accountancy (August)....
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