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

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
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
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

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)....
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online