Service Solutions

Your real estate holdings may qualify for a BKD engineering-based cost segregation study. These IRS-approved studies help you accelerate income tax depreciation deductions, generating potentially significant tax savings.

Many business owners routinely have real estate cost segregation studies done to save taxes and increase cash flow. For others, this may be a new concept to be evaluated cautiously, since the potential tax-saving results may seem too good to be true. If you're faced with a first-time decision about having a cost segregation study done, read these answers to questions we frequently receive from business owners like you.

Why hasn't my CPA told me about this?

Cost segregation studies employ engineering and cost-estimating procedures to identify shorter-lived assets qualifying for 5-, 7- or 15-year write-off periods, rather than the usual 39 years for building and acquisition costs. Most CPA firms don't have engineers on staff to physically inspect the property, examine architectural/engineering drawings and analyze cost data. Accountants may be able to capture some of the deductions, but without engineering expertise they may overlook substantial portions of a building to achieve tax savings.

What are BKD's qualifications?

BKD, one of the largest cost-segregation service providers in the United States, has a dedicated team of 10 engineers on staff to conduct these studies. Their combined cost segregation experience adds up to more than 125 years. BKD has been performing these studies since 1992. Today, we perform hundreds of studies for BKD clients across the nation each year as well as for nearly 100 CPA firms throughout the U.S. that participate in the BKD Alliance for Cost Segregation.

How much does it cost, and what return can I expect?

The cost of the study will vary depending on the project and the available documentation. In general, clients routinely receive present value cash-flow savings at least 10 or more times their investment for the cost segregation study. In addition, you may be eligible to receive sales/use tax benefits, property tax relief and other credits and incentives.

Are these studies cost effective?

First and foremost, BKD is an accounting firm with an 80-year history of providing practical, cost-effective accounting, auditing, tax and consulting solutions for its clients. We don't commit to performing a cost segregation study without providing a free initial evaluation and cost proposal to you. From that, both you and BKD can evaluate the cost vs. savings factors up front before any work begins. As CPAs, it's our nature not to initiate projects like these unless they provide value for your business.

Do these studies raise red flags with the IRS?

Engineering-based cost segregation studies to classify depreciation are an accepted standard approved by the IRS. Our experience in conducting successful cost segregation studies means yours is likely to withstand IRS scrutiny and to capture the costs that will earn you tax benefits. BKD's engineers are experienced in segregating costs and applying judicial decisions, IRS rulings and regulations to your situation. We also can help you file the necessary IRS paperwork to help you obtain your tax deductions.

What types of property are good candidates for these studies?

A BKD cost segregation study can "mine out" buried tax savings from:

• New buildings presently under construction
• Existing buildings undergoing renovation, remodeling, restoration or expansion
• Purchases of existing properties
• Office/facility leasehold improvements and "fit outs"
• Post-1986 real estate construction, building acquisitions or improvements where no cost segregation study was performed (even though the statute of limitations previously closed on the property construction/acquisition year)

For More Information

Cost segregation is highly specialized. BKD can help you with solutions shown in our
Real Estate Cost Segregation Solutions Brochure.

A comprehensive example of how cost segregation operates is in a Journal of Accountancy article entitled, "Cost Segregation Applied"

BKD also has published cost segregation articles including:

• Quicker Depreciation For Building Owners
• Imbedded Tax Savings
• Increase Cash Flow with Real Estate Cost Segregation
• Look at These Cost Segregation Savings!
• What's a Cost Segregation Study?

To learn more about the paybacks of BKD's engineering-based cost segregation studies, contact your BKD advisor or:

Jason Jobgen
800.307.3204

You also may complete the following form to have a BKD representative contact you:

* Name	* Required
Title
Organization
Address
City, State  ZIP
** Phone	** Phone or email required
** email
Type of Property	- Select One - Financial Institution Golf Course Health Care Manufacturing/Distribution Office/Professional Building Residential Development Retail Sport Facilities Other
Property Value	- Select One - $500,000 to $1 M $ 1 M to $ 3 M $ 3 M to $10 M > $ 10 M