Cost Segregation: The Tax Break You Didn’t Know Existed
Cost Segregation: The Tax Break You Didn’t Know Existed
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The recent legislative move to Section 174 tax of the Internal Revenue Code has generated significant buzz among business owners, accountants, and tax professionals. Explore our comprehensive guide on navigating the R&D tax credit amortization to maximize your business’s tax benefits and support innovation efforts.
Cost segregation is a tax-saving strategy that can be used by businesses and individuals to accelerate depreciation schedules. By identifying and segregating tangible personal property from real property, businesses can deduct the cost of the tangible personal property over a shorter period of time. This can result in significant tax savings.
Benefits of Cost Segregation
There are a number of benefits to cost segregation, including:
Increased tax savings: By accelerating depreciation schedules, businesses can reduce their taxable income and save on taxes.
Improved cash flow: Cost segregation can help businesses free up cash flow by allowing them to deduct the cost of tangible personal property over a shorter period of time.
Reduced audit risk: Cost segregation studies can help to reduce the risk of IRS audits by providing clear and accurate documentation of the company's assets.
How Cost Segregation Works
Cost segregation studies are typically conducted by qualified cost segregation consultants. These consultants will review a company's assets and identify any tangible personal property that can be segregated from real property. Once the tangible personal property has been identified, the consultant will assign a depreciation schedule to each asset.
Working with a Cost Segregation Consultant
If you are interested in conducting a cost segregation study, it is important to work with a qualified cost segregation consultant. A qualified consultant can help you to identify all of the tangible personal property that can be segregated from real property and assign the appropriate depreciation schedules to each asset.
Schedule a Free Consultation
If you are interested in learning more about cost segregation, we encourage you to schedule a free consultation with one of our qualified cost segregation consultants. We can answer any questions you may have and help you to determine if cost segregation is right for your business.
Common Myths About Cost Segregation
There are a number of common myths about cost segregation. Some of the most common myths include:
Cost segregation is only for large businesses.
Cost segregation is a complex and time-consuming process.
Cost segregation is only for new businesses.
Cost segregation is only for businesses that own real estate.
These myths are simply not true. Cost segregation can be a valuable tax-saving strategy for businesses of all sizes. The process is relatively simple and can be completed in a short amount of time. Cost segregation can be used by businesses that own or lease real estate.
Representative Examples of Cost Segregation Studies and Tax Credit Work
Here are some representative examples of cost segregation studies and tax credit work that we have completed for our clients:
A manufacturing company was able to save over $1 million in taxes by conducting a cost segregation study.
A retail company was able to save over $500,000 in taxes by conducting a cost segregation study.
A healthcare company was able to save over $250,000 in taxes by conducting a cost segregation study.
Conclusion
Cost segregation is a valuable tax-saving strategy that can be used by businesses and individuals. By identifying and segregating tangible personal property from real property, businesses can accelerate depreciation schedules and save on taxes. If you are interested in learning more about cost segregation, we encourage you to schedule a free consultation with one of our qualified cost segregation consultants.
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