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Case Studies

Tangible Property Regulation for Auto Dealerships

A Comprehensive Source Advisors Case Study

Source Advisors Approach

Source Advisors identified expenditures that met the requirements under the Tangible Property Regulations (TPR) to be treated as deductible repair costs. Expenditures deemed as a Betterment per the TPR were assigned to the proper MACRS (Modified Accelerated Cost Recovery) recovery periods, with several assets being eligible for Bonus Depreciation. These determinations were made by reviewing cost details, construction drawings, and from interviews with the property owner, and their knowledgeable representative. Additionally, assets originally placed in service that were removed in part or completely during the renovation were identified as dispositions. A detailed deliverable documenting all findings was provided to the client and their tax advisor for proper implementation during the preparation of the tax returns.

Financial Results

After our meticulous study, Source Advisors was able to achieve the following:

Source Advisors reclassified 45.9% or $1,102,615 as 15-year Qualified Improvement Property, 2.76% or $66,381 as 15-year Land Improvements, 6.28% or $150,893.20 as 5-year Tangible Personal Property, and 6.55% or $157,386 as deductible expense. Property with a depreciable life of less than 20 years qualified for 80% bonus depreciation under the Tax Cuts and Jobs Act. Additionally, Source Advisors identified the original assets that were removed and disposed of from the property in the current tax year, which resulted in the write-off of $945,078.

Highlights

Benefits

$157,332

Expensing in Year 1

$1,208,174

Accelerated Depreciation in Year 1

$422,861

Increased Cash Flow in Year 1

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Through detailed Cost Segregation analysis, Source Advisors turned complex construction costs into massive tax savings for the auto dealership.

Don’t leave money on the table. Contact Source Advisors to find out how Cost Segregation can work wonders for your auto dealership’s bottom line.

Discover the Source Advisors Difference

Our industry experience with cost segregation has helped businesses claim billions of dollars in tax credits and incentives.

Our engineers excel at delineating construction costs to yield the highest tax benefits.

Our 40-year history of achieving substantial tax credit savings for clients across various industries is a testament to our commitment and expertise.

Our thorough reporting ensures every qualifying cost is adeptly reclassified.

Our dedicated support team is readily available to guide you through every step of the process, ensuring a smooth and stress-free experience.

Our recommendations stand in full compliance with tax legislations, offering clients unmatched peace of mind.

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