Fast-Food Cost Segregation Studies
Fast-food restaurants have much in common with traditional dining. Much short-life depreciation can be found in the kitchen, with specialty gas appliances, cooking appliances, industrial refrigerators, and countless other appliances for making a quick meal. Then there is the counter area, where more savings can be found to help lower your income taxes.
A cost segregation study from O’Connor will not only focus on the interior of your fast-food establishment but also look at the exterior. The parking lot, signage, landscaping, and drive-thru lanes are just some components that can be used. Whether they are short-life or long-term depreciable assets, O’Connor will find and utilize all of them.
There is some upfront cost for a cost segregation study, but this can often be mitigated quickly by income tax savings using accelerated depreciation. The typical study is paid back by a ratio of 2-1, though this can be as high as 15-1 depending on circumstances. And that is just the first year! The table below shows other fast-food establishments that O’Connor has helped in the past.
Real Clients That Used Cost Segregation
Depreciable Basis | Purchase price | Purchase Date | Year of Study | 1st Year Tax Savings | Year 1 Payback | Initial 5 Years Tax Savings | 5 Year Payback |
---|---|---|---|---|---|---|---|
$2,150,000 | 10/1/2015 | 2015 | $18,840 | $7,461 | 1.2:1 | $136,055 | 23.7:1 |
$714,706 | 1/1/2012 | 2012 | $78,127 | $33,595 | 12.4:1 | $148,911 | 56.0:1 |
$5,476,716 | 12/1/2015 | 2015 | $100,339 | $39,734 | 9.1:1 | $653,681 | 151.0:1 |
$1,623,500 | 2/1/2011 | 2011 | $62,613 | $26,924 | 10.5:1 | $135,187 | 53.7:1 |
$1,318,776 | 11/1/2015 | 2015 | $16,434 | $6,508 | 2.4:1 | $109,941 | 41.6:1 |
Results
* Results from studies using mid-quarter depreciation convention due to timing of purchase and other factors.
NOTE: The above listed tax savings are based on a 39.6% tax rate for the owner.