Presentation given by Jerry Lotz CostSeg Energy Solutions.

1. 1
Bethesda Networking Trust
Jerry Lotz
February 21, 2018
Cost Segregation - TPR Implementation

2. CostSeg Energy Solutions
Copyright © 2018
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TAX SAVINGS SOLUTIONS
FOR BUILDING OWNERS/LESSEES
Increase Cash Flow and IRS Compliance
February 21, 2018
Jerry Lotz
Cost Segregation - TPR Implementation

3. ©2018
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Who is CSSI?
Tax Savings…. Delivered….
• Performing Engineering-based Studies for over 15 years
• 16,000+ Studies completed across the U.S.
• CEO - Jim Shreve, has been involved in Cost Segregation since the
Original IRS court case in 1997
• Full Engineering-Based Studies completed in 6-8 weeks.
Disposition & Cost Segregation
Tangible Property Regulation/Repair Regulation Calculations
Capital to Expense Reversals
LED Lighting Retrofits and Tax Benefits Associated
Section 179D Energy Credit Analysis
Quality Improvement Property (QIP) Calculations
R&D Tax Credit Analysis
Cost Segregation - TPR Implementation

4. CostSeg Energy Solutions
Copyright © 2017
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FEDERAL Income Tax Deductions
• Personal - Mortgage Interest, Child Care, Medical, etc.
• Business - Depreciation, Payroll, Interest, etc...
• Both look to MAXIMIZE Deductions to Offset Income
Cost Segregation - TPR Implementation

5. How?
Cost Segregation = Cash Flow
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What is Cost Segregation?
• The process of analyzing and identifying residential rental/multi-family or
commercial building components that are eligible for accelerated depreciation,
providing a significant tax benefit for the taxpayer
• Engineering-based is defined as the “Certain Method” by the IRS
• Accelerating Depreciation increases expense deductions to offset the income
RESULT = TAX SAVINGS = CASH FLOW
• Client can use the cash today instead of leaving with the IRS for 27.5 or 39 years
Personal Property is Segregated from Real Property
$50k to $80k in Savings per $1 Million in Basis
Works on $250k+ buildings
Cost Segregation - TPR Implementation

6. ©2018
Cost Segregation - TPR Implementation
Explaining Cost Segregation
Straight-Line
• Hamburger
Cost Segregation
• 2 All Beef Patties
• Special Sauce
• Lettuce
• Cheese
• Pickles
• Onions on a
• Sesame Seed Bun
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7. Explaining Cost Segregation
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7 Cost Segregation - TPR Implementation
5 & 7 Year Property
 Decorative building elements,
wallpaper
 Specialty electrical, plumbing,
mechanical
 Carpet, flooring, crown
moldings,
 Built In cabinets, counter tops
 Security, special lighting,
window treatments
 Communications, cable
 Kitchen fixtures, refrigeration
equipment
15 Year Property
 Landscaping, paving, fencing,
site utilities, parking lot,
signage, sidewalks, sprinklers,
walkways
Cost Segregation vs Straight-Line Depreciation

8. Cost Segregation - TAX Cuts & Jobs Act
HUGE ADVANTAGE
©2017
8 Cost Segregation - TPR Implementation
• 5yr., 7yr. and 15yr. property placed in-service
after Sept. 27, 2017 and for the NEXT five
years is allowed 100% BONUS DEPRECIATION!
• Roughly 15-25% of the total building asset is
NOW eligible for 100% bonus in year ONE
• New construction or old construction qualify
This is a GAMECHANGER!!!!!

9. . Any Building USA
Building Cost $ 2,200,000
2018 2022
Date Acquired: January 2017
Tax Year: 2017
Current Method
Accumulated Depreciation Reported
27.5 year straight line method $ 76,670 $ 156,662 $ 476,630
Alternative Method
Cost Segregation Study Accumulated Depreciation
5 yr. $ 74,800 $ 194,480 $ 374,000
15 yr. $ 7,700 $ 22,330 $ 67,612
27.5 yr. $ 58,269 $ 119,063 $ 362,239
Total $ 140,769 $ 335,873 $ 803,851
Results for Tax Year: 2017 2018 2022
Increased Accumulated Depreciation Expense $ 64,099 $ 179,211 $ 327,221
Tax Rate (Estimated) 39.6% 39.6% 39.6%
Estimated Accumulated Tax Savings Benefit $ 25,383 $ 70,968 $ 129,580

10. . Any Building USA

11. . Any Building USA

12. . Any Building USA
WHO Qualifies and WHO Benefits
• Owners and sometimes leaseholders of residential rental, multi-
family, and commercial property
• Properties newly bought, newly built, remodeled and even those
owned for a number of years
• Manufacturers, Food Processing Plants, Poultry Farms
• Warehouses, Residential Rentals, Apartments, Condos, Hotels
• Auto Dealers, Franchises, Restaurants, Supermarkets, Offices
• Retail Malls, Strip Centers, Medical/Dental Bldgs., Laboratories
• Nursing and Assisted Living Facilities, Hospitals, Funeral Homes
• Refineries, Self Storage locations, All Types of Buildings….

13. Stay Compliant Moving Forward
Building Systems Definition
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EXP/CAP TEST -
Client spends
$50,000 on HVAC
System.
TPR ratio test is
30-35%.
50,000/179,747 =
28%.
Test says to
expense. Train the
staff to do this for
these items at
time of
expenditure.
Cost Segregation - TPR Implementation
©2017

14. Case Studies -
Cost Segregation and Partial Disposition
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Climate Control $3,150,750
Self-Storage
Tax Savings Benefit: $ 164,682
Cost Segregation
Partial Disposition
Auto Dealership
Cost Segregation - TPR Implementation
©2017
Cost Basis
Condo $324,000
Tax Savings Benefit: $ 30,609
Office Warehouse $5,246,900
Tax Savings Benefit: $ 312,687

15. Capital to Expense Reversal
Examples $$
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Apartment Complex
• Purchased in 1993
• Cost $1.1 million
• Improvements over years
– $4 million, $160k, $2.7million,
$70k, $26K, $900k
Resulted in Tax Savings of
$554,000
Office Building
Converted to Hotel
• Purchased in 2000
• Cost $1.6 million
• Multiple Improvements
– $10 million, $1.2 million, $41K,
$30K
Resulted in Tax Savings of
$1.1 Million
Office Building
• Purchased in 2007
• Cost $560,250
Resulted in Tax Savings of
$69,800
Self Storage
• Purchased in 2016
• Cost $2,460,000
Resulted in Tax Savings of
$44,654

16. It is Easy to Start!
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We will provide a No-Cost Analysis of
Your Commercial Property
Data Required
Client’s Depreciation Schedule
OR
– Type of Building
– Cost Basis
– Year and month acquired
– Improvement (Year and month + Cost)
CSSI will generate a no-cost analysis for you.
Cost Segregation - TPR Implementation

17. Let’s Get Started
©2018
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Jerry Lotz
Savings Advisor
CostSeg Energy Solutions
jlotz@CostSegES.com
410-878-2553
Cost Segregation - TPR Implementation
Let US Help Reduce Your Income Taxes!
www.CostSegES.com
Let Us Provide a No Cost Analysis for You!