A restaurant is a definite candidate for a cost segregation study. Kitchen areas and dining areas both hold a tremendous power for accelerated depreciation.
The IRS has given extended guidance and provided a vehicle that has proven to be enormously valuable where "chain" stores are concerned. The IRS Audit Techniques Guide states, "The sampling or modeling approach uses a created model (or template) to analyze multiple facilities that are nearly identical in construction, appearance, and use (e.g., fast food chains and retail outlets). The use of sampling minimizes resources and costs compared to conducting studies on all properties." Say no more, we agree.
A breakdown by percentage for a restaurant with a capitalized cost basis of $750,000 after a segregation analysis is completed may look like the following:
| Capital Costs by Class Life after Cost Segregation | 2 Yr Cash Benefit $59,291 | |||
| 5 Years | 7 Years | 15 Years | Total | |
| 38.1 % | 1.0 % | 6.7 % | 45.8% | NPV Tax Savings $70,842 |
| $285,750 | $7,500 | $50,250 | $343,500 | |
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