CASE STUDY

Cold Storage Facility

Rochester, MN

Highlights

This project began with a client who did their homework. The cold storage facility, located just outside of Minneapolis, Minnesota, had just been acquired and was undergoing improvements. After being approached by multiple cost segregation firms, the client chose Cost Seg America for two key reasons: they wanted to maximize tax write-offs, and they wanted peace of mind knowing the study would stand up to IRS scrutiny. From our very first conversation, they knew Cost Seg America was different—and better.

In Spring 2024, the client purchased the property with a cost basis of $1,440,464 and invested an additional $410,483 in improvements. Their CPA recommended cost segregation to increase first-year cash flow—and the client was eager to move quickly and strategically.

Our team applied IRS Approach #2—the Detailed Engineering Cost Estimate Approach—to analyze both the acquisition and improvements. As a result, over 40% of the total basis was reclassified into shorter-life assets. This delivered $515,047 in first-year depreciation—compared to just $47,460 under straight-line—providing a powerful tax deferral and freeing up capital to reinvest in operations and future growth.

Statistics

$1,440,464

Cost Basis

$410,483

Improvements

$47,460

First-Year Depreciation (Straight-Line)

$515,047

First-Year Depreciation (Cost Seg + 60% Bonus)

$744,481

Total Accelerated Depreciation

40%

Depreciation Accelerated

Approach

Cost Seg America used the IRS’s Approach 2 — the Detailed Engineering Cost Estimate Approach outlined in the IRS Cost Segregation Audit Technique Guide — to accurately classify assets and maximize allowable depreciation.
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‍Breakdown of Reclassified Assets:

Comprehensive Data Collection – Our team gathers all relevant documents, including settlement statements, site plans, and architectural drawings, to create a complete asset profile.
On-Site Inspection – Our analysts conduct a detailed inspection to identify every critical component of the property.
Precise Asset Reclassification – Our team categorizes property components according to IRS guideline, ensuring compliance while accelerating depreciation schedules.
Optimized Depreciation Application – Our team's analysts apply MACRS to maximize tax deferrals and enhance cash flow.
Seamless CPA Collaboration – Our cost segregation report is delivered audit-ready, ensuring smooth integration into tax filings with full IRS defense.
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💡 How This Property Was Reclassified

🟦 39-Year Property: $1,106,466 (includes improvements)

🟩 15-Year Property: $325,814

🟨 7-Year Property: $955

🟥 5-Year Property: $417,712 (includes improvements)

Breakdown of Reclassified Assets

39-Year Property (Structure)

Building foundation and structural frame, Exterior walls and roofing systems, Elevators and stairwells, Standard electrical and plumbing infrastructure

15-Year Property (Land Improvements)

Asphalt parking lots and drive aisles, Concrete curbs, sidewalks, and ADA-compliant ramps, Exterior landscape lighting and bollard lights, Irrigation systems and planting areas

7-Year Property (Specialty Equipment)

Structured cabling and IT systems, Server racks and communication panels, Specialized telecom infrastructure

5-Year Property (Short-Life Assets)

Specialty lighting and fixtures, Custom office furniture, Security systems and tenant access controls, Interior signage and branding elements

Summary

Cost Seg America applied IRS Approach #2—the Detailed Engineering Cost Estimate Approach—to help this client accelerate 40% of their cold storage facility and improvement value, resulting in $515,047 in first-year depreciation. That’s more than 10x the deduction available under straight-line depreciation.

The client shared that they were grateful for how the study was handled—from the initial conversation to the detailed final report. Our team took the time to understand their property, remained hands-on throughout the process, and delivered a study that not only saved them money but gave them clarity and control over their asset portfolio.

At Cost Seg America, we do not take shortcuts. We treat each property like a puzzle worth solving—meticulously identifying every opportunity to reclassify and optimize depreciation. With over 23 years leading the industry in high-integrity, engineering-based studies, we approach every project like seasoned treasure hunters—driven to find every "X" that marks real tax-saving value. Our work is not just about numbers—it’s about doing the job right, so clients can move forward with clarity, confidence, and stronger cash flow.

Complimentary Proposal