CASE STUDY

IHOP Restaurant

Portland, OR

Highlights

n 2023, a husband-and-wife real estate team in Portland, Oregon acquired an IHOP restaurant as a long-term investment, with a cost basis of $1.6 million. Under straight-line depreciation, they would have only written off $41,026 in the first year. Instead, our team applied IRS Approach #2—the Detailed Engineering Cost Estimate Approach—to leverage 80% Bonus Depreciation and accelerate $508,104 into their first-year tax return—capturing 36% of the property’s value right away.

By front-loading those deductions, we turned years of slow depreciation into immediate cash flow—helping this couple fuel the next phase of their real estate journey. Grateful for both the outcome and the integrity of the process, they’ve become passionate advocates for Cost Seg America—referring other investors who want to grow their portfolios with confidence and strategy.

Statistics

$1,600,000

Cost Basis

$41,026

First-Year Depreciation (Straight-Line)

$508,104

First-Year Depreciation (Cost Seg + 80% Bonus)

$583,357

Total Accelerated Depreciation

36%

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.

With Cost Seg America, tax strategy is not just about compliance—it is about unlocking capital and fueling growth.
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💡 How This Property Was Reclassified

🟦 39-Year Property: $1,016,643 (64%)

🟩 15-Year Property: $265,834 (16.7%)

🟨 7-Year Property: $764 (0.05%)

🟥 5-Year Property: $316,759 (19.9%)

Breakdown of Reclassified Assets

39-Year Property (Building Structure)

Framing, roofing, and load-bearing walls, HVAC systems and ductwork, fire-rated walls, plumbing infrastructure.

15-Year Property (Land Improvements)

Parking lot paving and striping, outdoor lighting, sidewalks and curbs, landscaping, irrigation systems, and signage.

7-Year Property (Telecommunications)

Paging systems, structured cabling, and communication wiring.

5-Year Property (Short-Life Assets)

Restaurant booths, decorative lighting, and dining furniture, kitchen equipment, prep stations, and stainless work surfaces, POS systems, interior finishes, and signage.

Summary

By partnering with Cost Seg America, this client accelerated 36% of their IHOP property into short-life assets—unlocking $508,104 in first-year depreciation. That is over 12x what straight-line depreciation would have allowed. Our team applied IRS Approach #2—the Detailed Engineering Cost Estimate Approach—to deliver a fully documented, audit-ready strategy that turned a single restaurant into a powerful tax-saving asset.

Cost segregation is a proven strategy used by the most sophisticated real estate investors to boost cash flow, scale faster, and reduce tax liability. If you own commercial or residential rental property and have not done a study, now is the time. We deliver audit-ready results that give you clarity, control, and confidence in your financial future.

At Cost Seg America, we are here to help you protect what you have purchased, maximize what is possible, and move forward with confidence.

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