Advisory
Assurance
Tax
Technology
By David M. Desmarais
By Daniel M. Andrea
Growth & Transition
By Andrew R. Tavares
Mission Matters
By Robin Zitter
Office Locations
Accelerating Growth Through Cost Segregation
A manufacturer specializing in metal and component fabrication invested $12 million in February 2025 to build a new facility (acquired within an LLC) to support increased demand and modernize production. The leadership team was looking for ways to improve cash flow and fund additional equipment purchases.
The new facility was being depreciated over the standard 39-year timeline, limiting near-term tax benefits. With high projected tax liabilities and ongoing capital needs, the company needed a strategy to reduce their current tax burden and unlock capital for reinvestment.
KLR’s Cost Segregation Team conducted a detailed engineering-based study to identify building elements that qualified for shorter depreciation periods.
This included:
$2.4 million reclassified as 5-year, 7-year, and 15-year assets. Since the facility was acquired and placed in service after January 19, 2025, the 5-, 7-, and 15-year assets qualify for 100% bonus depreciation
Approximately $960,000 ($2.3M * 40%) in first-year tax savings
Increased liquidity funded the purchase of new fabrication equipment and employee training initiatives
The cost segregation study provided a comprehensive IRS-ready report
"We were surprised by how much of our facility qualified for faster depreciation. KLR’s team helped us improve cash flow and move forward with upgrades we had planned for next year."
— CFO, Manufacturing Client
Our team can help you accelerate depreciation, reduce tax liabilities, and reinvest the savings into what matters most.
