QEA: Quantum Engineering Associates Inc

Case Studies

Golf Course and Clubhouse

Project Overview

QEA, Inc. was engaged by the owner's of a real estate development company to conduct an Engineering-based Cost Segregation Study for a Golf Course and Clubhouse. The Study objective was to identity property components that could be reclassified to shorter recovery periods to accelerate building depreciation and defer income taxes.

Tax Benefits Summary

Cost Basis: $ 10,819,017 [excluding land value]

Cost Reallocated: $9,560,656

Reallocation Percent: 88.37%

1st Year Deferred Tax: $ 255,000

Total Deferred Tax: $1,367,430

Project Results

As a result of this Engineering-based Cost Segregation Study the client was able to reallocate $9,560,656 or 88.37% of the assets to a shorter recovery. The client's projected tax benefits on a 5 year Net Present Value (NPV) basis were projected to total $1,367,430 and the first year tax benefit equals $255,000.

Property Profile

The property is an 18 hole golf course and one story clubhouse containing approximately 24,743 square feet. The wood framed clubhouse structure is enclosed with Hardiplank siding and brick, with insulated glass in vinyl clad wood frames. Roof construction consists of a fiberglass shingle roof system. The clubhouse has a club room, open and individual office areas, computer room, men's and women's locker facilities, laundry, mechanical room, exercise room, and pool equipment and storage rooms. The service systems include standard plumbing fixtures; copper, steel, PVC, and cast-iron sanitary and waste piping systems. There is a year round heating, ventilating, and air-conditioning system. Electrical systems include power distribution equipment; fluorescent and incandescent light fixtures, receptacles, switches, conduit, and wire. Land improvements are extensive for the site including the golf course redesign. These site improvements include asphalt and concrete paving, concrete curbing, site signage, concrete sidewalks, under ground utilities, bridge construction, lake lining, fairways and rough shaping, bunker construction, cart path construction, tee construction, green construction and drainage, concrete dumpster pad and screen wall, and extensive seeding and landscaping with irrigation. The property had a total project cost basis of $ 10,819,017 after the exclusion of land value and was placed in service in 2005.

Engineering Process

Our construction engineers performed a complete analysis of all available construction drawings and specifications, contractor payment applications, invoices, and other supporting documentation. We prepared a detailed analysis of all accumulated data on a property unit basis for cost allocation purposes under the provisions of the Internal Revenue Code. We then performed an on-site inspection to verify, photograph, and document the property. Finally, our internal audit team of senior construction engineers and tax specialists reviewed and certified its completeness and accuracy.

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	Case Studies Golf Course and Clubhouse Project Overview QEA, Inc. was engaged by the owner's of a real estate development company to conduct an Engineering-based Cost Segregation Study for a Golf Course and Clubhouse. The Study objective was to identity property components that could be reclassified to shorter recovery periods to accelerate building depreciation and defer income taxes. Tax Benefits Summary Cost Basis: $ 10,819,017 [excluding land value] Cost Reallocated: $9,560,656 Reallocation Percent: 88.37% 1st Year Deferred Tax: $ 255,000 Total Deferred Tax: $1,367,430 Project Results As a result of this Engineering-based Cost Segregation Study the client was able to reallocate $9,560,656 or 88.37% of the assets to a shorter recovery. The client's projected tax benefits on a 5 year Net Present Value (NPV) basis were projected to total $1,367,430 and the first year tax benefit equals $255,000. Property Profile The property is an 18 hole golf course and one story clubhouse containing approximately 24,743 square feet. The wood framed clubhouse structure is enclosed with Hardiplank siding and brick, with insulated glass in vinyl clad wood frames. Roof construction consists of a fiberglass shingle roof system. The clubhouse has a club room, open and individual office areas, computer room, men's and women's locker facilities, laundry, mechanical room, exercise room, and pool equipment and storage rooms. The service systems include standard plumbing fixtures; copper, steel, PVC, and cast-iron sanitary and waste piping systems. There is a year round heating, ventilating, and air-conditioning system. Electrical systems include power distribution equipment; fluorescent and incandescent light fixtures, receptacles, switches, conduit, and wire. Land improvements are extensive for the site including the golf course redesign. These site improvements include asphalt and concrete paving, concrete curbing, site signage, concrete sidewalks, under ground utilities, bridge construction, lake lining, fairways and rough shaping, bunker construction, cart path construction, tee construction, green construction and drainage, concrete dumpster pad and screen wall, and extensive seeding and landscaping with irrigation. The property had a total project cost basis of $ 10,819,017 after the exclusion of land value and was placed in service in 2005. Engineering Process Our construction engineers performed a complete analysis of all available construction drawings and specifications, contractor payment applications, invoices, and other supporting documentation. We prepared a detailed analysis of all accumulated data on a property unit basis for cost allocation purposes under the provisions of the Internal Revenue Code. We then performed an on-site inspection to verify, photograph, and document the property. Finally, our internal audit team of senior construction engineers and tax specialists reviewed and certified its completeness and accuracy.