QEA: Quantum Engineering Associates Inc

Case Studies

MEDICAL OFFICE BUILDING

Project Overview

QEA, Inc. was engaged by the owner's of a MEDICAL OFFICE BUILDING which contained a total of 6,796 square feet of gross floor area, to conduct an Engineering-based Cost Segregation Study. The Study objective was to identity property components which could be re-classified to shorter asset lives thereby allowing for the acceleration of depreciation which directly defers the owner's income taxes.

Tax Benefits Summary

Cost Basis: $ 2,014,639.41

Cost Reallocated: $ 727,104.04

Reallocation Percent: 36.09%

1st Year Deferred Tax: $ 60,081.15

Total Deferred Tax: $ 150,926.06

Project Results

As a result of this Engineering-based Cost Segregation Study the client was able to reallocate $727,104.04 or 36.09% of the assets to shorter recovery. The client's total projected tax benefits on a Net Present Value (NPV) basis are projected to total of $150,926.06 with a first year tax benefit of $60,081.15.

Property Profile

This existing 2 story medical office building consists of approximately 6,796 square feet of office, medical treatment rooms, corridor and common area. General construction consists of a four inch thick concrete slab on grade reinforced with welded wire fabric over four inches of crushed stone on top of a vapor barrier. The steel framed structure is enclosed with brick veneer and insulated fixed glass in aluminum frames. Typical interior finishes include drywall over metal stud partitions finished with paint and hollow metal and wood doors with frames and hardware. The buildings second floor which is accessible by two elevators and two sets of stairs, includes men's and women's restrooms, an electrical room, an HVAC room, a telephone service room, and a janitorial closet. In addition, the medical offices contained additional architectural millwork, finish carpentry and extra cabinetry as well as special power and decorative accent lighting fixtures, dedicated communication outlets, phone outlets and data outlets. The building's first floor includes a mail room, mechanical room containing data and telecommunications equipment and an elevator equipment room. The flooring on both floors consisted of high quality grade nylon carpeting with vinyl tiling in the patient's visiting rooms. Land improvements for this site include signage, site lighting, marked parking spaces, asphalt paving, concrete curbing, concrete slab and concrete sidewalks, underground utility and storm drainage, general landscaping and irrigation system. In addition, the property is also improved with a surveillance system.

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 MEDICAL OFFICE BUILDING Project Overview QEA, Inc. was engaged by the owner's of a MEDICAL OFFICE BUILDING which contained a total of 6,796 square feet of gross floor area, to conduct an Engineering-based Cost Segregation Study. The Study objective was to identity property components which could be re-classified to shorter asset lives thereby allowing for the acceleration of depreciation which directly defers the owner's income taxes. Tax Benefits Summary Cost Basis: $ 2,014,639.41 Cost Reallocated: $ 727,104.04 Reallocation Percent: 36.09% 1st Year Deferred Tax: $ 60,081.15 Total Deferred Tax: $ 150,926.06 Project Results As a result of this Engineering-based Cost Segregation Study the client was able to reallocate $727,104.04 or 36.09% of the assets to shorter recovery. The client's total projected tax benefits on a Net Present Value (NPV) basis are projected to total of $150,926.06 with a first year tax benefit of $60,081.15. Property Profile This existing 2 story medical office building consists of approximately 6,796 square feet of office, medical treatment rooms, corridor and common area. General construction consists of a four inch thick concrete slab on grade reinforced with welded wire fabric over four inches of crushed stone on top of a vapor barrier. The steel framed structure is enclosed with brick veneer and insulated fixed glass in aluminum frames. Typical interior finishes include drywall over metal stud partitions finished with paint and hollow metal and wood doors with frames and hardware. The buildings second floor which is accessible by two elevators and two sets of stairs, includes men's and women's restrooms, an electrical room, an HVAC room, a telephone service room, and a janitorial closet. In addition, the medical offices contained additional architectural millwork, finish carpentry and extra cabinetry as well as special power and decorative accent lighting fixtures, dedicated communication outlets, phone outlets and data outlets. The building's first floor includes a mail room, mechanical room containing data and telecommunications equipment and an elevator equipment room. The flooring on both floors consisted of high quality grade nylon carpeting with vinyl tiling in the patient's visiting rooms. Land improvements for this site include signage, site lighting, marked parking spaces, asphalt paving, concrete curbing, concrete slab and concrete sidewalks, underground utility and storm drainage, general landscaping and irrigation system. In addition, the property is also improved with a surveillance system. 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.