Specialized Medical Facility Cost Segregation Study

Approach & Results

Client Profile
A CPA firm recently engaged McGuire Sponsel to carry out a cost segregation study for their client, a healthcare provider in Kearney, Nebraska, who recently completed a significant expansion of their medical facility, adding a state-of-the-art surgery center. This $7.36 million investment aimed to enhance their service offerings and operational capabilities.

Process
The engagement process began proactively, with the formal agreement signed on December 26, 2023, well before the medical facility’s addition construction was completed. On February 5, 2024, shortly before the final construction phase, our team conducted an in-depth on-site assessment. This timely evaluation allowed for a thorough examination of the property and a detailed review of all relevant construction documents, enabling us to precisely identify and strategically categorize assets for optimal tax treatment.

Study Results
The cost segregation study was finalized on March 8, 2024. Through meticulous analysis, our Fixed Assets team successfully reclassified over 55% of the depreciable basis from standard 39-year property into more advantageous 5- and 15-year property categories. These reclassified assets, all eligible for bonus depreciation, totaled more than $4 million of the project’s value.

This strategic reclassification yielded significant financial benefits for the client. The study generated an increased first-year cash flow exceeding $754,000, surpassing the initial projection by over $501,000. Moreover, the net present value of cash flows over the investment’s lifespan was calculated to exceed $544,000.