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There was an inordinate number of non-combat related crashes during WWII. Here are some of the non-combat crashes with a couple of combat crashes. There were manufacturing defects as well. See November 22, 1944 crash. One built for Churchill was lost March 27, 19452 June 1941“The first British Consolidated LB-30 Liberator II, AL503, on its acceptance flight for delivery from the cat company Consolidated Aircraft Company plant at San Diego, California, crashed into San Defiogo Bay when the flight controls froze. All five of the civilian crew were killed. The flight engineer, Army Reserve 2nd Lt. Bruce Kilpatrick Craig, was posthumously commissioned into the Army Air Corps, and on 25 August 1941 the airfield in his hometown was renamed Craig Field, later Craig Air Force Base.”“Investigation into the cause of the accident resulted in a two-month delay in deliveries, so the Royal Air Force (RAF) did not begin receiving Liberator IIs until August 1941.”22 April 1942B-24D-CO, 41-1133,“The aircraft had been returning to Kirtland Field, Albuquerque. All nine people on board were killed. Joe Baugher cites crash date as 22 May 1942.“4 June 1942“Consolidated LB-30 Liberator II, AL601, was destroyed, resulting in the deaths of 14 army flyers when the aircraft struck a hilltop as it circled for an emergency landing. Shortly after takeoff, the plane developed an unspecified mechanical issue, which the pilot reported to nearby Hamilton field, asking the tower to clear a runway. As the plane approached the field, it suddenly lost altitude and crashed into a hillside on the Herzog ranch, 3 miles (4.8 km) NW of Hamilton field.“7 June 1942“Maj. Gen. Clarence Tinker became the first U.S. general to die during World War II when his plane crashed during the Battle of Midway. His Consolidated LB-30 Liberator II, AL589, of the 31st Bombardment Squadron, 5th Bombardment Group, 7th Air Force, was seen going down, taking him and eight other crew to their deaths. Tinker Air Force Base in Oklahoma City, Oklahoma, was named in his honor on 14 October 1942.”1 July 1942“Consolidated LB-30 Liberator II, AL527, of the 38th Bomb Squadron, 30th Bomb Group, flown by 1st Lt. Robert K. Murphy departed March Field, California, and struck the top of a low knoll two miles (3.2 km) west of the field. It was destroyed in two explosions that initial reports described as bombs going off, though no bombs were loaded for the training flight. Nine crew died.“11 October 1942“B-24D-1-CO , 41-23647, c/n 442, the eighth block 1 airframe, of the 469th Bomb Squadron, 333d Bomb Group, based at Topeka Army Airfield, Kansas, piloted by Ralph M. Dienst, suffered engine failure and crashed into a hillside three miles (4.8 km) west of the base.”“Eight people were killed and one critically injured. Army officers stated that the plane was on a routine flight.“6 January 1943“At 1735 Central War Time three miles (4.8 km) west of White City, Kansas, a B-24D-13-CO, 41-23961, c/n 756, of the 469th Bomb Squadron, 333d Bomb Group, out of Topeka Army Air Base, piloted by Robert Clyne, suffered a catastrophic structural failure due to ice. All were killed instantly except for Lt Maleckas, who escaped by parachute.”6 January 1943“B-24D-20-CO, 41-24202, c/n 997, of the 504th Bomb Squadron, 346th Bomb Group, out of Salina Army Airfield, Kansas, suffered a fire in flight and crashed 15 miles (24 km) SW of Madill, Oklahoma. The aircraft, piloted by R. G. Bishop, was destroyed by fire.12 February 1943“B-24D-35-CO, 42-40144, c/n 1221, of the 528th Bomb Squadron, 380th Bomb Group, Biggs Field, Texas, piloted by Charles C. Wylie, suffered engine failure, resulting in a stall-spin. The aircraft came down 8 miles (13 km) NW of Roswell, New Mexico, according to a crash report, and 5 miles (8.0 km) north of Roswell according to the Associated Press.““Eight crew members were killed aboard; one crewman parachuted to safety.17 February 1943B-24D-53-CO, 42-40355, c/n 1432, crashed at Tucson Municipal Airport No. 2, Tucson, Arizona.“Of the 34 on board, 6 Consolidated Aircraft employees riding as passengers were killed and several others were injured. The damaged airframe was subsequently modified into the first C-87 Liberator Express.”3 May 1943“B-24D-1-CO, 41-23728, "Hot Stuff", of the 330th Bomb Squadron, 93d Bomb Group, 8th Air Force, out of RAF Bovingdon, England, crashed on Mt. Fagradalsfjall on the Reykjanes peninsula after an aborted attempt to land at RAF Kaldadarnes, Iceland. Thirteen were killed in the crash including Lt. Gen. Frank Andrews and six of his staff; only tail gunner SSgt George A. Eisel survived. Andrews was the highest-ranking Allied officer to die in the line of duty at that point in the war, and was on an inspection tour as Commander of US Forces, European Theatre of Operations. Andrews Field (later Andrews Air Force Base) was named for him on 7 February 1945.““It appears that "Hot Stuff" was the first heavy bomber to successfully complete 25 missions when it bombed Naples on 7 February 1943, despite the publicity given the "Memphis Belle" and "Hell's Angels" of the 303d Bomb Group. The bomber had been on the first leg of a trip to the United States for a war bond tour when it was lost.“20 May 1943“B-24E-5-FO, 42-7053, c/n 77, of the 1014th Pilot Transition Training Squadron, Tarrant Army Airfield, Texas, departed the field at 0650 CWT, piloted by David S. Alter.““At approximately 1145, the aircraft struck the side of a 20-million-cubic-foot (570,000 m) gas storage tank of the Peoples Gas Light and Coke Company at 3625 73rd Street and Central Park Avenue, approximately two miles (3.2 km) SE of Municipal Airport, Chicago, Illinois. All 12 crew were killed. (Joe Baugher cites the date as 5 May 1943, but this is incorrect.) Approaching the airport from the southwest in light rain, light fog and light smoke, with a 500-foot ceiling and .75 miles visibility, the bomber circled the field to the north and east, and was on a southern heading when it struck the approximately 500-foot-tall (150 m) tank at the 125-foot level, initially with the left wingtip. Much of the forward fuselage fell inside the tank structure which exploded, throwing steel plate over 300 feet (91 m) with heat felt over a mile away. Nine employees were on the grounds but none were injured. Four United Airlines flights had rejected landings at the airport between 0957 and 1027 due to conditions, and continued to Milwaukee.““The storage tank had been largest of its type in the world, erected in 1928 at a cost of $2 million, according to a Chicago Daily Tribune account; it was not rebuilt.”4 July 1943“RAF Consolidated LB-30 Liberator II, AL523, crashed on takeoff from RAF North Front, Gibraltar, killing the exiled Polish Prime Minister Władysław Sikorski, together with his daughter, his Chief of Staff Tadeusz Klimecki, and seven others. Only pilot Eduard Prchal (1911–1984) survived. The flight departed at 2307 hrs. and crashed into the sea after only 16 seconds of flight. Sikorski had tirelessly worked to promote the Polish cause and there were rumours that his death was not accidental. He had broken off relations with the Soviet Union on 26 April due to the Katyn massacre and his death was convenient for Stalin and the western Allies who were trying to preserve good relations with Russia.“8 August 1943“Consolidated RB-24E Liberator, 42-7159, c/n 183, built as a B-24E-15-FO and redesignated in the Restricted category, of the 605th Bomb Squadron, 399th Bomb Group, Wendover Field, piloted by Herbert Williams, Jr., experienced engine failure and crashed on U.S. 40-50 several miles east of Wendover, Utah. The aircraft slid across the highway and hit railroad tracks, coming to rest 100 feet (30 m) on the opposite side. 10 to 15 minutes later, a westbound freight train encountered the scattered wreckage and a spread rail. Three freight cars derailed with twenty-six more piling together.”“Two hundred feet (60 m) of the railroad was torn up, and a rail official estimated damage to train and freight at $200,000.““The trainmen helped the injured fliers escape from the wreckage.““Ten were injured, some critically, and co-pilot 2nd Lt. Richard L. Blue died at Wendover Field's hospital.““The bomber did not burn.”“The locomotives powering the freight were an EMD FTA-FTB semi-permanently coupled pair2 September 1943“Consolidated B-24E-25-FO Liberator, 42-7237, c/n 261, of the 703d Bomb Squadron, 445th Bomb Group, crashed on a routine training flight, killing all 10 crew members. The crash occurred 5 miles (8 km) from Sioux City air base according to the Associated Press, and 1 mile east of the base according to the crash report.”4 September 1943“B-24E-25-CF, 41-29071,of the 701st Bomb Squadron, 445th Bomb Group, Sioux City Army Air Base, Iowa, crashed in a corn field 4 miles (6.4 km) SW of Moville, Iowa. All eight crew members were killed.“20 October 1943“A Consolidated Liberator III from No. 10 Squadron RCAF, on a routine flight from Gander, Newfoundland, to Mont-Joli, Québec, flew into a mountain near Saint-Donat, Lanaudière, Quebec, due to inclement weather and a mapping error. Everyone aboard was killed and the wreckage was not located for more than two years.“25 October 1943“Two Consolidated B-24H Liberators of the 724th Bomb Squadron (Heavy), 451st Bomb Group (Heavy), from Fairmont Army Air Field, Nebraska, collided while flying in a formation of four B-24Hs during a training flight at 20,000 feet (6,100 m) The bombers crashed in agricultural fields, one 2 miles (3.2 km) north of Milligan, Nebraska, and the other 3.6 miles (5.8 km) NE of Milligan. All eight crew died aboard B-24H-1-FO, 42-7657, while the sole survivor of ten crew on B-24H-1-FO, 42-7673, was copilot 2nd Lt. Melvin Klein, who was thrown free of the wreckage and deployed his parachute.”“A Nebraska historical marker was erected in 2010 near Milligan.”8 January 1944“B-24J-40-CO, 42-73365, (the first block 40-CO airframe) of the 776th Bomb Squadron, 464th Bomb Group, Pocatello Army Air Field, Idaho, crashed 40 miles (64 km) NW of the air base during a night training mission.““The crash occurred on the grounds of the Idaho National Laboratory.”“Five crew members were found killed at the crash site and the bodies of the remaining two crew were located and identified by 11 January.”12 January 1944“B-24D-165-CO, 42-72887, c/n 2447, of Biggs Field, Texas, made a crash landing 30 miles (48 km) north of Biggs following mechanical failure.”“(An Associated Presswire report gave the location as "about 35 miles north of El Paso.") Seven crew were killed and one critically injured.”22 January 1944“Two RB-24Es of B-24 replacement training units 355th Bomb Squadron, 302d Bomb Group, Langley Field, Virginia, collided on a local flight. B-24E-25-CF (as built), 41-29075, c/n 67, flown by Howard R. Cosgrove, crashed and burned, killing all seven on board. B-24E-25-FO (as built), 42-7420, c/n 444, piloted by Carlos N. Clayton, crash landed in a swamp; despite the aircraft being virtually demolished, none of its eight crew members suffered serious injury.”25 January 1944“B-24E-25-DT, 41-28544, of the 34th Combat Crew Training Squadron, Blythe Army Airfield, California, piloted by Donald J. Harris, crashed 4 miles (6.4 km) north of Quartzsite, Arizona, killing all seven aboard.“9 April 1944“B-24D-135-CO, 42-41128, c/n 2203, of the 420th AAF Base Unit, March Field, California, crashed in a weather-related accident 3 miles (4.8 km) SW of Marine Corps Auxiliary Air Station Mojave, California, while on a routine training flight to simulate a long-range bombing mission. All ten crew members were killed.”“The crash site was rediscovered in 2005.11 April 1944“B-24H-25-FO,'' 42-95064, crashed while flying from Waller Field, Trinidad, to Belem, Brazil. Its last reported contact was at 0905 hrs., when a ground station in Brazil relayed a requested weather report to the aircraft.”“Decades later, the crash site was discovered in dense jungle 50 miles (80 km) NE of Macapa and 250 miles (400 km) NW of Belem. A three-week recovery effort by Army Central Identification Laboratory in Hawaii (CILHI), with assistance from a FAB (Brazilian Air Force) team, found two sets of dog tags and numerous bone fragments. The remains of the crew were interred under a group headstone at Arlington National Cemetery on 20 February 1988.“25 April 1944“A Royal Air Force Liberator B Mark VI EW-148 en route to Britain via Gander, Newfoundland, crashed into the Griffintownneighborhood in downtown Montreal, Quebec, minutes after taking off from Dorval Airport. The five-member RAF Ferry Command crew and ten civilians on the ground were killed, and a large fire destroyed at least 10 homes. Witnesses described seeing part of the tail detached at low altitude as the aircraft apparently tried to reach the river. The crew included three members of the Polish Air Force.”29 April 1944“Consolidated RB-24E Liberator, 41-28413, They were flying back to their base at Kirtland Field, Albuquerque, New Mexico after a brief stop-over at Glenview Air Field, Chicago, Illinois and while overflying Nebraska, and due to bad weather the aircraft went out of control and crashed in a canyon located some 15 miles southwest of Merna. All 10 occupants were killed.““Capt. Virgil D Anderson - Capt. Stanley M Foster - 2nd Lt. Frank L Brown - 2nd Lt. Warren C Karas - 2nd Lt. Charles F Piel - Flt. Off. Rollin E Ryburn - S/Sgt. Eugene D Rydstedt - Flt. Eng. Cpl. Adam Joseph Kochan - Pvt. Edward J Jacobs - Pvt. Bruno C Oskar.“5 May 1944“B-24J Liberator, SN: 44-40332, crashed early in the morning after departing from Hickam Field on a replacement mission en-route to the 5th AF. Shortly after take off, they failed to make a turn and crashed into Pu'u Uau Ridge in the Ko'olau mountains on Oahu, Hawaii. Some of the wreckage is still visible along the Aiea Loop Trail within the Keaiwa Heiau State Recreation Area. All ten aviators perished serving their country. Their names were 2 Lt W R Kimble, 2 Lt C E Mueller, S Sgt J J Dowd, 2 Lt W E Somsel Jr, Sgt J H Means, Cpl G L Weiss, Cpl M F Campos, 2 Lt M Righthand, S Sgt M F Norman, Cpl J J Carlucci“.8 June 1944“C-87-CF Liberator Express, 41-24006, c/n 801, crashed during attempted belly-landing at Station 4, Jorhat, India. The pilot was Lawrence C. Ackerson.”15 June 1944“B-24J, 44-40564, crashed while attempting night landing at Abadan, Iran. Pilot Dealma Lurry.”15 July 1944“B-24J-5-FO Liberator, 42-50871, of the 272d Base Unit, Topeka AAF, Kansas, crashed one mile NW of Ashville, New York, killing all five crew.““The Aviation Archaeological Investigation and Research website indicates that the bomber was involved in a mid-air collision, but provides no further details, and no other aircraft appear in accident report listings at this location and date.“23 August 1944“A United States Army Air Forces (AAF) B-24H-20-CF, 42-50291, "Classy Chassis II", crashed into a school at Freckleton, Lancashire, England, at 1047 hrs. after aborting a landing at Warton Aerodrome. 20 adults, 38 children and the 3-man crew were killed. In addition to a memorial in the village churchyard, a marker was placed at the site of the accident in 2007.”15 September 1944“A U.S. AAF TB-24J Liberator, 42-50890(built as a B-24J-5-FO and converted), of the 3007th AAF Base Unit, Kirtland Field, crashed, killing all eight crew members. The aircraft was en route from Bakersfield, California, to Kirtland Field, New Mexico, when it flew off-course and crashed into a boulder field near the top of Humphreys Peak, 10 miles (16 km) north of Flagstaff, Arizona, at about 0330 hrs. The location is nearly inaccessible and has been left undisturbed.“18 October 1944“A U.S. AAF B-24H-20-CF, 42-50347, broke-up in mid-air over the town of Birkenhead, England. The aircraft was on a flight from New York to Liverpool and the accident killed all 24 airmen on board.“22 November 1944“PB4Y-2 Privateer, BuNo 59544, on a pre-delivery test flight by company crew out of Lindbergh Field, San Diego, California, lost its port outer wing on climb-out and crashed in a ravine less than two miles (3.2 km) from point of lift-off. All crew were killed. The wing panel came down on a home at 3121 Kingsley Street in Loma Portal.““The cause was found to be 98 missing bolts, with only 4 spar bolts holding the wing. Four employees were fired and Consolidated Vultee was found guilty of gross negligence.”24 October 1944“U.S. Navy Consolidated PB4Y-2 Privateer, BuNo 59394, of VPB-106, out of NAAS Camp Kearney, California, became lost in bad weather on a long-range training mission, ran out of fuel and ditched in the Gulf of California. Eleven crew, two female Marines, and the squadron canine mascot all evacuated the bomber as it rapidly sank.““The party made their way to a deserted island near the eastern coast of Baja California, subsisting on raw fish and clams until they were rescued by Mexican fishermen four days later”.30 November 1944Two B-24J-35-CO Liberators, 42-73344and 42-73357, of the 233d Combat Crew Training Squadron, flying out of Davis–Monthan Army Air Base, collided on a training mission NE of Tucson, Arizona. All eighteen airmen died. The crash occurred in the desert over a major natural drainage canal known as the Pantano Wash, at a point half-way between present day East Broadway and East Speedway.“15 December 1944“a Liberator flying out of Truax Field near Madison, Wisconsin crashed into Lake Pepinon the Minnesota/Wisconsin border. Al three aboard were killed. The aircraft was recovered in April, 1945.”30 January 1945“B-24L-1-FO, 44-49180, crashed west of Helendale, California. Three crew died in the crash while three others successfully bailed out.““The wreckage was recovered to Victorville Army Airfield, California.”26 February 1945“C-87A-CO Liberator Express, 41-24174, was lost between Kwajalein and Johnston Island while en route to Hawaii. Brigadier General James Andersenwas aboard, and Andersen Air Force Base, Guam, was subsequently named in his honor.“27 March 1945“RAF Consolidated LB-30 Liberator II, AL504, the first Mk II accepted by the British, converted to a very long-range VIP transport for the prime minister and named "Commando", was lost over the Atlantic Ocean. It was travelling between the Azoresand Ottawa, Ontario, Canada. The prime minister was not on board.““Lost with the crew was Air Marshal Sir Peter Roy Maxwell Drummond, the RAF's Air Member for Training.“5 April 1945“A B-24H-15-DT, 41-28779 of the 564th Bomb Squadron, 389th Bomb Group (Heavy), was captured by the Luftwaffe on 20 June 1944 (MACR 6533),and operated as KO+XA by KG 200. It departed Wackersleben, Germany, to avoid the Soviet advance with twenty-nine KG 200 personnel aboard for a flight to Bavaria via Braunschweig. About 25 minutes into the flight, a German flak battery fired on KO+XA, damaging the fuselage, wings, right outer engine and rudder cables, and injuring two passengers (one of whom died). Pilot Oberfeldwebel Rauchfuss landed in a meadow near Quedlinburg, but a power line forced him to apply power to clear it and the bomber broke its nose wheel strut when it overran into a freshly ploughed field. Damaged components were sent for repair and an attempt was made to take off on 13 April, but the clearing proved too short, the aircraft bogged down in the sodden soil, and the nose strut broke again. The crew then destroyed the airframe by burning it.“21 April 1945“B-24J-1-FO, 42-95592, "Black Cat", of the 784th Bomb Squadron, 466th Bomb Group, based at RAF Attlebridge (USAAF Station 120), was shot down during military operations over Germany. It had aborted a mission to bomb a rail bridge at Salzburg, Austria, due to bad weather, and was returning to base when it received a flakburst in the port wing near Regensburg. It was the last heavy bomber of the 8th Air Force lost over Germany during World War II, and the only loss of this mission. Only the bombardier and the tail gunner escaped from the aircraft to become prisoners of war, the other ten crew being killed. (MACR 14182)”30 April 1945“The first production PB4Y-2 Privateer, BuNo 59359, was destroyed by fire on the ramp at Lindbergh Field, San Diego, California. It was being prepared for a flight to NAS Twin Cities, Minnesota. A mechanic attempted to remove the port battery solenoid, located 14 inches below the cockpit floor, but did so without disconnecting the battery. A hydraulic line three inches above the battery was accidentally punctured with a wrench and the fluid ignited, setting the entire aircraft alight. The mechanic suffered severe burns and only the starboard outer engine of the aircraft was deemed salvageable. The cause was ruled to be an unqualified mechanic attempting a task that only a qualified electrician should undertake.“10 May 1945“Two PB4Y-2 Privateers, BuNo 59437 and 59721, both of VB-4, collided in mid-air while in training over Munson, Florida. As a F6F Hellcat fighter dove at the formation of two patrol bombers, the bombers maneuvered into a turn and the trailing bomber collided with the leader, disabling one of the leader's engines. The lead bomber went into an immediate spin and crashed. The second PB4Y flew straight and level for a short time before it also spun and crashed. The wreckage came down about eight miles (13 km) north of Munson. Twenty-eight crew were killed, including one found in an unopened parachute.“14 May 1945“Consolidated B-24M-15-CO "Brief", 44-42058, of the 494th Bombardment Groupfrom Angaur, was shot down by anti-aircraft fire while taking part in a bombing raid over Koror, Korea. The bomber's left wing was struck by flak fire, destroying it and causing it to swing into the fuselage. Nine crew died in the crash, with the sole survivor captured and later executed by Japanese forces.“13 June 1945“A USAAF B-24H-25-FO, 42-95095, of the 66th Bomb Squadron, 44th Bomb Group, returning to the U.S. from Prestwick Airfield, crashed at Shieldaig in the remote Fairy Lochs in Wester Ross, Scotland. The crew of nine were killed along with six crewmen from Air Transport Command.““A memorial has been erected at the site.“13 July 1945“B-24H-20-FO, 42-94956, c/n 1721, of the 2135th Base Unit, Tyndall Field, Florida, crashed due to bad weather 12 miles (19 km) NW of Southport, Florida. All the crew were killed.“3 November 1945“Consolidated LB-30/C-87 Liberator Express, AL-640, assigned to the 1504th AAF Base Unit, Fairfield-Suisun Army Air Base, crashed into the Pacific Ocean and sank. The aircraft was four hours out of Hawaii en route to Fairfield-Suisun Army Air Base, California, when it ran out of fuel and ditched at 0740 hrs., 500 miles (800 km) NE of Honolulu at approximately 149-50W/25-25N.”“Eighteen were killed and eight survived on life rafts to be rescued by surface vessels. Seven ships, including aircraft carriers, were involved in the search.““One of the survivors, John R. Patrick, was convicted at a court martial of involuntary manslaughter for failing to "determine positively" whether the plane had been refueled before takeoff.“Accidents and incidents involving the Consolidated B-24 Liberator - Wikipedia

Since Mr. Trump enacted new tax law, 100% Bonus Depreciation creates significant tax benefits in the acquisition year.In one of my apartments $3M, 52-unit building is looking to get more than $266K in tax savings (at 37% tax rate) in his first year of ownership.On syndications, depreciation is distributed to investors on the K-1 Form.Not making any promises as depreciation amount is primarily based off building specifics and amount of leverage used in a deal but here is a real-life example from a $50K investment in the first year K-1 in 2018 utilizing cost segregation.Passive Losses!Note this is a Class C apartment dealBasicsOne of the cool things about investing in real estate is that the properties create a paper loss. For single family homes, you can take 1/27 the value of the property (minus land value because that does not devalue over time) per year for 27 years. This is what is shown below. A Cost SeG juices this deduction as it puts the asset on a more aggressive depreciation schedule which front-loads as much depreciation as the tax code allows. This is one of the reasons why large deals are better because they can support a 5-8K cost segregation study.Paper losses due to depreciation!What is Cost Segregation?Cost Segregation is the identification of building components and reclassifying the tax life on each of those components. Typical components that can be reclassified include a building’s non-structural elements, such as carpet, decorative lighting and trim, dedicated electrical and plumbing, and security systems; exterior land improvements, such as landscaping, curbs, sidewalks, fencing, and signage; and indirect construction costs, such as architect and engineering fees and construction permits.Commercial properties establish a 39-year depreciation schedule, and residential properties establish a 27.5-year depreciation schedule. For example think of a 3 bedroom single family home in Birmingham, Alabama that is worth $100,000. Of that approximately $65,000 is determined to be the building value and $35,000 is determined to be the land value. Each year you can deduct 27.5th of the building value which is about $2,363 a year that can once again offset income gains. This can be taken for the next 27.5 years until all the value on paper is depleted. Unfortunately, you cannot deduct the land.However, the IRS assigns a tax-life to each of the individual components.Most components that qualify for accelerated depreciation can have their tax life reclassified to either 5, 7, or 15 years:5-year tax-life components: tangible, personal property assets (carpeting, decorative lighting and trim, dedicated electrical and plumbing, and security systems)7-year tax-life components: all telecommunication related systems (cabling, telephone, etc.)15-year tax-life components: land improvements (landscaping, curbs, sidewalks, fencing, and signage)What is a Cost Segregation Study?A Cost Segregation Study is a strategic, tax-saving tool that can be used by companies and investors who have constructed, purchased, expanded, or remodeled any kind of commercial real estate (including 1 to 4 unit residential rental properties). The study allows the owner to take advantage of accelerated depreciation deductions and defer federal and state income taxes on the reclassified building components mentioned above.During a Cost Segregation Study, components of a specific property or leasehold improvement are identified and reclassified for depreciation over a shorter time (5, 7, or 15 years). For example, 30% to 90% of the total electrical costs in most buildings can qualify for 5 or 7-year depreciation. The result of a Cost Segregation Study is that a property owner’s tax obligation is reduced and his cash flow is increased.Is Cost Segregation something new?Cost Segregation is not new. On the contrary, it has been in existence since 1954 when the IRS allowed for certain personal assets to be accelerated into a shorter life class. However, it wasn’t until Hospital Corporation of America sued the IRS in 1997, and won, that the IRS revisited the issue of accelerated depreciation. The IRS ruled that property qualifying as tangible personal property under the former Investment Tax Credit (ITC) rules would also qualify for purposes of federal income tax depreciation under MACRS (Modified Accelerated Cost Recovery System).The IRS Chief Attorney wrote a memo saying, “. . . Cost Segregation, for it to be properly applied, had to involve those with competencies in architecture, engineering or construction and/or construction techniques, in order for personal property assets to be accurately identified and segregated.” As a result of this memo, Cost Segregation became a viable tax-saving strategy allowed by the IRS.What type of real estate is eligible?Commercial real estate (including 1 to 4 unit residential rental properties) eligible for Cost Segregation includes buildings that have been purchased, constructed, expanded, or remodeled since 1987. A study is typically cost-effective for buildings purchased or remodeled at a cost greater than $100,000. A Cost Segregation Study is most efficient for new buildings under construction, but it can also uncover retroactive tax deductions for much older buildings.What are the steps involved in the process?From start to finish, the Cost Segregation process can be broken down into the following steps:Engage a reputable Cost Segregation firm that utilizes engineers and architects trained in Cost Segregation and its application to the proper allocation of assets.The engineer determines what documents are available (e.g. planning, construction, invoices, appraisal, and current tax depreciation) for reference and referral.The engineer then sets a schedule for surveying the subject property and gathering the available documents for review prior to arrival at the subject property.For those documents that are unavailable, time is then scheduled into the Cost Segregation process for document recreation using known industry standard costing data (Marshall & Swift and/or RS Means costing publications). After all necessary documents are acquired, it takes about 4 to 6 weeks to finish the process.The site survey is executed and completed. Time varies for each survey, but it can be completed within as little as an hour. During the survey, measurements are taken and all areas are photographed for IRS verification and substantiation of asset values.The engineer returns to the office and “crunches the numbers.” This is when all documents are reviewed in detail, assets are verified and measured against known costing data, and asset reallocation is applied.A review committee then examines the results of the analysis completed by the engineer of record to verify its veracity and confirms it meets and exceeds IRS guidelines per the Cost Segregation Audit Techniques Guide.Once approved, the study results are compiled into a final report that includes: all IRS tax code to substantiate the reallocated assets, spreadsheets identifying all assets categorized according to their building codes, representative photographs of the reallocated assets, and the engineer’s credentials for IRS review.Final report is issued. Digital copies are emailed to the client and the CPA of record for application to the client’s tax return.Why bother? I’ll eventually get the deduction.As investors, we like paper depreciation to occur earlier because that offsets gains earlier and gets more money in our pocket earlier. Just like you give a mouse a cookie…. Give an investor a dollar early and… they will turn em and burn em.In other words, you are not creating more depreciation but you are shifting it earlier to take advantage of the time value of money concept.On the project level in a single asset LLC arrangement the more you can lower your tax liability the more you can significantly increase your cash flow and create more value for investors.A Cost Segregation Study in effect gives you an interest-free loan from the government for the first 15 years, which you will then repay interest-free over the remaining 25 years. Wouldn’t you rather have your money? There are also advantages to doing a study if the building is going to be sold (via 1031 exchange) or if the owner of the building dies.Does the Cost Seg need to get done this year (Dec 2018) or do we just need to acquire in this year (2018)?For bonus depreciation, we just need to acquire. The Cost Seg can be completed in the next year (2019).How much will I save on taxes?Most Cost Segregation firms will perform a free analysis if you provide your basic property information and tax rate. From the information you provide, they can provide a conservative estimate of the accelerated benefits you can expect, as well as their fixed fee proposed for the final study.Typically, tax savings from 5% to 10% of the building’s original tax-basis are generated, but there are instances where it can be substantially more. Each property and circumstance is unique, so it requires a case-by-case approach to give you a definitive answer.How much-accelerated depreciation can I get?Certain types of commercial property can be grouped together to give us an idea of the percentage of those types of buildings eligible for accelerated depreciation. Your results may be greater, or less than those quoted here, but in general, property that falls into one of the following categories is most likely to result in accelerated depreciation within the specified ranges.Commercial Property Types:Apartment Buildings 15 – 25%Dental/Medical 30 – 60%Health Care 25 – 65%Heavy Manufacturing 30 – 80%Industrial 25 – 70%Light Manufacturing 20 – 45%Office Buildings 15 – 25%Research & Development Facilities 30 – 75%Restaurant 15 – 30%Retail Centers 10 – 25%Senior Living Facilities 15 – 30%Warehouse 5 – 15%Does Cost Segregation have other benefits?Yes. Cost Segregation can provide additional tax benefits. It can reveal opportunities to reduce real estate tax liabilities and identify certain sales and use tax savings opportunities. Under certain circumstances, segregated assets may qualify for a special bonus depreciation allowed by multiple tax reconciliation acts enacted by Congress. Additionally, a Cost Segregation Study canMaximize tax savings by adjusting the timing of deductions. When an asset’s life is shortened, depreciation expense is accelerated and tax payments are decreased during the early stages of a property’s life. This, in turn, releases cash for investment opportunities or current operating needs.Create an audit trail. Improper documentation of cost and asset classifications can lead to an unfavorable audit adjustment. A properly documented Cost Segregation Study helps resolve IRS inquiries at the earliest stages.Capture retroactive savings. Since 1996, taxpayers can capture immediate retroactive savings on property added since 1987. Previous rules, which provided a four-year catch-up period for retroactive savings, have been amended to allow taxpayers to take the entire amount of the adjustment in the year the Cost Segregation is completed . . . this alone is huge. This opportunity to recapture unrecognized depreciation in one year presents an opportunity to perform retroactive Cost Segregation analyses on older properties to increase cash flow in the current year.Lower property insurance premiums. Since it generally costs less to insure personal property, versus real property, building components reallocated as personal property should reduce your insurance costs as well.How much does a Cost Segregation Study cost?On average, the total fee will generally fall between 5% and 20% of the estimated Net Present Value tax savings shown on your free analysis. This can be impacted by how large or small the real estate project is. In addition, the location, accessibility, and quality of the records and documents impact the ultimate cost. Minimum fees can be as low as $2,000 for small projects, and some firms GUARANTEE a minimum of 500% ROI (fee vs. tax recovery) on projects over $500,000.How long does a Cost Segregation Study take?The time that a Cost Segregation Study takes depends on the size of the project and the completeness of the documentation that you can supply. Generally, it takes about 4 to 6 weeks from the time the appropriate documentation is received and recreated.What is required of me to have a study done?You need to provide as much of the original documentation pertaining to planning, construction, and current tax depreciation as you can. This could include a complete set of construction plans, current tax depreciation records such as tax returns, building cost budget information, final AIA (American Institute of Architects) application and a document of certification for payment or other cost information, change orders, direct or indirect costs paid by the owner that are not included in other documents, and other information depending upon the project.What if I lack some of the needed documents?Even if you lack some of the necessary documentation, a study can still be performed for you. Construction, engineering, and other specialists will do an extensive site visit. They will measure and estimate using currently accepted costing techniques and pricing guides (such as the IRS-recommended costing publications Marshall & Swift and RS Means) to determine the costs that qualify for shorter recovery life periods.Can’t my CPA do a study for me?CPAs are not qualified according to the IRS guidelines. However, most Cost Segregation firms will gladly work with them on a consulting basis to complete the work for you. Remember, the IRS Chief Counsel issued a memo that made it clear what constitutes proper “methodology” in applying Cost Segregation, and it must be done by people who are competent in architecture, engineering or construction and/or construction techniques. See “Is Cost Segregation something new?” above.Will a study increase the chance of an audit?A study conducted by a reputable Cost Segregation firm should strictly adhere to the IRS Cost Segregation Audit Techniques Guide. The type of study most firms perform actually decrease your chances of an audit because the study places you in Internal Revenue Code Tax Compliance. However, be aware there are six different Cost Segregation methods allowed by the IRS, and not all are of equal merit. There is currently no standard method, and there is still some ambiguity about which method is best. If you have heard conflicting information about what is, and is not possible regarding Cost Segregation, this is probably why – it depends on which method is being used.Will I be assisted in the event of an audit?A reputable Cost Segregation firm can assist you in the event of an audit. They will focus on doing the Cost Segregation Study to create documentation and support for conclusions so that these are easily communicated and resolved with the IRS. In fact, you should expect a final report that is “all inclusive.” It should quote specific Internal Revenue Codes related to the reallocated assets. Additionally, it should provide photographic evidence of these same assets for complete substantiation of the assessment.Conclusion:The Pro’sReduction in tax liabilityThe deferral of taxesBump in up front cash flowThe Con’sCosts typically range $4,000-$8,000, depending on property size/asset valueAccurate and complete documentation is required and requires effort to collectCost segregation is not feasible below $100,000 property valueCost Segregation studies is one of the easiest and quickest way to squeeze a little extra profit out of an investment. If you played race video games in your youth (or still do) it’s like paying for the inexpensive computer chip upgrade, its a no brainer. If you don’t get that reference, its “low hanging fruit.”If this is a concept new to you, you may be able to go back to previous years taxes and get back some benefits this year. Often times getting a quote is free and quick.A recent quote I got back for a few properties.52-Unit in Des, Moines Iowa Case Study:Who do I call for more information?