This case study reviews The Capstan Course taken to assist the owner of a recreational resort with some innovative tax strategies.
A local developer with experience in the recreation industry recently acquired a large ski resort and golf club. Wanting to make the most of their significant investment, the owners approached the Capstan team for assistance in maximizing tax savings through the acceleration of deductions.
After reviewing the scope of the project and discussing the owner’s future plans for the property, the Capstan team recommended our most thorough cost segregation analysis — the Advanced Cost Segregation Study (ACSS). This analysis provides an enhanced level of pricing detail in regards to base-building assets and is well-suited for the maximization of depreciation deductions from year one. Capstan also suggested a Unit of Property analysis be performed simultaneously to provide an even more detailed assessment of historic assets and a breakdown of building systems. Capstan proposed this combination of studies in light of the client’s intention to perform extensive renovations. Creating a complete and accurate assessment of all cumulative assets pre-renovation provides the client with a powerful tax-savings tool to use in evaluating the property once the dust has settled.
The owners appreciated Capstan’s careful consideration of their needs and enthusiastically agreed to the performance of the studies. The tremendous size of the grounds and the varied nature of the buildings posed a unique challenge to the Capstan engineer. The property contained retail and office spaces, restaurants, two banquet facilities, a conference center, a gym with sauna, a luxury spa, a full-service hotel and even a “slope-side pub.” Unusually, the ski area and golf green were situated on completely separate parcels of land, further contributing to the size of the project. The ski area consisted of almost 30 slopes and trails, and the golf green measured over 6,000 yards of perfection, maintained by an extensive underground irrigation system. In short, the facility was an incredibly large and elaborate mosaic of multiple complex property types.
Fortunately, Capstan engineers are trained to deal with unusual properties in an efficient manner, and the staff engineer completed her meticulous assessment of the entire property in a timely fashion. The owners purchased the resort at a deep discount and were very pleased that Capstan successfully moved over 35% of the depreciable basis out of 39-year class life. The owners were also pleased to have compiled the most accurate and complete asset listing possible, positioning themselves for potential future savings through partial asset disposition and/or reclassification of assets.
Capstan issued “The Capstan Warranty” to the client which provides audit support up to the field agent level at no additional cost should the project ever be audited by the IRS. Capstan will also provide guidance to the owners in maximizing tax savings post-renovation in future.