Client Profile

Issue

A warehouse fire damaged a food manufacturer tax client’s distribution operations. The company juggled routine business demands, making its insurance claim, and building a new distribution center in a different location. It had two years to complete the new facility before the insurance claim payment would generate taxable gain.

Solution

With our tax team’s assistance, the company minimized the tax impact related to the loss and rebuild of its warehouse. It deferred gain on the insurance claim proceeds and received support for a partially-refundable grant for solar panels damaged by the fire. A cost segregation study bifurcated the structural and non-structural components of the new plant into shorter life assets and helped maximize depreciation tax benefits. Undergoing a Section 179D study generated further tax savings.

We identified that the new build was in a Pennsylvania Keystone Opportunity Zone, a program that provides sales and use tax relief to building owners, and connected the manufacturer to a state training grant for the 160 new jobs created by moving the distribution facility to a new location.

Outcome

All together, the food manufacturer experienced significant tax relief and benefits:

• $35 million tax deferral
• $40-60K of sales and use tax relief per year
• $3.9 million training grant
• $100K Section 179D Tax Savings