Ep. 106 — Jodi Nielsen & David Deshotels: Friends Don't Let Friends Overpay on Taxes

5 min read

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Episode Summary

You own the building. Your CPA depreciates it straight-line over 39 years. You write the tax check every April and you have no idea you just handed the IRS an interest-free loan you didn’t have to give them. I brought Jodi Nielsen and David Deshotels from Cost Segregation Services Inc. (CSSI) on to walk through the one decision most commercial building owners get wrong by default: straight-line vs. cost segregation. We got into how the Tax Cuts and Jobs Act changed the math (100% bonus depreciation on the parts and pieces they identify), the Big Mac analogy David uses to explain why breaking the building into its components beats depreciating it as a whole, and real numbers from a $540K Ace Hardware, a $2M Ace Hardware, and a $38M hotel that produced $2.7M in tax benefit. We also got into recapture, the step-up in basis when buildings pass to heirs, and the part most owners miss: how a cost seg study at the right moment can bridge the cash flow gap between what a buyer will pay and what the seller actually needs to walk away. Jodi’s line: friends don’t let friends overpay their taxes.

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## Top 10 Takeaways
  1. If you own a commercial building and use straight-line depreciation, you are giving the IRS an interest-free loan you didn’t have to give.
  2. Cost segregation breaks the building into parts (5, 7, and 15-year components) so deductions hit your P&L now instead of over 39 years.
  3. The best time to cost segregate is the year you buy or build. The second-best window is the first five to six years.
  4. Bonus depreciation under the new tax law lets you write off 15-30% of a new building in year one, not over four decades.
  5. Your CPA is a river wide and an inch deep. They know cost seg exists. They are not equipped to calculate or defend the numbers.
  6. Recapture is real, but a higher rate applied to a salvage-value component years from now is rarely the trap owners fear.
  7. If you plan to sell in the next three years, cost seg probably is not for you. Time value of money is the whole game.
  8. When the patriarch dies and the building gets a step-up in basis, recapture disappears and the cycle starts over.
  9. Cost seg is a negotiation tool in a sale. Show the buyer $200K of year-one tax benefit and your asking price gets easier.
  10. Two reasons to skip a study: you owe no taxes, or you plan to put the cash in a drawer instead of working it.

Sound Bites

“Friends don’t let friends overpay their taxes.” (@00:00:31) — David Deshotels

“100% of the companies on the planet that I’ve ever met are underpriced — I mean, you can describe a Big Mac as a hamburger, or you can describe it as its parts and pieces. That’s the difference between straight-line and cost segregation.” (@00:07:10) — David Deshotels

“I work with two types of clients: those running toward gold medals who know every nickel reinvested makes a large return, and those running away from German Shepherds who can’t find money to pay their taxes.” (@00:17:59) — David Deshotels

“If you owe $100,000 in taxes this year, you don’t write a check to the IRS. That’s cash. What can you do with that $100,000?” (@00:11:21) — Jodi Nielsen

“When you first buy a building, that’s the best time. Do you want to get your money back from the IRS, or do you never want to send it to them in the first place?” (@00:21:30) — David Deshotels

About This Episode

Jodi Nielsen and David Deshotels are with Cost Segregation Services Inc. (CSSI), a national engineered-based cost segregation firm founded in 2001 with over 22,000 studies completed and zero audits triggered. Jodi’s background is in nuclear medicine; David is a mechanical engineer. They speak regularly to CPA groups around the country on how the Tax Cuts and Jobs Act changed the depreciation game for commercial building owners. This episode sits in the value-and-cash-flow strand of the early podcast catalog: specific, tactical, owner-focused tax strategy that ties directly into exit planning and ownership transitions.

Resources Mentioned

  • Cost Segregation Services Inc. (CSSI) — National engineered-based cost segregation firm, founded 2001.
  • Jodi Nielsen — Direct contact: 651-210-1921
  • Tax Cuts and Jobs Act (TCJA) — Referenced throughout for 100% bonus depreciation, Section 179 expansion, and indefinite NOL carryforward
  • Prior episode referenced — Ernst & Young tax interview (broad-strokes TCJA overview)

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