Background
A Colorado-based design-build firm specialized in creating parking structures and other facilities for government entities, such as libraries, hospitals, and administrative buildings. Known for taking projects from concept to completion, the company handled both the design and construction phases. But because they didn't own the completed structures, they assumed they couldn't benefit from related tax incentives.
Challenge
While the firm regularly incorporated energy-efficient features into its designs, leadership was unaware that the energy efficient commercial building deduction under IRC Sec. 179D (179D) allowed primary designers of government-owned buildings to receive the tax benefit — even if they didn't own the property. Without this knowledge, the company was missing out on valuable tax savings that could directly impact their bottom line.
Approach
Introduced to the company through a banking contact, MGO identified the opportunity and explained the 179D deduction in plain terms. At the time, the deduction offered up to $1.80 per square foot for energy efficiency improvements across three building systems:
- Building envelope: Structural, exterior materials and insulation to optimize energy performance
- HVAC: Systems meeting high efficiency ratings
- Lighting: Energy-efficient lighting such as LED installations
Because the firm acted as the primary designer for government-owned facilities, the government entity could allocate the deduction to them. MGO guided the client through the certification process — reviewing designs, materials, and energy calculations to confirm compliance with the required standards.
Value to Client
The project yielded approximately $250,000 in tax deductions — savings the company could reinvest in future projects. Beyond the immediate benefit, the engagement opened the firm's eyes to an incentive they had never considered. They continued to apply 179D opportunities to other qualifying projects, creating an ongoing tax savings strategy that complemented their core business.
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