Case Study - Single Exchange: Janssen Brothers Engineering and Construction

Janssen Brothers Engineering and Construction (JBEC) is a large, top-rated contracting firm based in the Midwest. They routinely buy and sell a variety of heavy equipment in the course of business.

The Problem

In 2009 JBEC decided to move several older cranes and to purchase a new model from a local dealership. The existing cranes were fully depreciated for tax purposes, and the company anticipated a hefty tax bill upon sale.

The Accruit Solution

JBEC, which had conducted several single exchanges in the past, consulted with its Accruit Client Service Manager and learned that its plans represented a very simple straightforward 1031 exchange. The CSM helped them structure the exchange, at which time they sold the relinquished assets (four Grove RT series and one Grove TMS series) at a Ritchie Bros. auction.

The Results

The net sales price at auction approached $400,000 and the combined tax rate was approximately 35%, allowing Janssen Brothers to defer recognition of a $140,000 gain. Shortly thereafter the firm applied these funds to the purchase of a new Terex RT series, which is in service today.

Janssen Brothers is based on an actual Accruit client.