In the latest issue of Construction Executive, Accruit CEO Brent Abrahm lays out the value of 1031 exchanges for construction firms looking to green their operations. These concerns are especially significant for businesses operating in California and other states preparing to adopt similarly strict emissions standards.

Abrahm explains, in part:

For example, a construction company seeking to comply with stricter state emissions standards needs to upgrade its fleet to include cleaner, more efficient trucks, cranes, skid steers, wheel loaders and backhoes. It launches a program to replace 20 assets per year for the next five years. In doing so, it sells the old assets at auction to offshore interests for an average of $50,000 a piece, realizing a taxable gain of $1 million. Because these funds are then reinvested in new assets, that tax burden is deferred—with a cash flow benefit of approximately $400,000.

Other construction industry applications for LKEs include replacing inefficient back-office infrastructure (including heating/cooling, plumbing, lighting and IT assets) with advanced energy-saving technologies.

Useful insight for constructions execs, and for businesses in other industries, as well…