CostSegPlus™ is a Service of

1880 Century Park East #200
Los Angeles CA 90067-1600
Tel: 310.289.9888
Fax: 310.289.8186
Email: info@GerberCo.com

 


 

The Cost Segregation Process

1. Review the architectural drawings and specifications for the base building, tenant improvements, and land improvements to identify all construction related assets that qualify for accelerated depreciation.
2. Obtain and review copies of approved contractor pay requests, change orders, and miscellaneous invoices in order to segregate these costs properly into the correct asset classifications for federal income tax purposes.
3. Develop and provide a listing of construction costs for which a specific breakdown is required from the contractors involved. If the contractors are not able to provide this information, we will estimate those costs of the assets by using nationally recognized cost estimating manuals (this is especially the case for used facilities).
4. Allocate project indirect costs, such as contractors’ general conditions, architectural/engineering fees, permits, etc., to all project-related assets on a functional basis.
5. Personally inspect the building and tenant improvements to ensure that all qualifying personal property and land improvements have been identified.
6. Compile schedules of MACRS depreciation.
7. Apply relevant IRS regulations, rulings and court cases to support the allocations of property to the various MACRS classifications.
8. Prepare a written report which includes project background information, methodology, fixed asset classifications and descriptions, allocation of project related fees and services, fixed asset classification spreadsheets segregating the assets into personal property (5 or 7 year tax life), land improvement property (15 year tax life), and residential real or commercial property (5 or 7 year tax life). Also, include references to court cases, revenue rulings, tax citations and photographs supporting the position taken regarding the identification of personal property and land improvement assets for federal income tax purposes.