At Cost Segregation Study
LLC, our approach is goal-oriented. We create
value for our clients, and do not interfere with current
business relationships. We are willing to work
with your existing accountant to help you r company
realize the value our service can provide.
Our construction engineering and tax specialists examine
real estate holdings to determine which costs can be
segregated and depreciated over a much shorter recovery
period, rather than over a 39-year depreciable life.
Our experts are trained
in this technical are of taxation and
engineering-based approach of constructing your
facility.
Our consultants have
researched all the highly technical court cases, IRS
rulings and procedures as they relate to cost
segregation.
Our professionals can
read and interpret blueprints and specifications.
Our team has performed
thousands of studies ranging from warehouses to
highly automated processing plants.
We build strategic
alliances with CPA firms with engineering support to
complete outsourcing.
We have experience in
dealing with IRS audits as it pertains to asset
allocations.
We've saved millions of
dollars
for businesses like
yours!
COST SEGREGATION
RECLASSIFICATION PROCESS
The following is an example of the
“breakout” process that takes place
during the analysis of electrical
components during a cost segregation
analysis. The
first step is to compare the panel
information obtained in the field to the
drawings to ensure that no changes have
occurred since they were installed.
In similar fashion, the circuits are
identified and reviewed against the
schematics.
The example below shows the circuits
that were identified and applied toward
the assets that were in place at the
time of the study (highlighted cells
indicate circuits dedicated to §1245
equipment):
Electrical Room
UL = Unlabeled
Panel HP
225 Amps
Volts
120/208V 3P/4W
C
S = Spare
PA
Description
PA
B = Blank (Not Used)
1
1/20
Lights
Lights
1/20
2
3
1/20
Lights
Lights
1/20
4
Standard Formula
5
1/20
Lights
Lights
1/20
6
Total Amps or Total Circuits =
940
7
1/20
Lights
Lights
1/20
8
Dedicated Total = 480
9
1/20
Copy Machine
Receptacles
1/20
10
11
1/20
Coffee Maker
Receptacles
1/20
12
Percentage of Panel = 51.06%
13
1/20
Refrigerator
Hot Water Heater
2/20
14
15
1/20
Disposal
Hot Water Heater
16
Notes:
17
1/20
Site Lights
Site Lights
1/20
18
19
1/20
Site Lights
Site Lights
1/20
20
21
1/20
Site Lights
Site Lights
1/20
22
23
1/20
Ice Maker
Receptacles
1/20
24
25
1/20
Vending
Receptacles
1/20
26
27
1/20
Vending
Receptacles
1/20
28
29
1/20
Receptacles
GFI Counter Recept
1/20
30
31
1/20
Receptacles
GFI Counter Recept
1/20
32
33
1/20
Receptacles
Dishwasher
1/20
34
35
1/30
Computer
Telephone
1/20
36
37
3/30
Air Conditioning
Trash Compactor
3/30
38
39
Air Conditioning
Trash Compactor
40
41
Air Conditioning
Trash Compactor
42
The next step is to compute the
percentage of amps on each panel that
are dedicated to §1245 property.
To do this, divide the total number of
amps available on the panel into the
amps dedicated to §1245 property (480
divided by 940 = 51.06%). Locate
the cost allocation for “panels and
switchboards” on cost invoices supplied
by the contractor. Apply the
amp percentage against the dollars on
the panels and switchboard; the end
result will be amounts that can be
allocated to 5- or 7- year
assets.
In this example, if
the one panel and switchboard cost
$100,000, the depreciable amount
allocated to the equipment would total
$51,060…and this is only one small part
of the overall building process.