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The Practice of Cost Segregation Analysis: Maximizing Tax Bennefits for Building Acquisitions and Construction

ISBN: 978-0-87629-744-5
240 pages
January 2004
The Practice of Cost Segregation Analysis: Maximizing Tax Bennefits for Building Acquisitions and Construction (0876297440) cover image
This expert guide walks you through the practice of cost segregation analysis, which enables property owners to defer taxes and benefit from “accelerated cost recovery” through depreciation deductions on assets that are properly identified and classified. A relatively new practice that evolved from various court decisions and Internal Revenue Service rulings, cost segregation can be applied to new buildings under construction, renovations of existing buildings, leasehold improvements, and purchased real estate –  going back as far as 1987.

Cost segregation practice requires knowledge of both tax law and the construction process. In this book, the authors share their expertise in these areas with tax and accounting professionals, cost segregation consultants, facility owners, architects and general contractors –  providing guidance on major aspects of a professional, defensible cost segregation study, including:

  • The legal framework for cost segregation, as defined by the IRS, tax courts, and federal agencies
  • Review of key IRS cases, court rulings, and revenue procedures
  • Classification and depreciation methods
  • Understanding construction plans and specifications
  • Professional takeoff and cost estimating procedures
  • Optimizing cost segregation in new construction –  from design choices to proper project documentation

With a glossary of terms, sample cost segregation estimates for various building types, key information resources, and updates via a dedicated website, The Practice of Cost Segregation Analysis is a must-have resource.

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About the Authors & Reviewers .

Foreword.

Part I: Tax Regulations & Precedent-Setting Rulings.

Chapter 1: Introduction to Cost Segregation.

Chapter 2: Income Taxes & Depreciation Deductions.

Chapter 3: The Legal Framework for Cost Segregation.

Chapter 4: Tax Cases, IRS Revenue Rulings, & Revenue Procedures.

Chapter 5: Classification of Property.

Part II: The Engineering/Estimation Portion of Cost Segregation.

Chapter 6: Asset Allocation Methodologies.

Chapter 7: Plans & Specifications.

Chapter 8: Estimating Standards & Practices.

Chapter 9: Area & Volume Calculations for Takeoff.

Chapter 10: Understanding Material & Labor Cost Factors.

Chapter 11: Sources of Pricing Information.

Chapter 12: Cost Segregation in Design & Construction.

Part III Appendix, Glossary, & Resources.

Appendix A: Cost Segregation Audit Techniques Guide Excerpts.

Appendix B: Cost Segregation Issues in the Restaurant Industry.

Appendix C: Calculating the Surface Area of Cylinders, Pyramids, & Cones.

Appendix D: Using RSMeans Cost Data.

Glossary.

Resources.

Index.

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