by Randy Vesco

The concept and use of “cost segregation” as a key tax tool arrived after the Hospital Corporation of America verdict in 1997 and the subsequent IRS acquiescence in 1998. These pivotal events made cost segregation a viable option in tax planning for your clients.

Between then and the issuance of the IRS Cost Segregation Audit Techniques Guide in 2004 there was little information available on what was happening in this area. Large CPA firms were recommending cost segregation studies to their clients, but relatively few others were. You can liken this to Johns Hopkins or the Mayo Clinic introducing a major new medical technique, but it taking 3 or 4 years to work its way down to your family doctor. The same was true of cost segregation until recently.

What is a cost segregation study? It’s an engineering-based tax tool that allows building owners to allocate building costs between real and personal property based on case law and IRS guidance. The study is performed by qualified engineers/estimators and meets the IRS “guidelines” for a quality cost segregation study.

Click on Document for Complete Article

"Cost Segregation Applied"    

Journal of Accountancy - August 2004

"Cost Segregation Audit Techniques Guide" 

Internal Revenue Service

"The Best of Both Worlds"

Journal of Accountancy - August 2005

"How the IRS Examines Repair and Maintenance Costs"

Journal of Accountanacy - February 2011

"Cost Segregation Saves You Money"

Denver Business Journal - August 20-26, 2004

"Side Effects of Cost Segregation"

 Journal of Accountancy - April 2012