Cost Segregation

CPA Firms

Accounting firms locally and nationally are exploring ways to add services outside the typical financial and accounting arenas. When an opportunity evolves, so must the services offered by Certified Public Accountants. By partnering with The Cost Segregation Group you will strengthen relationships and offer additional valuable services to your clients. Promoting your ability to provide cost segregation services will also provide you with the edge to attract new engagements.

If your client owns developed real estate valued at $750k or more, you may be in a position to help them realize significant tax savings and an increase in cash flow through a cost segregation study (CSS).

CSS have become an increasingly valuable but not commonly understood tax strategy that should be considered by virtually every CPA whose client owns, is constructing, rehabilitating or acquiring a real estate facility. Absent a CSS, newly constructed or purchased property often yields only modest depreciation deductions, leaving unrealized tax benefits on the table. The Cost Segregation Group can maximize inherent tax benefits for a client by identifying, classifying, and segregating components of a building into personal property and land improvements rather than real property in order to place them in shorter MACRS depreciation categories.

Although the use of CSS studies is becoming more widespread, there are still many clients who have never been introduced to the concept. Most CPA firms do not have the engineering or architectural experience required by the IRS to perform a CSS. The Cost Segregation Group team will work with your firm to create goodwill and substantial tax savings for your client.

Our Qualifications

The CSS should be performed by an organization that provides a blend of in-house knowledge of engineering, tax and accounting. This team approach will result in a study that maximizes the tax benefits of the study, while conforming to IRS regulations.

How is the study performed?

The CSS process is in-depth but non-intrusive. The cost segregation specialist uses an engineering-based approach, as specified by the IRS. Their job is to examine architectural/engineering drawings for potential asset reclassification. A physical inspection will be performed. Cost data including the contractor’s application for payments, change orders, owner incurred cost and disbursements are examined. Direct labor, material components and indirect costs are allocated based on analysis of drawings and specifications.

An existing property without the above documentation requires a different approach.

The specialist must become familiar with the purpose and major functions of the property. Then a full analysis of the property is conducted, including inspection, photographs and measurements. This allows the specialist to reconstruct the property on paper, including all the components. The components are then priced out using standard construction cost data such as R S Means Building Construction Cost Data and Marshall Valuation Service.

Some examples of assets that have qualified for accelerated depreciation include land improvements, parking lots, fencing, outdoor lighting, landscaping, intercom and security systems, specialized heating, ventilation and cooling systems related to specific business requirements, storage and shelving, ramps, moveable wall partitions, and many others.

The Report

The report includes the project background , asset classifications, and depreciation, allocated related fees and services, spreadsheets segregating the assets, reference to tax court cases, revenue rulings and tax citations.

Training

We provide 2 day training sessions to equip CPA’s with the knowledge and tools needed to offer cost segregation services to their clients.

You receive detailed training manuals, prepared by our team with over 1,000 hours of R&D.
You receive a comprehensive training manual covering all facets of a cost segregation engagement .
We include marketing information, presentations for clients, sample engagement letters and more.
You receive sample reports and completed 3115’s along with how to file and logistical information.
Computer disks with the cost segregation report and all related work papers to provide you with virtually no start-up or re-creation time.
Assistance in client meetings, if warranted.

Outsourcing

Work with your staff to provide seamless service to your client.
Provide you with engineering and appraisal support on older projects or sophisticated facilities, when actual records are not available and/or purchased facilities.
Provide backroom consulting support.

Client Benefits

Lowered taxes
Exceptional return on investment.
Increased profit and cash flow
The most cost-effective solution for specialized staffing.

CPA Benefits

A high return value-added service for your clients.
Timely, efficient and seamless participation by a team with a proven record of honoring and strengthening client relationships.
Identification and documentation of assets by on-staff specialists in tax law, engineering and construction who are trained and experienced in hundreds of cost segregation studies.
Asset review, classification, research and reporting by experienced cost segregation tax CPA’s and engineers to assist in serving the best interests for your clients.