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.