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Accelerating depreciation by identifying shorter-lived recovery property is the goal of the cost segregation service line. Specifically, we utilize the following service lines to achieve this goal:

 Cost Segregation Studies
Purchase Price Allocations
Correction of Prior Fixed Asset Depreciation Reporting

A natural extension of the depreciation and valuation services outlined above include Machinery & Equipment appraisals and Construction Replacement Cost estimates for various objectives including Market Value determinations and insurance valuation requirements or consulting.

When to Use Cost Tech Consulting

We can help your business achieve improved cash flow by enhancing the income tax depreciation deductions from your real estate, tenant improvements and other depreciable assets. Cost Tech Consulting can increase your depreciation deductions if you have:

  Built a new facility
  Purchased real estate
  Renovated or expanded existing facilities
 Under-depreciated fixed assets (correction of prior depreciation)

It is never too late to act.
Utilizing an IRS Revenue Procedure, under-depreciated assets from both open and closed tax years can be corrected without the need for amended tax returns.

Cost Tech Consulting's Services in Detail

Cost Segregation Studies

Cost segregation is quite simply the process of breaking up cost, usually for tax depreciation purposes, and supporting the re-casting of those costs in case of future review. Also dubbed “Cost Seg” by practitioners of the discipline, the process is usually or best provided by cost engineers or appraisers familiar the process. Cost Seg is the term that applies when “new” or “original” cost are being reviewed. The concepts can be applied when performing Purchase Price Allocations but then a value element comes in to play. Knowledge of construction, tax accounting, depreciation and valuation are important areas Cost Seg professionals emphasize.

Purchase Price Allocations

Performing Purchase Price Allocation’s (PPA) work is an extension of appraisal and valuation disciplines. If focused on real estate only, the process involves an appraisal of the land “as though vacant and available” and then using Cost Seg principles, allocating the remaining assets into the appropriate tax or financial reporting lives. If an acquisition of a business is involved, intangible assets and personal property may need to be appraised also. The benefit of having Cost Seg professionals involved is that the same or similar benefits exist for buildings, building fixtures and land improvements that are part of normal cost seg engagements. That is to say that under the tax code, the same lifing is used whether you built or buy assets. The difference is that you must restate the basis in terms of value instead of costs.

Correction of Prior Fixed Asset Depreciation Reporting

The above (Rev.Proc. 2002-09) is the latest in a string of Rev.Proc.’s issued since 1996. Simply it is an opportunity to correct prior depreciation errors/misapplications without causing an audit of the original years involved. This is accomplished by filing a ?Change of Accounting Method? with the IRS. There is an automatic consent element in the Rev.Proc. In its latest iteration, all of the benefit from the restatement is taken in the current tax year. From 1997 to 2001 you had to determine the benefit from recasting the depreciation and take the benefit over a four-year spread. Our property record review and possible retrospective cost seg and purchase price allocation work can result in significant benefit. Cost Tech Consulting will monitor all of these changes on a regular basis so we’re the one to call for information.

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