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Cost Segregation

Beginning in June through early September, TMG was extremely busy with cost segregation studies for property placed in service in 2013. Obviously, the taxpayers wanted to file the new tax depreciation schedules with the extended returns. Our staff has worked many overtime hours to accommodate the "last minute" rush to extra deductions.

We also want to alert our readers to two recent happenings in cost segregation, as follows:

  1. The IRS has been auditing our cost segregation work for at least the last two years. One of the problems we have experienced is that the front line agents are poorly trained or lack the expertise to actually question our detailed work. In some instances, they have misquoted or misapplied their own code sections and regulations.
  2. Typical of the growth in cost segregation services, many practitioners have entered the business. Some are well-trained and perform well. However, many are producing reports that are highly likely to fail an IRS audit. They provide no tracking of how assets and costs are developed, nor the detailed buildup essential to support the basis of 5, 7, and 15 year lived assets. We can only warn: Buyer Beware.
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