The Cost Segmentation Process

A Madison SPECS cost segmentation (or segregation) analysis is always efficiently and accurately completed by our experienced team of in-house accounting, engineering, and tax experts. These advisors study every fixed asset in your real estate holdings to determine the amount of tax savings your business can gain based on accelerated depreciation.

1. FREE INITIAL EVALUATION

• Based on the information you provide to our consultants, we make an initial assessment as to whether a cost segmentation opportunity exists for your property. If it does, we will give you a written fee estimate for the project.

2. RECORD REVIEW

• We thoroughly review engineering based documents such as site surveys, blueprints, construction drawings and specifications during our cost segmentation studies. Additionally, we review your general contractor, architectural/engineering and private vendor invoices and change orders when applicable. We also perform a comprehensive review of all relevant financial records your CPA or tax advisors have kept.

3. SITE INSPECTION

• Our experienced engineers conduct an in-depth visit of your real estate, identifying and confirming each fixed asset in a building that is eligible for accelerated depreciation (not including intangibles). An extensive photo record is taken of the property during the study and key personnel are interviewed.

4. VALUE ALLOCATION

• Our cost specialists determine the value of all assets eligible for cost segmentation, using the most widely accepted sources of construction cost information, such as the services of RS Means.

5. TAX ANALYSIS

• Our accounting and tax experts compile relevant tax law and FASB guidance in order to support the eligible asset reclassification. Additionally, these consultants research, prepare and complete the appropriate schedules which will be incorporated into your tax return by your CPA.

6. DOCUMENTATION

• We provide high level reports to document the results of all cost segmentation studies. We also provide a detailed report for each project with schedules ready for implementation, as well as full, audit ready documentation and support as recommended by the IRS.

At Madison SPECS we take pride in our cost segmentation services, knowing that our team of engineering, accounting and tax advisors is second to none. We view ourselves as the consultants of choice for helping business like yours increase their cashflow while enjoying the benefit of tax savings of accelerated depreciation.