Information Document Requests - Cost Segregation

APPENDIX - CHAPTER 6.7 - INFORMATION DOCUMENT REQUESTS

Chaper 6.6 | Table of Contents

APPENDIX - CHAPTER 6.7 - INFORMATION DOCUMENT REQUESTS

INTRODUCTION

Appropriate documentation is needed to support the conclusions in a cost segregation study. Once an examination has revealed the use of cost segregation techniques, the examiner needs to review the supporting documentation to determine whether an examination is warranted and, if so, the scope of the examination.

The use of appropriate Information Document Requests ["IDR’s"] will facilitate the identification of available records for review and the solicitation of records from the taxpayer. The sample IDR language is intended as a suggestion for obtaining records. One or more IDR's may need to be issued and examiners should "tailor" the language to each specific case.

  1. Purpose - To identify the participants and their respective roles in the preparation of a cost segregation study/analysis.
    Taxpayer, Inc., made changes to cost recovery deductions for its properties based upon recommendations from its consultant through Cost Segregation reports. A review of these recommendations is necessary.
    The Engagement Letter/Letter of Understanding between Consultant and Taxpayer, Inc., is requested to show the extent of the Cost Segregation engagement, the steps taken to gather information, and the way in which the work was to be reported.
    Additionally, a conference is requested with a representative from Consultant to describe the Cost Segregation process and to answer questions concerning the style and general cost computations. It is expected that a telephone conference will be suitable, provided the Engagement Letter/Letter of Understanding has been furnished.
  2. Purpose - To identify the specific properties subject to cost segregation study/analysis Please provide the names and locations of properties visited and inspected by Consultant for use in its Cost Segregation analysis. By reviewing the same properties visited by Consultant, a better understanding of the Cost Segregation Report is achieved.
  3. Purpose - To locate the source of property blueprints and drawings Please provide access to the construction drawings and specifications used by Consultant to perform its Cost Segregation Study. It is not necessary to duplicate the drawings; all that is requested is access to perform an adequate review in a location where the drawings may be unrolled and reviewed easily.
  4. Purpose - To obtain a copy of the cost segregation study Please provide a copy of the complete Cost Segregation Study, to include all schedules, spreadsheets, and attachments referred to in the Study.
    Please locate the related workpapers for the Cost Segregation Study and hold available for review.
  5. Purpose - To secure a copy of the study computations and formulae The Cost Segregation Study is described as containing numerous spreadsheets and schedules used in arriving at the summary recommendations. Please provide a machine sensible copy of the data files used in preparing and printing the spreadsheets and schedules.
    Please include a description of the software used in preparing the spreadsheets and schedules.
    Please provide an index to the machine sensible files, (or other description of the file titles and how the files are identified). If the machine sensible copy is a visual copy, or value only copy, then an additional description and presentation of the mathematical formulae used to perform the computations is also requested.
  6. Purpose - To ask specific questions about segregated properties The blueprint review is complete. Specific questions about the study remain.
    With regard to the "Quantity Take Off" schedules prepared by Consultant for the properties, there are certain unidentified assets that would fit into more than one MACRS class, depending upon location and use in the taxpayer’s business. Please provide a copy of the detailed listing of the Consultant’s selected assets, showing use and location for:
    Receptacles in Kitchen Junction Boxes in Kitchen Disconnect Switches in the Kitchen Receptacles in Offices Junction Boxes in Offices Circuit Breakers in Offices Receptacles in Lab areas Junction Boxes in Lab areas Floor Drains in Kitchen Sinks in Kitchen 3" pipe in Lab areas 1" pipe in Lab areas
    These assets were opined to have shorter lives than the building lives.
  7. Purpose - Request for specific items and amounts in question. 1. Please provide copies of all construction contracts, addenda, purchase orders, change orders (including the Contract Bid breakdowns) for each item listed below. Note: The Property Unit numbers and Descriptions were obtained from the formal Cost Segregation Analysis.

 

Category Description Amount
A Exterior Façades  - sec. 1245

$1,203,xxx

B Interior Decorations - sec 1245 $3,069,xxx
C Interior Decor - 1245 $1,458,xxx
D Interior Columns - 1245 $180,xxx
E Wallpaper $1,039,xxx
D Signage $1,967,xxx
F Property Utilities $1,902,xxx
G Room Locking Systems $772,xxx
H Backup Generator $814,xxx
I Equipment Connects - Rooms           $1,338,xxx
J Ceiling Decorations $390,xxx
K Equipment Connects - Kitchen $422,xxx
L Equipment Connects - Mech. Room $1,338,xxx
M Equipment Connects - Jacuzzi $62,xxx
N Kitchen Exhaust $114,xxx
O Equipment - Display Room $830,xxx
P Sound Room - Display Room $189,xxx
Q Millwork and Trim $2,811,xxx
R Interior Decorative Lighting $334,xxx
S Interior Dec. Lighting - Connects $861,xxx

 

 


Chapters:

  1. Introduction
  2. Legal Framework
  3. Cost Segregation Methodologies
  4. Principal Elements of a Quality Cost Segregation Sudy and Report
  5. Review and Examination of a Cost Segregation Study
  6. Appendix
    1. Uniform Capitalization
    2. Change in Accounting Method
    3. Depreciation Overview
    4. Relevant Court Cases
    5. Statistical Sampling
    6. Construction Process
    7. Information Document Requests

 

ABOUT US: CSP360, headquartered in Buffalo, New York, is one of the nation's leading providers of cost segregation and tax minimization services including tangible property regulation compliance, IRC 179D/45L energy efficiency studies, research tax credits, 263(a) maintenance repairs, fixed asset depreciation review and 179d analysis/45L to cpa, accounting and chartered accounting firms across the United States. Through our CPA Partnership Program we provide services to their qualified clients who have constructed, bought, expanded or remodeled real estate. We are affiliated with Freed Maxick CPAs, P.C., a Top 100 Firm in the United States, and have been providing cost segregation studies for over twenty years.