Financial advisors often find it difficult or impossible to suggest methods or strategies to reduce real estate property owners' federal tax liability and apply MACRS depreciation to all assets that qualify under the IRS Rules and Procedures. In accordance with the Department of the Treasury under I.R.C. Sections 1245 and 1250, and recent US Tax Court Cases, personal property and certain land improvements may be depreciated over significantly less time than nonresidential real property by performing a Cost Segregation Study.
A Cost Segregation Study may prove to be a measurable solution that will reduce your client's tax liability, as well as assist in the specific and defensible identification of assets that qualify under the Cost Segregation Procedural Rules, IRS Statutes and Tax Court Cases.
A Cost Segregation Study is an engineering based analysis on real (31.5/39yr) and residential rental (27.5yr) property that will determine whether an asset is I.R.C. Section 1245-property or Section 1250 property. Assisting in this determination, Cost Segregation specialists use a wide variety of tools for this analysis such as precedent-setting US Tax Court Cases like Hospital Corporation of America and Subsidiaries, 109 T.C. 21 (1997) [enhanced version available to lexis.com subscribers] or Boddie-Noell Enterprises, Inc. v. United States, KTC 1996-510 (Fed.Cls.1996) [enhanced version available to lexis.com subscribers].
Download the entire document, Benefits of the Cost Segregation Study for Real Estate Investors.
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