Cost segregation is a strategic tax tool that allows companies and individuals to increase their cash flow by accelerating depreciation expenses and deferring federal and state income taxes. Candidates for cost segregation services include buildings that were constructed after 1986, acquired since 1986, or that need catch-up depreciation. By identifying and segregating construction costs related to 5-year, 7-year, and 15-year property from the 39-year non-residential property costs, such property can be depreciated over a much shorter time than otherwise would be the case. Our approach to completing cost segregation studies includes: • Physically inspect the facility to ensure that all qualifying personal property and land improvements have been identified. • Review architectural / engineering project drawings and specifications to identify all construction related assets that qualify for accelerated depreciation. • Obtain and review copies of approved contractor pay requests, change orders, and miscellaneous invoices in order to segregate these costs properly into the correct asset classifications for federal income tax purposes. • Analyze all cost data. • Develop listing of construction costs for which specific breakdown is required from the contractors.  If this information is not available, estimate the costs by using nationally recognized cost estimating manuals. • Prepare listing of units / assets that, in our opinion, do and do not qualify for accelerated depreciation. • Allocate project indirect costs, such as contractors’ general conditions, architectural / engineering fees, permits, etc. to all project-related assets on a functional basis. • Reconcile total costs used in analysis to total project capitalized costs, as documented in accounting and control records. • Prepare written report. The report includes project background information; methodology; fixed asset classifications and descriptions; allocation of projected related fees and services; fixed asset classification spreadsheets segregating the assets into personal property (5 or 7 year tax life), land improvement property (15 year tax life), and non-residential property (39 year tax life); and references to court cases, revenue rulings, tax citations, and photographs supporting the position taken regarding the identification of personal property and land improvement assets for federal income tax purposes.