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HISTORY OF Cost Segregation |
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The key events leading to the IRS’s full endorsement of Cost Segregation:
• 1962: Cost Segregation studies started under Investment Tax Credit ( ITC )
• 1986: ITC repealed. Cost Segregation became uncertain. Tax lives for real assets
was changed.
• 1997: U.S. Tax Court ruled that property qualifying as tangible personal property
under former ITC rules would also qualify for federal income-tax
depreciation (Hospital Corp of America ).
• 2002: IRS consents to changes in the method of depreciation Form 3115, filed in
the year the changes is elected.
• 2004: IRS reversed the two-year waiting period required to change the method of
depreciation calculation.
• 2004: IRS publishes the Cost Segregation Audit Technique Guide.
Cost Segregation had been utilized prior to 2004 with varying degrees of interpretation and uncertainty. The publishing of the “Cost Segregation Audit Techniques Guide by the IRS in 2004 removed all of that uncertainty. Cost Segregation is now a practice fully endorsed by the IRS. IRS Reference |
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