FROM PROPOSAL TO REPORT, QUALITY IS THE FOCUS
Palmetto Cost Segregation, LLC conducts its cost segregation studies in accordance with the IRS-published Cost Segregation Audit Techniques Guide (“ATG”) and the Minimum Quality Standards (“MQS”) published by the American Society of Cost Segregation Professionals (“ASCSP”). The report includes all elements set forth in Chapter 4, "Principal Elements of a Quality Cost Segregation Study & Report" of the ATG and is designed to withstand IRS scrutiny. While the incorporation of quality standards ensures compliance with industry guidelines and contributes to the integrity of the report, PCS understands that what a client needs and wants is not always the same as what the IRS wants. To address specific needs of the client, PCS has incorporated additional features into its deliverables. PCS issues the following deliverable package as part of its cost segregation services:
1) The Report
The report provides a summary of relevant facts about the subject property, defines the project purpose and scope, explains the methodology used in executing the study, provides an overview of accounting for depreciation of MACRS property, summarizes the findings and results of the study through a series of schedules, explains the rationale (including legal citations) for categorizing assets as either §1245 or§ 1250 property and assigning the appropriate asset classifications, and contains exhibits which support classifications and determinations made.
While a cost segregation is typically conducted to identify items eligible for a shorter recovery period, and the report is used to show detail on those segregated items, the PCS report provides additional detail for certain structural components to assist in future disposition calculations. Further, for each building considered in the analysis, the report will provide a cost breakdown of the building structure and each of its systems to assist in proper application of the capitalization standards.
2) The Depreciation-Detail Excel Schedule
Most cost segregation reports provide a schedule of the ending cost basis for each segregated asset and contain a narrative section which describes the depreciation treatment for each asset classification. However, most do not have a comprehensive, easy-to-interpret schedule which clearly shows the applicable method, convention, recovery period and applicable bonus percentage on an asset-by-asset basis. PCS understands the importance of producing results for clients in a format that is easy to interpret, implement and integrate into their current systems. PCS designed a schedule that mimics a standard federal tax depreciation schedule. The schedule contains all fields required to correctly compute depreciation. Prepared on an asset-by-asset basis, the schedule reports the ending cost basis, applicable property and asset class, date in service, method, convention, recovery period and applicable bonus percentage.
3) Reconciliation of Estimate to Actual
Prior to beginning a study, PCS projects the potential impact by estimating the percentage of the building cost that will be reclassified to other types of property (e.g., land improvement, tangible personal property, etc.) and applying certain other assumptions. The cost/benefit analysis calculates the net present value of the study, provides a fee quote and ultimately provides the user the anticipated Return on Investment. Upon completion of the project, PCS will update the model for actual results and final amount billed so the client can clearly see the benefits of their investments.
4) The Complete Documentation Study Package
The package, delivered on a CD or thumb drive, contains an electronic copy of all other deliverables as well as any documentation, information and communication received during the study from the client and/or its representatives (e.g. contractors, engineers, property managers, etc.) which was relied upon during the Study. As the client always bears the ultimate burden of record-keeping, PCS ensures that all information is provided at one time, organized in a single location, for easy reference and retrieval.