Cost segregation for CPAs and their clients

What you receive

A fixed-asset schedule, delivered as a spreadsheet in the layout you work in, whether that is an import file for your depreciation software or your own workpaper. Each line gives the description, cost, placed-in-service date and class of the asset, with the recovery period, method and convention as the preparer understands them. New York and New Jersey do not follow the federal rules in every respect, so federal and state treatment are shown in separate columns instead of being left for you to unwind.

Behind each line is a citation and, where the component was observed, a photograph or a time reference in the site recording. The full report accompanies the schedule, including the reconciliation of classified costs to the client’s total basis. The schedule reflects the preparer’s reading of the authorities. The positions taken on the return are yours and your client’s, and items that could reasonably be classified either way are flagged so that you can decide them.

Look-back studies and Form 3115

For a building already in service, the schedule is arranged by original placed-in-service date so that depreciation can be recomputed from the beginning, which is what the section 481(a) adjustment requires. The form and the computation on it are yours. What Highbridge Studies contributes is Form 3115 support in the plain sense: the reclassified cost detail, and a preparer who will go through it with you.

During filing season

Questions go to the preparer directly, by phone or by email, and they are answered by the person who did the work. The workpapers behind a study are retained for years and are available to you on request. How a study is prepared describes what those workpapers contain.

Which clients

The studies the firm prepares most often are for clients who have recently built, bought or substantially renovated a building, and for clients who have held one for years without ever having it studied. Apartment buildings and mixed-use buildings are the usual subjects, though any building held for rental or business use can be examined. If you are unsure whether a property justifies the work, the preparer will look at the basic facts informally and tell you what the documentation is likely to support.

What Highbridge Studies does not do

It does not give tax advice, prepare or file returns, or project the tax effect of a study for a client. It does not represent taxpayers before the Internal Revenue Service or any state taxing authority. Its engagement is limited to preparing the study and explaining it. An estimate of what a study is worth to a particular client is better made by the accountant who knows that client’s whole position.

Referrals

Accountants who would like to refer a client, or to talk through a particular building before raising it with one, can write to [email protected] or call (201) 218-5758. The services page describes the kinds of buildings and situations the firm takes on.