The Tax Court has concluded that a taxpayer could not modify purchase price allocations that it agreed to in connection with two asset acquisitions. The taxpayer made the modifications in an attempt to secure quicker depreciation deductions following a cost segregation analysis. The Court concluded that IRS did not abuse its discretion in prohibiting the taxpayer from determining useful lives of assets in a manner that was inconsistent with the original allocation schedule.
tax deduction
Cost Segregation Study Key to Accelerating Tax Deductions
For those who have recently purchased or built a new building, or even substantially remodeled an existing building that they own, faster write-offs are only a cost segregation study away. A cost segregation study identifies property components and their cost, allowing owners to maximize their current depreciation deductions by using the shorter lives and faster depreciation rates available for the qualifying parts of the property. But the overall benefit may be limited in certain circumstances. This article explores some of the details, while addressing the concern some have as to whether a cost segregation study might trigger an audit.