On 6/1/2022 the IRS updated its Cost Segregation Audit Techniques Guideline (ATG) for the first time since 2017. On Page 1 of the Introduction, the ATG states that it is “…not intended as an official IRS pronouncement. Accordingly, it may not be cited as authority.”   

Nonetheless, the ATG is quite valuable as it takes readers into the mind of an IRS Examiner, spelling out exactly what he is looking for as he scrutinizes a report. The proactive and thoughtful reader can use this guidance to ensure best practices in his cost segregation studies.  

The 2022 update points out two new areas of focus. The importance of identifying land values is stressed, and an entire new chapter is added on the subject of electrical distribution systems. This seems to imply that future auditors will be taking a close look at these subjects. Director of Engineering Ziv Carmel notes, “Capstan engineers always seek to comply with IRS guidelines regarding electrical load distribution and analysis. We also make certain to confirm land values with the client.” 

Beyond those two areas, this version of the Guidelines updates content to include terms and legislation that were not in existence at the time of the last update:  

  • Guide now includes the staggered rules of QIP, QLIP, QRIP, and QRP.  (Table on Page 69) 
  • Guide now references the TCJA and nuances regarding the application of IRC Sec. 263A to newly constructed property.  (Page 59 and Others) 
  • Guide now includes Rev. Proc. 2022-14, the latest Form 3115 guidance for automatic changes in accounting. (Page 138)  
  • Guide now uses updated language to reference the staggered rules relating to IRC Sec. 179. (Table on Page 124) 

If you have any questions about how Capstan Cost Segregation Studies meet and exceed IRS Audit Technique Guidelines, we’d be happy to discuss our engineering-based methodology at your convenience.   


Maximizing ROI: How Cost Segregation Can Boost Your Real Estate

Real estate investors sometimes make the mistake of thinking about real property as a single, indivisible asset. They might not realize that, for tax purposes, real property consists of multiple types of assets with a wide range of useful lives. Your property isn’t a...

Specialty Tax Incentives in the Life Sciences

Part I – Real Estate Incentives The evergreen life sciences industry is eligible for a myriad of specialty tax incentives. We’ll discuss these incentives in a Two-Part Series, focusing on real estate-based incentives this month, and covering the R&D Tax Credit in...

Inbox Zero: The Impossible Dream?

Nick Sonneberg’s webinar last month really got us thinking about how to work more efficiently. Email seems like the obvious place to start – Nick referenced a Carleton University study that found most people spend one third of their workday dealing with email.   The...

The R&D Tax Credit for Software Developers

Introduction   In the most recent year for which data is available, software developers claimed over $2 Billion in R&D Tax Credits.   This tremendous incentive is a dollar-for-dollar federal Credit that can be claimed yearly and used to offset tax liability. The...

Marketing: The Secret to Growing Your Firm?

Nine Ways to Get the Most Out of Your Marketing Department Hinge, a leading branding and marketing firm for professionals, recently released its 2023 High Growth Study. One notable takeaway – the difference between high-growth firms and medium-growth firms comes down...