UoP Bolt-on to Cost Segregation Study
Capstan offers Unit of Property (UoP) designations as an option on every Standard or Advanced Cost Segregation Study. UoP aggregates the costs found in a cost segregation study into the Unit of Property designations as outlined in the IRS Tangible Property Regulations. The UoP designations are then used as a guide in performing Materiality tests once a project is deemed not to be a Betterment, Adaptation, or Restoration (BAR).
Capstan offers a UoP Upgrade to any Cost Segregation Study previously performed by our team. Adding a UoP Upgrade to a previously performed Cost Segregation Study allows property owners to get the best return on their investment. That’s because UoP designations provide guidance in determining whether future expenditures can be expensed or capitalized.
If a client has a cost segregation report produced by a third party, Capstan can upgrade the report as long as the 39-year assets are sufficiently detailed. If additional assets have been placed in service since the study was performed, Capstan’s ability to upgrade the report will be evaluated. In such a case, a site revisit and further cost segregation of new assets may be required.
In certain circumstances, a Cost Segregation Study is not possible due to the age of an asset or is not desirable from the client’s perspective. Capstan offers a UoP Survey option to address these special cases, in which an owner recognizes the benefit of the UoP designations but does not want to bear the cost of a Cost Segregation Study.
The Capstan team reviews the depreciation schedules, visits the site to review the property, and utilizes our proprietary tools to develop an engineering-based analysis of the building’s structure and systems as defined by the IRS in the Tangible Property Regulations. One caveat: This service does not provide the detailed cost breakout by asset required for making Partial Asset Disposition (PAD) elections.
Capstan recommends the UoP Screen tool for assets with a very low depreciable basis and simplistic depreciation schedules. The service is very similar to the UoP Survey except that no on-site is conducted. In a UoP Screen, the client completes a property questionnaire. The Capstan engineer then reviews all client-supplied information about the property, using proprietary tools to determine UoP designations.
This engineering-based analysis documents the building’s structure and systems into units of property that correlate to the depreciation schedule. The UoP Screen meets the “reasonable method” requirements defined by the IRS and provides the UoP designations that will help in making Materiality determinations going forward. Again, unlike a Cost Segregation Study, this service does not provide the detailed cost breakout by asset required for making Partial Asset Disposition (PAD) elections.