Cost Segregation Studies: Understanding the Application of Income Tax Analysis to Property Tax and Sales Tax Reporting

General Business

October 13, 2015
by Daryl Ohland, CPA, CIRM, MST

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Daryl Ohland Daryl Ohland, CPA, CIRM, MST

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Many companies have cost segregation studies performed when they have new construction projects. These studies are valuable because they segregate costs into shorter depreciable lives to maximize income tax depreciation deductions in the early years.
However, to get the most state-tax-favorable treatment for your construction project, it is important to understand the potential integration between the cost segregation study and sales and property taxes. Understanding your study will ensure that your company will use the information from the study to properly report both sales/use and property taxes. Used properly, the cost segregation study may also provide valuable substantiation for property and sales tax opportunities available to your organization.

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