How to Review a Cost Segregation Report Before Accepting It

Read the reconciliation before the headline

Begin with the agreed study pool and verify that the report totals reconcile to it. Check how land, furnishings, later improvements and excluded costs are handled. A high short-life allocation is not a substitute for a supported starting amount.

Trace selected components back to evidence

Choose material items and inspect how their location, quantity, function and cost were established. Distinguish actual costs from estimates and ask why the chosen methodology fits available records. The IRS audit technique guide is a useful examination reference, but it is not an IRS approval of an individual study or a substitute for law.

Read limitations as part of the report

Look for inaccessible spaces, missing plans, sampled units, assumptions about ownership and information supplied by the owner. Ask whether an unresolved assumption could materially change the result. Confirm the technical reviewer and the procedure for correcting a factual error.

Check that implementation can be traced

Request stable asset references, clear cost periods and an explanation of how the preparer can reconcile the study with the existing schedule. Taxpayer-level loss limitations, elections, filing procedure and state treatment remain preparer decisions. Keep technical questions and tax implementation questions assigned to the appropriate person.

Download the working template

Blank CSV template for your own records. Open it in your spreadsheet application, add source references, and keep it with the engagement file.

Template columns: Review point; Report page or asset reference; Supporting source; Exception; Assigned reviewer; Resolution.

Continue with your property decision