A Long-Held Duplex: Separate the Study From Catch-Up Work

The fictional situation

The fictional duplex has prior depreciation schedules. The preparer supplies a $40,000 incremental deduction assumption and expects half to be usable in the modeled period. The $1,200 implementation assumption is hypothetical, not an AE quote.

Read the numbers correctly

The example assumes 3,000 square feet, a $3,000 Stratum study fee, and $1,200 of separately engaged implementation work. It assumes $40,000 of additional depreciation compared with the no-study baseline, a 24% marginal rate, and 50% usability in the modeled period. None of these deduction or implementation inputs is a quote or a completed study result.

Calculate the early-period comparison

Assumed tax reduction = $40,000 × 50% × 24% = $4,800. Combined assumed cost = $3,000 + $1,200 = $4,200. The arithmetic difference is $600. This is an undiscounted early-period comparison; it is not a lifetime return, permanent savings estimate or recommendation.

Change the assumption that matters

If only 25% is usable, the modeled tax reduction falls to $2,400 and is below the $4,200 combined cost. A catch-up figure needs a verified historical calculation and an appropriate filing procedure.

What the example leaves for review

The preparer must establish the depreciation difference, when deductions can be used, the relevant marginal rates, state treatment, later-year depreciation and sale consequences. This example does not calculate bonus eligibility or assign asset lives. Use the fee-benefit tool to substitute adviser-supported inputs, then retain the complete multi-year analysis before commissioning the work.

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