Reading the component asset schedule
The component schedule should connect physical descriptions to costs and proposed depreciation treatment. Practical cost segregation buyer guidance from Stratum.
The decision this guide addresses
The component schedule should connect physical descriptions to costs and proposed depreciation treatment.
Look for identifiable items, locations, quantities, costing methods, recovery periods, and supporting classification explanations.
Make this review concrete
Choose entries with large costs, ambiguous descriptions, or unusually favorable treatment for review. Ask where each item is located and what it serves. A row labeled electrical should explain the actual scope instead of leaving the reader to guess whether it refers to a dedicated equipment branch or the general distribution system.
A practical review sequence
Select several material rows and trace them back to records or physical evidence. A long spreadsheet is not sufficient if the rows cannot be explained.
Begin with the actual property and engagement being considered. Keep a written distinction between confirmed facts, estimates, services being purchased, and decisions reserved for the return preparer. If a seller or provider presents only a headline benefit, ask for the underlying evidence and assumptions before making a comparison.
Working review sheet
| Field | What to record |
|---|---|
| Question to resolve | The component schedule should connect physical descriptions to costs and proposed depreciation treatment. |
| Evidence or explanation to request | Look for identifiable items, locations, quantities, costing methods, recovery periods, and supporting classification explanations. |
| Review action | Select several material rows and trace them back to records or physical evidence. A long spreadsheet is not sufficient if the rows cannot be explained. |
| Responsible party | Name the owner, study provider, technical reviewer, or return preparer who can answer this particular question. |
| Acceptance record | Document the answer, its supporting reference, unresolved items, and the version of the report or engagement to which it applies. |
A hypothetical problem to recognize
A report has hundreds of generic entries with no indication of which building contains them.
Treat the missing explanation as an open item. Ask for a written response, connect it to the affected records, and determine whether it changes the proposed scope or feasibility. This scenario is an editorial illustration, not a testimonial or evidence that a particular provider has performed deficient work.
Questions for the next conversation
What evidence supports the proposed conclusion for this property? Which facts or records could change the answer? Who is responsible for resolving them, and is that work included in the quoted engagement? These questions are more useful when they identify a specific document, asset row, or service than when they request a general assurance of quality.
Ask what the final deliverable will contain and how the preparer will receive it. Where the question affects costs or implementation, request a revised written scope rather than relying on a sales-call recollection. Where it affects tax treatment, the preparer should apply the current rules to the taxpayer rather than extrapolate from another property.
Complete the decision record
Retain the relevant proposal, response, source documents, final report version, and implementation notes in the property file. Record what remains unresolved and whether it must be addressed before engagement, before report delivery, or before filing. A documented decision is easier to review later than an unexplained schedule or an isolated benefit estimate.
Stratum focuses on component evidence and reporting. Broader tax planning, method changes, state calculations, and return preparation need defined responsibilities and an agreed scope. Confirm those roles so the property work produces a useful handoff rather than an assumption that one purchased service includes every related task.
References and scope
- IRS Cost Segregation Audit Technique Guide, Publication 5653
- IRS Publication 551: acquisition, transferred, and adjusted basis
- IRS Publication 946: depreciation, ownership, methods, and timing
These references explain the underlying tax framework. The checklists and scenarios on this page are editorial tools for gathering evidence, not quotations or asset-specific rulings from the IRS. The audit guide is examination guidance, not an official pronouncement of law or certification of a provider. A return preparer must apply current authority to the particular property, taxpayer, and filing year.
Focused implementation guides
Resolve the related evidence question before carrying a planning assumption into implementation.
- Cost segregation electrical component evidence: A study identifies electrical costs but source documents do not explain the equipment or areas served.
- Cost segregation component identifier continuity: A property has report revisions, replacement purchases and several asset schedules.