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:: Cost Segregation Audit Techniques Guide - Chapter 6.7 -
Information Document Requests
APPENDIX - CHAPTER 6.7 -
INFORMATION DOCUMENT REQUESTS
INTRODUCTION
Appropriate
documentation is needed to
support the conclusions in a
cost segregation study. Once an
examination has revealed the use
of cost segregation techniques,
the examiner needs to review the
supporting documentation to
determine whether an examination
is warranted and, if so, the
scope of the examination.
The use of
appropriate Information Document
Requests ["IDR’s"] will
facilitate the identification of
available records for review and
the solicitation of records from
the taxpayer. The sample IDR
language is intended as a
suggestion for obtaining
records. One or more IDR's may
need to be issued and examiners
should "tailor" the language to
each specific case.
-
Purpose
- To identify the
participants and
their respective
roles in the
preparation of a
cost segregation
study/analysis.
Taxpayer, Inc., made
changes to cost
recovery deductions
for its properties
based upon
recommendations from
its consultant
through Cost
Segregation reports.
A review of these
recommendations is
necessary.
The Engagement
Letter/Letter of
Understanding
between Consultant
and Taxpayer, Inc.,
is requested to show
the extent of the
Cost Segregation
engagement, the
steps taken to
gather information,
and the way in which
the work was to be
reported.
Additionally, a
conference is
requested with a
representative from
Consultant to
describe the Cost
Segregation process
and to answer
questions concerning
the style and
general cost
computations. It is
expected that a
telephone conference
will be suitable,
provided the
Engagement
Letter/Letter of
Understanding has
been furnished.
-
Purpose
- To identify the
specific properties
subject to cost
segregation
study/analysis
Please provide the
names and locations
of properties
visited and
inspected by
Consultant for use
in its Cost
Segregation
analysis. By
reviewing the same
properties visited
by Consultant, a
better understanding
of the Cost
Segregation Report
is achieved.
-
Purpose
- To locate the
source of property
blueprints and
drawings
Please provide
access to the
construction
drawings and
specifications used
by Consultant to
perform its Cost
Segregation Study.
It is not necessary
to duplicate the
drawings; all that
is requested is
access to perform an
adequate review in a
location where the
drawings may be
unrolled and
reviewed easily.
-
Purpose
- To obtain a copy
of the cost
segregation study
Please provide a
copy of the complete
Cost Segregation
Study, to include
all schedules,
spreadsheets, and
attachments referred
to in the Study.
Please locate the
related workpapers
for the Cost
Segregation Study
and hold available
for review.
-
Purpose
- To secure a copy
of the study
computations and
formulae
The Cost Segregation
Study is described
as containing
numerous
spreadsheets and
schedules used in
arriving at the
summary
recommendations.
Please provide a
machine sensible
copy of the data
files used in
preparing and
printing the
spreadsheets and
schedules.
Please include a
description of the
software used in
preparing the
spreadsheets and
schedules.
Please provide an
index to the machine
sensible files, (or
other description of
the file titles and
how the files are
identified). If the
machine sensible
copy is a visual
copy, or value only
copy, then an
additional
description and
presentation of the
mathematical
formulae used to
perform the
computations is also
requested.
-
Purpose
- To ask specific
questions about
segregated
properties
The blueprint review
is complete.
Specific questions
about the study
remain.
With regard to the
"Quantity Take Off"
schedules prepared
by Consultant for
the properties,
there are certain
unidentified assets
that would fit into
more than one MACRS
class, depending
upon location and
use in the
taxpayer’s business.
Please provide a
copy of the detailed
listing of the
Consultant’s
selected assets,
showing use and
location for:
Receptacles in
Kitchen
Junction Boxes in
Kitchen
Disconnect Switches
in the Kitchen
Receptacles in
Offices
Junction Boxes in
Offices
Circuit Breakers in
Offices
Receptacles in Lab
areas
Junction Boxes in
Lab areas
Floor Drains in
Kitchen
Sinks in Kitchen
3" pipe in Lab areas
1" pipe in Lab areas
These assets were
opined to have
shorter lives than
the building lives.
-
Purpose
- Request for
specific items and
amounts in question.
1. Please provide
copies of all
construction
contracts, addenda,
purchase orders,
change orders
(including the
Contract Bid
breakdowns) for each
item listed below.
Note: The Property
Unit numbers and
Descriptions were
obtained from the
formal Cost
Segregation
Analysis.
Category
|
Description
|
Amount
|
A
|
Exterior Façades - sec.
1245
|
$1,203,xxx
|
B
|
Interior Decorations -
sec 1245
|
$3,069,xxx
|
C
|
Interior Decor - 1245
|
$1,458,xxx
|
D
|
Interior Columns - 1245
|
$180,xxx
|
E
|
Wallpaper
|
$1,039,xxx
|
D
|
Signage
|
$1,967,xxx
|
F
|
Property Utilities
|
$1,902,xxx
|
G
|
Room
Locking Systems
|
$772,xxx
|
H
|
Backup
Generator
|
$814,xxx
|
I
|
Equipment Connects -
Rooms
|
$1,338,xxx
|
J
|
Ceiling
Decorations
|
$390,xxx
|
K
|
Equipment Connects -
Kitchen
|
$422,xxx
|
L
|
Equipment Connects -
Mech. Room
|
$1,338,xxx
|
M
|
Equipment Connects -
Jacuzzi
|
$62,xxx
|
N
|
Kitchen
Exhaust
|
$114,xxx
|
O
|
Equipment - Display
Room
|
$830,xxx
|
P
|
Sound
Room - Display Room
|
$189,xxx
|
Q
|
Millwork and Trim
|
$2,811,xxx
|
R
|
Interior Decorative
Lighting
|
$334,xxx
|
S
|
Interior Dec. Lighting -
Connects
|
$861,xxx
|
Note: Include
all progress payment requests
along with the architect’s or
construction manager’s
certification of the percentage
completion (i.e., Application
and Certificate for Payment –
AIA Form G-702).
PLEASE RESPOND
BY: {date}
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